<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<FILENAME>a2055361z10-k.txt
<DESCRIPTION>10-K
<TEXT>
<Page>


                                    FORM 10-K

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
(Mark One)

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

For the fiscal year ended April 30, 2001

                                       OR

[   ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
        EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from __________ to __________.


                         Commission file number: 0-14922


                        ABC DISPENSING TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

                  Florida                                   59-2001203
   ---------------------------------------              ------------------
      (State or other jurisdiction of                    (I.R.S. Employer
      incorporation or organization)                    Identification No.)

       451 KENNEDY ROAD   AKRON, OHIO                          44305
   ----------------------------------------                 -----------
   (Address of principal executive offices)                  (Zip Code)

   Registrant's telephone number, including area code: (330) 733-2841


    Securities registered pursuant to Section 12(b) of the Act: NONE
                                                                    ----
    Securities registered pursuant to Section 12(g) of the Act:

                           COMMON STOCK, PAR VALUE $.01
                           ----------------------------
                                 (Title of class)

         Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days: [ X ] Yes [ ] 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 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 as of July 13, 2001 was $1,628,898.

         The number of shares outstanding of each of the registrant's classes
of common stock as of the latest practicable date is:

         Common Stock outstanding at July 13, 2001 was 23,269,976 shares.
Documents Incorporated by Reference

         The Registrant's Proxy Statement for the 2001 Annual Meeting of
Shareholders is incorporated by reference in Part III.

                                        Total number of pages of this report: 33
                                        Index to Exhibits located on page: 32

<Page>


ITEM 1.  BUSINESS

         WHEN USED IN THIS REPORT, THE WORDS "ESTIMATE", "PROJECT", "INTEND",
"EXPECT", "BELIEVE" AND SIMILAR EXPRESSIONS ARE USED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY. SUCH
RISKS INCLUDE, WITHOUT LIMITATION, SUBSTANTIAL COMPETITION, FUTURE CAPITAL
NEEDS, UNCERTAINTY OF ADDITIONAL FINANCING, POTENTIAL FUTURE DILUTION,
DEPENDENCE ON KEY-PERSONNEL AND UNCERTAINTY AS TO FULL SCALE
COMMERCIALIZATION OF THE COMPANY'S PRODUCTS. READERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS
OF THE DATE HEREOF. THERE CAN BE NO ASSURANCES THAT THE COMPANY'S
FORWARD-LOOKING STATEMENTS WILL PROVE TO BE TRUE. THE COMPANY UNDERTAKES NO
OBLIGATION TO PUBLICLY RELEASE UPDATES OR REVISIONS TO THESE STATEMENTS.

CORE COMPETENCE

         The Company designs, manufactures and services state-of-the-art
dispensing systems that utilize standard micro-processing technology and
proprietary operating software. The current product offerings are
specifically designed to allow semi-skilled operators to efficiently dispense
liquids in varied environments. The Company's technology is protected by 24
patents and 1 patent pending. This technology is designed to provide users
with a superior ability to effectively dispense and control materials and
minimize labor and waste.

         The Company's patent protected technology is complemented by a
talented, highly responsive workforce. These core assets allow the Company to
design, assemble, install and service dispensing equipment that intends to
provide the Company with uniquely beneficial capabilities to meet the needs
of its dispensing customers.

MARKET FOCUS

         The Company has set a strategy to focus all of its existing
resources on its paint dispensing and juice dispensing product lines. These
product lines represent the Company's primary product development efforts.
Revenues and profits from these lines may be reinvested to develop additional
applications for dispensing systems. The Company will consider new
development only under strict financial guidelines including advance
customers' commitments necessary to defray development expenses.

PRODUCTS

PAINT AND COATINGS

         The Company produces Royal Match(R) equipment, a pneumatic colorant
dispenser serving the architectural paint manufacturing and retailing
industries. Royal Match(R) is designed to accommodate the ever changing, more
environmentally friendly colorant formulations resulting from the mandatory
elimination of V.O.C. (Volatile Organic Compounds). Check Mate(R) operating
software, used for Royal Match(R), is user friendly with advanced
functionality and efficient keystroke and screen commands.


                                       2

<Page>

ITEM 1. BUSINESS (CONT.)

PRODUCTS PAINT AND COATINGS (CONT.)

         Royal Match(R) is state-of-the-art technology designed to provide many
years of inexpensive operating use with the following:

<Table>
<Caption>

FEATURES                                 BENEFITS
--------                                 --------
<S>                                     <C>
Pneumatic flow control.                  Eliminates costly mechanical pumps and
                                         manual calibration, reducing operation
                                         costs.


Modular Configuration:  Up to 18         System matches customers needs to
colorant reservoirs in 5, 7, or 9        equipment configuration. Automatic
quart capacities.                        notification of product shortages.
Includes electronic inventory fill       Prevents dispensing if sufficient
level monitoring.                        colorant amounts are unavailable.


Automatic, simultaneous dispense.        Eight ingredients dispensed at a time
                                         for efficient store operation. Dual
                                         colorant dispensing provides for
                                         quicker dispensing of high volume
                                         colorants.

Nozzle protection:  Eliminates manual
purging:

  1.)  Clear flush after each dispense.  --Self cleaning--carries colorant to
                                           paint can and prevents drying and
                                           clogging.
  2.)  Pneumatic nozzle cover.           --Keeps tips moist--automatically slips
                                           on and off for dispense.
  3.)  Colorant line strainer system.    --Prevents colorant debris from
                                           clogging valves.


Electronic self-calibration              System automatically adjusts during
                                         periodic recycle for changes in
                                         colorant rheology.

Proprietary, high tech easy to use
Check Mate(R) operating software.        --Operates from a single screen.

                                         --Simple operation 1) color 2) product
                                           3) dispense. Goal is to provide
                                           software for operation by untrained
                                           users.

                                         --Save custom formulas.

                                         --Adjust standard formulas-customize by
                                           percentage increments up or down.

                                         --Modification of data base at
                                           location-enter and delete paint
                                           manufacturing formulas on site.

                                         --Internet ready, allowing for
                                           electronic ordering, diagnosis and
                                           troubleshooting by modem.

</Table>

         The Company has designed Royal Match(R) with its Check Mate(R)
operating software to displace existing, mechanical displacement dispensing
systems. The Company has adapted the applicability of Royal Match(R) to range
from

                                       3

<Page>

the highest volume paint seller to the small operator who wants to modernize.
The Company has focused its marketing efforts in the U.S. and Western Europe.

         ITEM 1.  BUSINESS (CONT.)

         The Company has great confidence in its paint dispensing products
and service organization. The Company is currently in discussions with
potential customers that comprise a substantial portion of the domestic
market, although the Company has no assurance of sales. Units are installed
and running or being specially prepared for further testing at I.C.I.,
Wal-Mart, Akzo, Nobel and others.

         During the last year, the Company has enjoyed a continuing
relationship with The Home Depot as evidenced by renewed service agreements.
During the fiscal years ended April 30, 2001, and April 30, 2000, paint
product and service sales to The Home Depot represented 36%, and 25% of total
Company revenues, respectively.

         A 30-day, free trial program of the Royal Match(R) colorant system
has resulted in the sale of 56 units to thirteen smaller, independent paint
companies. To date, most of the customers who have evaluated the products
have purchased the equipment.

         The Company assembles its own equipment from standard industry parts
and custom assemblies made to the Company's specifications. The Company does
not foresee any shortage of materials needed to meet the demand of its
customers.

BEVERAGE

         The Company currently assembles and markets two types of beverage
dispensers: juice and liquor.

         Virtual Squeeze(R) is designed to be a complete fruit-juice program
being marketed primarily to the health care industry by major foodservice
companies, independent beverage companies and directly by the Company. The
program includes state-of-the-art, proprietary dispensing equipment,
shelf-stable bag-in-the box fruit-juice concentrates and service.

         Direct marketing efforts during the year in Northeast Ohio have
resulted in the utilization of approved and ongoing distribution by Alliant
Foodservice, Avalon Distributing, SYSCO Foods, and Tasty Pure Foods. The
direct placement of units in this market and the support of the committed
distributors has generated interest in the marketplace. The unique features
of the program and attention to customer service have provided us a loyal
customer base and a blueprint for new market introduction.

         The Company's electronically brix-controlled, high-volume, automatic
system is capable of consecutively pouring 400, four ounce drinks chilled to
under 40(Degree). This dispenser adds 30 inches of kitchen counter space.
Built-in "dishwasher-like" mandatory, periodic internal sanitization
functionality ensures safety and freshness while extending the reliability
and useful life of the dispenser. The button-actuated, patented nozzle inside
the convenient, moveable wand dispenses water and concentrate simultaneously
and repeatedly for up to six flavors. The space saving unit is totally
self-contained--electronics, power supply, compressor, chiller, and bins for
up to six bags of concentrate--all fitting within the small footprint.
Automatically blending two juices at a time provides an expanded universe of
flavors.

         Other important aspects of the Virtual Squeeze(R) program are:

<Table>
<Caption>

FEATURES                                 BENEFITS
--------                                 --------
<S>                                      <C>

Large capacity chilling for drinks    Designed to meet requirements of State
dispensed well below 40(Degree).      and Federal regulatory agencies regarding
                                      serving temperature and cleanliness.
                                      Allows for pour and serve operations,
                                      eliminating the need to chill prior to
                                      serving.

Semi automatic mandatory              Management and State inspectors are
sanitization set every 28 days.       assured of the safe dispensing of juice
                                      and hydration products.

Shelf stable 200 oz. bag-in-box       Bags are easy to handle, juice is high
juice stored at room                  quality and temperature with
capability to blend any two flavors.  easily dispensed, minimizing labor and
                                      product waste. Eliminates the need for
                                      refrigerated or frozen storage.

Self contained unit includes bag      Designed for large volume juice
storage, increased counter space,     consumption. Kitchen space is maximized
with movable or stationary wand for   while adding productivity and efficiency
hands freepouring, portion control    to serving duties.
and auto-dispense.

</Table>

                                     4

<Page>

ITEM 1.  BUSINESS (CONT.)

         PROGRAM SUMMARY:

--Customer receives state-of-art dispenser, installation, and maintenance at no
   charge for use with Virtual Squeeze juice.

--Help desk support for all customers

--Virtual Squeeze(R) juice delivered to customers by foodservice, independents
  and the Company.

--Customer enjoys high tech package and competitive prices for juice and
  hydration products.

         The Company's immediate goal is the penetration of skilled nursing
facilities within the institutional juice market. In addition, an opportunity
also exists for hospitals, government facilities, prisons, military
installations and schools. The Virtual Squeeze Program has generated total
revenues of $382,000, $421,000 and $344,000 in FY 2001, FY 2000 and FY 1999,
respectively.

         The Company's UltraBar(R) liquor dispensing system pours
multi-ingredient drinks quickly and consistently. Advantages of the system
include: speed, accuracy, cash and inventory accountability, and control of
theft, spillage, over-pours and giveaways.

         Sales of UltraBar(R) products accounted for 5.3%, 8.7% and 3.2%, of
total Company revenues in FY 2001, FY 2000, and FY 1999, respectively.

         The Company assembles its own equipment from standard industry parts
and custom assemblies made to the Company's specifications. The Company does
not foresee any shortage of materials needed to meet the demand of its
customers.

SERVICE AND TECHNICAL SUPPORT

         The Company has a geographically dispersed service organization that
has the ability to support the equipment sales of the Company in the United
States. The Company is continuing to analyze the need for additional service
technicians as the equipment base grows. We believe we have a solid
reputation regarding quick and thorough service response, which is a
contributing factor to the sales effort. The Company is dedicated to
providing the best ongoing support and service in its respective markets.

         Service sales accounted for 85.1%, 66.8% and 52.2% of total Company
revenues in FY 2001, FY 2000 and FY 1999, respectively.

SALES BACKLOG

         As of April 30, 2001 the sales order backlog (un-shipped product
orders) was $90,000. As of April 30, 2000 the sales order backlog was
$260,000.

INTERNATIONAL SALES

         Revenues from international sales were 2% of sales for FY 2001, and
6% for FY 2000. Primary international sales efforts center on liquor
equipment to Canada and Royal Match(R) colorant dispensers to Western Europe.

         Royal Match(R) is being introduced to large paint manufacturers in
Europe. With the proliferation of V.O.C. free colorant and the resulting
extra wearing of conventional mechanical pumps, the appeal of Royal Match(R)
should increase. The sales process includes introduction of the Company, the
technology and the dispenser while building a confident relationship with the
customer. Formal testing is in progress.

                                        5

<Page>

ITEM 1. BUSINESS (CONT.)

COMPETITION

         The markets for the Company's beverage and industrial products are
extremely competitive. The Company competes in both markets with
organizations that have greater financial resources, stronger name
recognition, larger sales, marketing and product development departments and
greater economies of a scale that cause their products to be more competitive
in those regards. Such intense competition may have a material adverse effect
on the Company's ability to achieve full scale commercialization of its
products. Although the Company believes that the appeal of its
state-of-the-art technology can countervail these competitive disadvantages,
no assurance can be made that the Company will be able to compete
successfully against current and future competitors.

         The Company is one of four manufacturers that offer automatic,
computer controlled tint dispensers in the United States. Of the other three
manufacturers, one has an established presence in the U.S. market, the other
two being foreign companies trying to enter the domestic paint industry. The
technology of all of the competition is similar and is based on mechanical
displacement pumps. The Company believes that the design and features of its
dispensing equipment, in combination with the ability to provide nationwide,
on-site technical support gives the Company a distinct competitive advantage
in our respective markets.

         The institutional juice market in the United States is estimated at
$3 billion and is highly competitive. Competition in this market is
fragmented and diverse, ranging from small independent juice manufacturers,
distributors, and brokers to major economic concerns such as Sunkist(R) and
Minute Maid(R). The Company will compete in this market place with shelf
stable juice products that will be dispensed with a unit specifically
designed to meet the needs of the health care industry. The Company believes
that Virtual Squeeze(R) is the only dispenser specifically designed for bag
in the box juice products.

HUMAN RESOURCES

         As of July 17, 2001, the Company had 26 full-time employees. This
compares to 25 full-time employees at the same time last year. The workforce
has stabilized since the current focus on the commercialization of the
existing products was implemented. The employees are not represented by a
union. Temporary workers are utilized in the production process as needed. A
highly qualified labor pool exists in the immediate geographic area should
the Company need to expand its workforce.

PATENTS

         The Company has consistently sought patent protection for its
proprietary technology and products. To date, 24 patents are outstanding and
an additional one is pending. Patent coverage of our dispensing technology is
broad. Research and development expenditures for the fiscal years 2001, 2000,
and 1999 were $114,000, $127,000 and $124,000, respectively.

ENTITIES & FISCAL YEAR

         The Company is comprised of three legal entities: the parent (public
entity)--ABC Dispensing Technologies, Inc., (a Florida corporation) (OTC
BB:ABCC), the operating subsidiary--ABC Dispensing Technologies, Inc. (an
Ohio corporation), and a second subsidiary that holds the patents--ABC Tech
Corp. (an Ohio corporation). ABC was formed in 1972.

         For the year ended in April 2000, the Company changed its fiscal
year end to April 30 from a 52-53 week period ended on the last Saturday in
April. This change, which was made to more closely align closing periods with
its major customers and vendors, resulted in 370 calendar days included in
the financial statements for the period ended April 30, 2000. The estimated
impact of this change would not be material to the Company's reported results
of operations or financial position.

ITEM 2. PROPERTIES

         The Company owns a single floor building of approximately 18,400
square feet of office, laboratory, and production space located in Akron,
Ohio. The property is encumbered by a mortgage in favor of an institutional
lender. The principal balance of the mortgage was $213,000 as of April 30,
2001.

                                       6

<Page>

ITEM 3.  LEGAL PROCEEDINGS

         The Company is subject to routine litigation incidental to its
business. There are no known open litigation issues at this time.

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

         No matters were submitted to a vote of security holders during the
fourth quarter of FY 2001.

                                     PART II

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

A.       PRICE RANGE OF COMMON STOCK

The Company's common stock currently trades on the Bulletin Board of the Over
the Counter Market under the symbol ABCC. The table below shows the range of
bid prices of the common stock for the last two years as reported by Over the
Counter (OTC) Market and NASDAQ reflecting inter-dealer prices, without
retail mark-up or markdowns, or commissions (and may not necessarily
represent actual transactions).

<Table>
<Caption>

COMMON STOCK (ABCC):
YEAR ENDED APRIL 30, 2001 PRICES:                         High Bid      Low Bid
-----------------------------------------------------     --------      -------
<S>                                                      <C>           <C>
02/01/01 - 04/30/01 (Fourth Quarter)                       $ 1/8        $ 3/64

11/01/00 - 01/31/01 (Third Quarter)                         6/64          1/64

08/01/00 - 10/31/00 (Second Quarter)                        3/16          2/32

05/01/00 - 07/31/00 (First Quarter)                         5/16         11/64

<Caption>

COMMON STOCK (ABCC):
YEAR ENDED APRIL 30, 2000 PRICES:                         High Bid      Low Bid
-----------------------------------------------------     --------      -------
<S>                                                     <C>            <C>
02/01/00 - 04/30/00(Fourth Quarter)                      $ 17/32        $ 1/8

11/01/99 - 01/31/00 (Third Quarter)                        15/64         5/64

08/26/99 - 10/31/99 (Second Quarter)                       19/64          1/8

04/25/99 - 07/31/99 (First Quarter)                        27/64         5/32

</Table>

B.       APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS

<Table>
<Caption>

                                              Approximate Number of
                                                 Record Holders
             Title of Class                    as of July 13, 2000
             --------------                   ---------------------
            <S>                              <C>
             Common Stock, $.01 par value        Approximately 1,100

</Table>

C.       DIVIDENDS

         The Company has never paid a dividend on common stock and has no
current plans to do so. Future policy for common stock dividends will be
determined by the Board of Directors based on the Company's earnings,
financial condition, capital requirements, and other existing conditions.

D.       EQUITY SALES

         The Company issues Series A Preferred Stock, a 9% convertible
cumulative redeemable instrument that is convertible into Common Stock at a
price of $1.00 per share. At conversion, each Preferred Share will entitle
the holder to warrants to purchase the same number of shares of Common Stock
at a price of $1.25 per share. For the fiscal year ended April 30, 2001, and
April 30, 2000, the Company issued no shares.

                                       7

<Page>

D.       EQUITY SALES (CONT.)

         The Company issues Series B Preferred Stock, a 9% convertible
cumulative redeemable instrument that is convertible into Common Stock at a
price of $0.75 per share and is identical to Series A Preferred Stock in all
other aspects. The Company issued no shares for the fiscal years ended April
30, 2001 and 2000.

         The Company issues Series C Preferred Stock, a 9% convertible
cumulative redeemable instrument with a conversion price of $0.25 per share.
There are no warrants attached to this issuance. The Company issued no shares
for the fiscal years ended April 30, 2001 and 2000.

ITEM 6.  SELECTED FINANCIAL DATA

<Table>
<Caption>

FOR THE FISCAL                             APRIL 30,         APRIL 30,       APRIL 24,          APRIL 25,        APRIL 26,
YEARS ENDED:                                 2001              2000             1999              1998              1997
----------------------------------------------------------------------------------------------------------------------------
<S>                                     <C>               <C>              <C>               <C>              <C>
REVENUES (a)                             $  1,671,000      $  2,184,000     $  1,710,000      $  5,299,000     $  3,073,000

NET LOSS                                 $ (1,796,000)     $ (1,080,000)    $ (2,204,000)     $ (2,028,000)    $ (2,968,000)

WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING                      22,700,396        19,084,100       17,774,000        17,230,000       17,074,000

NET LOSS PER SHARE -
  BASIC AND DILUTED                      $      (0.10)     $      (0.08)    $      (0.15)     $      (0.13)    $      (0.18)

TOTAL ASSETS                             $  2,031,000      $  2,572,000     $  2,622,000      $  3,294,000     $  3,350,000

LONG-TERM OBLIGATIONS                    $  3,325,000      $  2,286,000     $    233,000      $    257,000     $    283,000

STOCKHOLDERS' EQUITY
(Deficit)                                $ (2,790,000)     $ (1,013,000)    $   (139,000)     $  1,003,000     $  1,635,000

RESEARCH & DEVELOPMENT (a)               $    114,000      $    127,000     $    124,000      $    691,000     $    629,000

</Table>

(a) Research & Development costs for fiscal year 1997 include costs subject
to reimbursement under various agreements. The amounts earned under these
agreements are included in revenues for the respective years.

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

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000

         The net loss for FY 2001 was $1,796,000 representing an increased
loss of $716,000 or 66.3% from the net loss of $1,080,000 for FY 2000. FY
2001 increased loss is primarily due to a 65.6% decrease in equipment sales
and a significant increase in interest expense.

<Table>
<Caption>

REVENUES                                FY 2001        FY 2000
                                        -------        -------
<S>                                <C>            <C>
Equipment Sales - Net               $   249,000    $   724,000
Service Revenues                      1,422,000      1,460,000
                                    -----------    -----------
Total                               $ 1,671,000    $ 2,184,000

</Table>



                                       8

<Page>


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

         REVENUES (CONT.)

         Equipment sales for FY 2001 decreased due to not having any large
single orders for the year. Large orders for Royal Match paint equipment and
Beverage equipment for the U.S. Government occurred during FY 2000.

         Juice sales in FY 2001 were $382,000 a decrease of $39,000 or 9.3%
from FY 2000. This reduction is due to fewer units in the field and vendors
buying habits.

         Service revenues decreased $38,000 for FY 2001 from FY 2000 or 2.6%.
This decrease was due to fewer service agreements for the paint machines of
$45,000 and an increase of parts sales for beverage and paint machines of
$45,000 and the decrease in juice sales of $39,000.

<Table>
<Caption>

GROSS MARGINS                               FY 2001      FY 2000
                                            -------      -------
<S>                                        <C>          <C>
                  Equipment                 (33.7)%        54.6%
                  Service                    23.2 %        33.7%
                                             ----           ----
                  Total                      14.7 %        40.6%

</Table>

         For FY 2001, gross margins as a percentage of sales on equipment
decreased by 88.3 percentage points. The decrease was due to lower sales
volume resulting in a lesser ability to absorb fixed expenses and an increase
in obsolescence expense.

         For FY 2001, gross margins as a percentage of service revenues
decreased 10.5 percentage points. The decrease was due to a lower volume in
service contract sales and smaller juice sales.

GENERAL AND ADMINISTRATIVE

         General and Administrative expenses increased to $61,000 or a 4.5
percentage points. The increase was due to an increase in bad debt expense of
$127,000, partially offset by an overall decrease in general and
administrative expenses.

SELLING AND MARKETING EXPENSES

         Selling and marketing expenses increased $26,000, or 8.9 percentage
points. This increase was due to increasing our marketing campaign to promote
our juice machines and paint machines.

RESEARCH AND DEVELOPMENT EXPENSES

         Research and development expenses decreased $13,000 or 10.2
percentage points. The reduction was due to expense control and fewer
development projects.

INTEREST EXPENSE

         Interest expense increased $114,000 or 60.0%, to $304,000 for FY
2001. This was due to notes issued to finance operations.

OTHER INCOME

         Other income, net increased $128,000 due to adjustments from prior
year estimates and reducing sales tax accruals that had been on the records
for over two years based on resolution of these taxes.

                                       9

<Page>

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

FISCAL 2000 COMPARED TO FISCAL 1999

         The net loss for FY 2000 was $1,080,000 representing a decreased
loss of $1,124,000, or 51.0% from the net loss of $2,204,000 for FY 1999. The
net loss for the fourth quarter of FY 2000 decreased $244,000, or 52.8%, to
$218,000 from the $462,000 net loss for the fourth quarter of the prior year.
The full year decreased loss is primarily due to a 27.7 percent increase in
sales and significant cost reductions enacted during the year. The fourth
quarter (FY 2000 vs FY 1999) loss improvement is primarily due to an increase
in sales of $353,000 or 90.1 percent and cost reduction initiatives taken
during the year.

<Table>
<Caption>

REVENUES                                  FY 2000          FY 1999
                                          -------          -------
<S>                                  <C>              <C>
         Equipment Sales-Net          $   724,000      $   818,000
         Service Revenues               1,460,000          892,000
                                      -----------      -----------
         Total                        $ 2,184,000      $ 1,710,000

</Table>

         Equipment sales for FY 2000 decreased $94,000, or 11.5% from FY
1999. The decrease is primarily due to the completion of a significant order
of the Royal Match(R) product line during the first half of FY 1999. Beverage
equipment sales for FY 2000 increased $6,000, or 4.3% from FY 1999. This
slight increase is due to additional business generated in FY 2000 from the
U.S. Government. Equipment sales for the fourth quarter (FY 2000 vs FY 1999)
increased $277,000, or 182%. The increase is due to a significant order being
completed in the fourth quarter of FY 2000.

         Juice sales in FY 2000 were $421,000, a monthly average of $35,110.
Juice sales per month, for the four months of FY 1999 after the Joint Venture
was terminated, averaged $23,425 Juice sales prior to the termination of the
joint venture were not consolidated, because of the nature of the joint
venture agreement. Prior to January 1, 1999, the financial results for the
joint venture are included as Equity in Loss of Joint Venture.

         Service revenues for FY 2000 increased $568,000, or 63.7%, over FY
1999. The increase is due to a $175,000 increase in service agreement revenue
generated from paint units and increased juice sales of $328,000. Service
revenues for the fourth quarter for FY 2000 increased by $76,000, or 25.9%,
over the FY 1999. This was due primarily to an increase of $14,000 in service
agreement revenue on Royal Match(R) paint colorant dispensers, increased
juice sales of $14,000, and increased installation revenue of $22,000.

<Table>
<Caption>

GROSS MARGINS                              FY 2000      FY 1999
                                           -------      -------
<S>                                       <C>          <C>
                  Equipment                 54.6%        31.4 %
                  Service                   33.7%        (9.2)%
                                            ----         ----
                  Total                     40.6%        10.2 %

</Table>

         For FY 2000, gross margins as a percentage of sales on equipment
increased by 23.2 percentage points. This improvement is a result of price
improvement exceeding the higher costs associated with lower production
levels.

         For FY 2000, gross margins as a percentage of service revenues
increased 42.9 percentage points. This is a result of higher juice revenues
and margins, and a higher utilization of service personnel.

GENERAL AND ADMINISTRATIVE

         General and Administrative expenses decreased $264,000, or 16.3%, to
$1,359,000. This has resulted from expense reduction programs, primarily
payroll related, that were initiated during FY 1999 and FY 2000.


                                      10

<Page>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT.)

FISCAL 2000 COMPARED TO FISCAL 1999 (CONT.)

SELLING AND MARKETING EXPENSES

         Selling and marketing expenses decreased $81,000, or 21.7%, to
$292,000. This decrease is due to lower payroll and benefit costs of $29,000
and lower allocation of administrative resources due to a reorganization of
the marketing function.

RESEARCH AND DEVELOPMENT EXPENSES

         For the fiscal year 2000, Research and Development expenses
increased $3,000, or 2.4%, to $127,000. This increase is attributable to
development efforts associated with the Check Mate(R) software systems
required with the Royal Match(R) product line.

INTEREST EXPENSE

         Interest expense increased $1,000 or 0.5%, to $190,000 for FY 2000.
This was due to notes issued to finance operations.

OTHER INCOME

         For fiscal year 2000, other income decreased $114,000 to $1,000
compared to $115,000 for the fiscal year 1999. This was due to the
liquidation of the joint venture assets being included in FY 1999 results and
amortization of the value of warrants issued in return for a five year
extension of short term notes payable.








                                      11

<Page>

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

LIQUIDITY AND CAPITAL RESOURCES

         The Company's cash balance increased to $204,000 as of April 30,
2001 from $163,000 at April 30, 2000. Operations for FY 2001 used cash of
$995,000 which resulted from a net loss of $1,796,000, plus depreciation and
amortization and non-cash charges of $160,000, and increases in net operating
liabilities of $641,000. Net cash provided by financing activities was
$1,038,000. The cash provided by financing activities is mainly attributable
to notes payable increases of $1,060,000. The Company currently has no
material commitments for capital expenditures.

         Consistent with prior years, the Company's primary source of
liquidity has been private placements of equity instruments and the private
issuance of short and long-term notes payable.

         In August of 1997, to raise additional capital, the Company began
issuing short term promissory notes through a private placement. The notes
are sold in multiples of $12,500, or fractions thereof, and accrue interest
at the rate of 10%, with principal and interest due at maturity. The initial
maturity date was June 30, 1998, however, the Company had the option, which
it exercised, to extend the maturity date to December 31, 1998. The Company
extended the maturity date through negotiations with Holders of the Notes and
their representatives until December 31, 1999, and again until December 31,
2000. In September, 1999, The Company renegotiated most of the short term
notes payable to five (5) year 10% APR Promissory Notes that come due on
August 1, 2004. These notes are collatoralized with the intellectual property
of The Company. The Company is hopeful, although there are no assurances that
it can satisfy the notes through either proceeds from future equity
offerings, additional extensions or other re-financing options.

         The Company hopes to satisfy its short-term (i.e., the next 12-month
period) capital requirements using the proceeds of offerings of its equity
securities and the issuance of additional notes. The Company is currently
attempting to raise at least $2,000,000 through an offering of its
convertible preferred stock. The exact terms of this offering have not been
finalized. Aside from potential improvements in operational cash flow, the
Company may attempt to satisfy its longer-term capital needs with proceeds
from future equity dept offerings, warrant exercise proceeds, and traditional
credit facilities. There can be no assurance that at any time a sufficient
market for the Company's equity offerings or debt financings will be
available upon commercially reasonable terms, if at all.

         The Company's long-term capital plan is critically dependent upon
the commercial success of its Products and, to the extent success is not
timely achieved, its ability to implement significant cost reduction
programs. Toward this end, Management has taken steps to increase revenue
through sales and marketing efforts that include the redeployment of research
and development resources of the Company to work closely with the Company's
existing and prospective customers in the paint and beverage industry. If it
becomes necessary to implement significant cost reduction programs, it is
likely that such programs will involve a significant curtailment of marketing
and research and development activities as well as payroll reductions which
would likely have an adverse affect on future operating results. There can be
no assurance that the Company will be successful in generating operating
profit and sufficient operational cash flow through the commercial success of
its products or any such cost reduction programs. If the Company is not
successful in this regard, Management will have to consider alternative uses
of its assets including the possible licensing or outright sale of one or
more of its proprietary technologies.

         The current liquidity position of the Company and the inability of
operations to generate positive cash flow raise doubt about the Company's
ability to continue as a going concern (see Note 3 to the Financial
Statements).


                                        12

<Page>

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

2001 AUDIT

         Grant Thornton, LLP has audited the consolidated balance sheet of
the Company as of April 30, 2001, and the related consolidated statement of
operations, cash flows and stockholders' equity for the year ended April 30,
2001. In their report of July 12, 2001, to the Board of Directors and to the
Company, Grant Thornton LLP stated that the financial statements have been
prepared assuming that the Company will continue as a going concern. However,
their report states that the "history of operating losses and limited capital
resources raise substantial doubt" about the Company's ability to continue as
a going concern (see Note 3 to the Consolidated Financial Statements).

ITEM 7A.  DISCLOSURES ABOUT MARKET RISK

         There are no material risk elements associated with foreign
currency, interest rates and commodity prices. The building mortgage is the
only variable interest rate contract and does not present a material risk to
the Company.










                                       13

<Page>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<Table>
<Caption>

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES                                PAGE NO
--------------------------------------------------------                                -------
<S>                                                                                    <C>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                                           15

FINANCIAL STATEMENTS:

   Consolidated Balance Sheets as of April 30, 2001 and April 30, 2000                       16

   Consolidated Statements of Operations for the Years ended April 30, 2001,
      and April 30, 2000, and April 24, 1999                                                 17

   Consolidated Statements of Cash Flows for the Years ended April 30, 2001,
      and April 30, 2000, and April 24, 1999                                                 18

   Consolidated Statements of Stockholders' Equity/(Deficit) for the Years ended
      April 30, 2001, and April 30, 2000, and April 24, 1999                                 19

   Notes to Consolidated Financial Statements                                             20-29

SUPPLEMENTARY DATA
Schedule II-Valuation and Qualifying Accounts                                                30

</Table>

         All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore
have been omitted.


                                       14

<Page>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



The Board of Directors and Stockholders
ABC DISPENSING TECHNOLOGIES, INC.

We have audited the accompanying consolidated balance sheets of ABC
Dispensing Technologies, Inc. and Subsidiaries as of April 30, 2001 and April
30, 2000, and the related consolidated statements of operations, cash flows
and stockholders' equity (deficit) for each of the three years in the period
ended April 30, 2001. Our audits also included the financial statement
schedule listed in the index at Item 8. 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 of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of ABC Dispensing Technologies, Inc. and Subsidiaries at April 30, 2001 and
April 30, 2000, and the consolidated results of their operations and their
cash flows for each of the three years in the period ended April 30, 2001, in
conformity with accounting principles generally accepted in the United States
of America. 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.

The accompanying consolidated financial statements and schedule have been
prepared assuming that the Company will continue as a going concern. As more
fully described in Note 3, the Company's history of operating losses and
limited capital resources raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters
are also described in Note 3. The consolidated financial statements and
schedule do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts and
classification of liabilities that might result from the outcome of this
uncertainty.

                                         GRANT THORNTON LLP


Cleveland, Ohio
July 12, 2001


                                        15

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>

ASSETS                                                                                APRIL 30, 2001     APRIL 30, 2000
------------------------------------------------------------------------------------------------------------------------
<S>                                                                                  <C>                <C>
Current Assets
         Cash and cash equivalents                                                    $   204,000        $   163,000
         Accounts receivable, less allowance for doubtful accounts
           of $159,000 in 2001 and $33,000 in 2000                                        138,000            306,000
         Inventories (Note 4)                                                           1,014,000          1,281,000
         Prepaid Expenses                                                                  68,000            100,000
                                                                                      -----------        -----------
Total current assets                                                                    1,424,000          1,850,000

Property, plant and equipment  (Notes 5 and 11)                                           549,000            662,000

Other assets:
         Intangible assets, less accumulated amortization of
          $501,000 in 2001 and  $495,000 in 2000                                           11,000             17,000
         Other                                                                             47,000             43,000
                                                                                      -----------        -----------
                                                                                           58,000             60,000
                                                                                      -----------        -----------
TOTAL ASSETS                                                                          $ 2,031,000        $ 2,572,000
------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current Liabilities
         Current portion of long-term debt                                            $    19,000        $    19,000
         Short-term notes payable (Note 5)                                                175,000            175,000
         Accounts payable                                                                 302,000            409,000
         Accrued liabilities:
           Accrued interest                                                               511,000            226,000
           Employee compensation and benefits                                              82,000             82,000
           Warranty reserve                                                                 5,000             18,000
           Other                                                                          206,000            235,000
         Deferred income                                                                  329,000            302,000
                                                                                      -----------        -----------
                  Total current liabilities                                             1,629,000          1,466,000
                                                                                      -----------        -----------

Long-term debt (Note 5)                                                                 3,192,000          2,119,000

Stockholders' equity/(deficit) (Notes 7, 9):

         Preferred Stock - Series A, 9% cumulative; authorized 840 shares; 399
          shares issued and outstanding
         Series B, 9% cumulative authorized 160 shares;
           24 shares issued and outstanding
         Series C, 9% cumulative authorized 200 shares;
          37 shares issued and outstanding;
          Total Preferred Stock                                                         5,608,000          5,608,000
         Common Stock, $.01 par value; authorized 50,000,000
           shares; 23,269,976 and 21,888,336 shares issued and
           outstanding at April 30, 2001 and 2000, respectively                           233,000            219,000
         Additional paid-in capital                                                    20,911,000         20,654,000
         Accumulated deficit                                                          (29,540,000)       (27,492,000)
                                                                                      -----------        -----------
                                                                                       (2,788,000)        (1,011,000)
         Less Treasury Stock at Cost                                                       (2,000)            (2,000)
            Total Stockholders' Equity/(Deficit)                                       (2,790,000)        (1,013,000)
                                                                                      -----------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)                                  $ 2,031,000        $ 2,572,000
------------------------------------------------------------------------------------------------------------------------

</Table>

                             See accompanying notes.

                                       16

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>

                                                                            YEARS ENDED
                                                          ------------------------------------------------
                                                            APRIL 30,         APRIL 30,          APRIL 24,
                                                              2001              2000               1999
                                                          ------------     -------------       -----------
<S>                                                      <C>              <C>                 <C>
Revenues:
         Equipment Sales                                  $   249,000        $   724,000        $   818,000
         Service revenues                                   1,422,000          1,460,000            892,000
                                                          -----------        -----------        -----------
                                                            1,671,000          2,184,000          1,710,000

Cost and expenses:
         Cost of equipment sold                               338,000            329,000            703,000
         Service expenses                                   1,102,000            968,000            975,000
         General and administrative                         1,420,000          1,359,000          1,623,000
         Selling and marketing                                318,000            292,000            373,000
         Research and development                             114,000            127,000            124,000
                                                          -----------        -----------        -----------
                                                            3,292,000          3,075,000          3,798,000
                                                          -----------        -----------        -----------

Loss from operations                                       (1,621,000)          (891,000)        (2,088,000)

Other income (expense)
         Interest expense                                    (304,000)          (190,000)          (189,000)
         Equity in loss of joint venture                            -                  -            (42,000)
         Other, net                                           129,000              1,000            115,000
                                                          -----------        -----------        -----------
                                                             (175,000)          (189,000)          (116,000)
                                                          -----------        -----------        -----------

NET LOSS                                                  $(1,796,000)       $(1,080,000)       $(2,204,000)
                                                          -----------        -----------        -----------
-------------------------------------------------------------------------------------------------------------
NET LOSS PER SHARE - BASIC AND DILUTED                       $ ( 0.10)         $ ( 0.08)           $ ( 0.15)
-------------------------------------------------------------------------------------------------------------
</Table>
                             See accompanying notes


                                       17

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>

                                                                                           YEAR ENDED
                                                                    --------------------------------------------------------
                                                                       APRIL 30,             APRIL 30,           APRIL 24,
                                                                         2001                 2000                 1999
                                                                    -------------         -------------        -------------
<S>                                                                <C>                   <C>                  <C>
OPERATING ACTIVITIES:

Net loss                                                            $ (1,796,000)         $ (1,080,000)        $ (2,204,000)

      Adjustments to reconcile net loss to net cash
         used in operating activities:
         Deprecation and amortization                                    141,000               118,000               175,000
         Gain on disposal of asset                                             -                     -                (1,000)
         Gain on termination of Joint Venture                                  -                     -               (79,000)
         Loss on equity investment in Joint Venture                            -                     -                42,000
         Warrants issued for services                                     19,000                31,000                     -

      Changes in operating assets and liabilities:
         Receivables                                                     168,000              (104,000)             513,000
         Inventories                                                     282,000               216,000             (159,000)
         Other assets                                                     28,000               (49,000)             (21,000)
         Accounts payable                                               (107,000)             (477,000)             236,000
         Accrued liabilities                                             243,000                32,000              (58,000)
         Deferred income                                                  27,000               (62,000)             103,000
                                                                    ------------          ------------         ------------
      Total adjustments                                                  801,000              (295,000)             751,000
                                                                    ------------          ------------         ------------
Net cash used in operating activities                                   (995,000)           (1,375,000)          (1,453,000)

INVESTING ACTIVITIES
      Purchases of property, plant, and equipment                         (2,000)               (3,000)              (3,000)
      Proceeds from sale of equipment                                          -                     -                4,000
                                                                    ------------          ------------         ------------

Net cash used in investing activities                                     (2,000)               (3,000)               1,000

FINANCING ACTIVITIES:
      (Payments) /Proceeds from Line of Credit - Net                           -                     -             (201,000)
      Proceeds from private placement of
        Stock - Net                                                            -                     -              982,000
      Proceeds from private placement of                                       -                     -                    -
        notes payable                                                  1,060,000             1,500,000              390,000
      Repayment of long term debt                                        (22,000)              (24,000)             (35,000)
      Proceeds from collection of stockholders receivable                      -                     -               25,000
      Proceeds from stock issued for exercise of stock
        options and warrants                                                   -                     -                5,000
                                                                    ------------          ------------         ------------
Net cash provided by financing activities                              1,038,000             1,476,000            1,166,000
                                                                    ------------          ------------         ------------
Net increase/(decrease) in cash and cash equivalents                      41,000                98,000             (286,000)
Cash and cash equivalents at beginning of year                           163,000                65,000              351,000
                                                                    ------------          ------------         ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                            $    204,000          $    163,000         $     65,000
------------------------------------------------------------------------------------------------------------------------------
</Table>

                             See accompanying notes

                                       18

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY/(DEFICIT)

          YEARS ENDED APRIL 30, 2001, APRIL 30, 2000, AND APRIL 24, 1999

<Table>
<Caption>

                                                 Common
                                    Number of     Stock                  Additional                          Notes
                                    Shares of    $.01Par     Preferred     Paid-in        Accumulated     Receivable-    Treasury
                                  Common Stock    Value        Stock       Capital          Deficit      Stockholders     Stock
----------------------------------------------------------------------------------------------------------------------------------
<S>                              <C>            <C>        <C>          <C>            <C>              <C>             <C>
BALANCE AT APRIL 25, 1998          17,591,498    $176,000   $4,675,000   $19,461,000    $(23,264,000)     $(45,000)         $0
----------------------------------------------------------------------------------------------------------------------------------
  Preferred Stock private
    Placement (Note 9)                                         983,000

  Commissions on Preferred Stock                                              (1,000)

  Preferred Stock Dividend
    (Note 9) -                        274,985       3,000                    203,000        (206,000)
  Warrants Outstanding
     Original Issue Discount
     (Note 5)                                                                 50,000

  Exercise of Stock Warrants           20,000                                  5,000

  Collection on notes receivable
       Stockholders                                                                                         25,000

  Net loss                                                                                (2,204,000)

Preferred Stock Conversion             50,000                  (50,000)       50,000

BALANCE AT APRIL 24, 1999          17,936,483    $179,000   $5,608,000    $19,768,000   $(25,674,000)     $(20,000)         $0
----------------------------------------------------------------------------------------------------------------------------------
     Warrants issued for services
       and debt                                                              206,000

     Preferred Stock Dividend
       (Note 9)                     3,951,853      40,000                    698,000        (738,000)
     Acquire Treasury Stock
       upon cancellation of
       stockholders
       notes receivable                                                      (18,000)                       20,000        (2,000)
     Net loss                                                                             (1,080,000)

BALANCE AT APRIL 30, 2000          21,888,336    $219,000   $5,608,000   $20,654,000    $(27,492,000)           $0       $(2,000)
----------------------------------------------------------------------------------------------------------------------------------

     Warrants Issued for Services                                             19,000

     Preferred Stock Dividend
       (Note 9)                     1,381,640      14,000                    238,000        (252,000)
     Net loss                                                                             (1,796,000)            0             0

BALANCE AT APRIL 30, 2001          23,269,976    $233,000   $5,608,000   $20,911,000   $( 29,540,000)           $0       $(2,000)
----------------------------------------------------------------------------------------------------------------------------------

</Table>

                             See accompanying notes

                                      19

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.       BUSINESS DESCRIPTION

ABC Dispensing Technologies, Inc. (the "Company"), a Florida Corporation,
designs proprietary dispensing systems to dispense and blend liquids, powders
and other ingredients to a uniform, specification with a high degree of
accuracy. The Company provides training, installation and product service and
also custom designs and assembles its own proprietary dispensing equipment to
meet the needs of its customers which are located primarily in the United
States. The Company is currently focusing its marketing efforts on the
Beverage and Paint Industries.

2.       SIGNIFICANT ACCOUNTING POLICIES

         YEAR END - In fiscal year 2000, to more closely align closing
periods with its major customers and vendors, the Company changed its fiscal
year end from a 52-53 week period ending on the Saturday closest to April 30
to an April 30th year end. This change has increased the number of days
included in the financial statements from 364 calendar days in the 52 week
period ended April 24, 1999 to 370 calendar days in the period ended April
30, 2000.

         References to the years 2001, 2000 and 1999 refer to fiscal years
ended April 30, 2001, April 30, 2000 and April 24, 1999, respectively

         CONSOLIDATION - The consolidated financial statements include the
accounts of the Company and its subsidiaries, ABC Dispensing Technologies,
Inc. (an Ohio Corporation) and ABC Tech Corp. Significant inter-company
transactions and balances have been eliminated in consolidation.

         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 amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

         CASH FLOW STATEMENTS - The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents. For the years ended April 30, 2001, April 30, 2000 and April 24,
1999, interest paid approximated $24,000, $31,000 and $143,000, respectively.

         FINANCIAL INSTRUMENTS - The carrying value of the Company's cash,
accounts receivable, accounts payable and short term notes payable are a
reasonable estimate of their fair value due to the short-term nature of these
instruments. The Company's long-term debt has variable interest rates or
fixed interest rates of 10%. The carrying value of the long-term debt
approximates fair value at April 30, 2001.

         INVENTORIES - Inventories are valued at the lower of cost or market,
using the first-in, first-out (FIFO) method.

         PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are
carried at cost. Depreciation is provided by use of the straight-line method
over the estimated useful lives of the assets, which are three, five and ten
years for machinery and equipment and thirty years for buildings.

         INTANGIBLE ASSETS - Intangible assets consist of patents and
purchased selling rights which are recorded at cost. Amortization is provided
using the straight-line method over a period of five years or less.

                                 20

<Page>

                   ABC DISPENSING TECHNOLOGIES, INC.
          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

2.       SIGNIFICANT ACCOUNTING POLICIES (CONT.)

         REVENUE RECOGNITION - Revenue on equipment sales is recognized when
the product is shipped and the title transfers. Revenue for development
services and for service and support is recognized when the service is
performed unless there is a service contract. Revenue from service contracts
is recognized ratably over the contract term, generally one year.

         MAJOR CUSTOMER - Revenues from The Home Depot, Inc. were 36%, 25%
and 52% of total revenues for the years ended April 30, 2001, April 30, 2000
and April 24, 1999, respectively.

         PROVISION FOR WARRANTY CLAIMS - Estimated warranty costs are
provided at the time of sale of the warranted products.

         STOCK-BASED COMPENSATION - The Company grants stock options for a
fixed number of shares to employees and members of the board of directors
generally with an exercise price equal to the fair value of the shares at the
date of grant. As permitted by Statement of Financial Accounting Standards
No. 123, (SFAS 123), "Accounting for Stock Based Compensation", the Company
is recognizing compensation expense related to employee stock options
pursuant to Accounting Principles Board Opinion No. 25, (APB 25), "Accounting
for Stock Issued to Employees". However, as required by SFAS 123, the Company
is disclosing what the effects on net loss would have been had it adopted the
fair value approach prescribed by SFAS 123. The effects on net loss and net
loss per share had the Company adopted the expense recognition of SFAS 123,
are shown in note 7. Stock warrants granted to consultants and others are
accounted for using the fair value approach of SFAS 123.

         SEGMENT REPORTING - The Company operates in only one business
segment. The Company's chief operating decision maker is the chief executive
officer who reviews a single set of financial data that encompasses the
Company's entire operation for the purpose of making operating decisions and
assessing performance.

3.       GOING CONCERN UNCERTAINTY

         The Company has reported a net loss for each year of operation since
its inception except for 1989, and as of April 30, 2001 has an accumulated
deficit of $29,540,000. The Company had negative cash flow from operating
activities of $995,000 and $1,375,000 for the years ended April 30, 2001 and
April 30, 2000, respectively. Management expects that the Company will
continue to incur losses and use cash in operations in the near future.

         Management recognizes the Company must generate additional funds to
assure continuation of operations. The Company has been able to raise
$7,633,000 in capital from private investors over the past five years through
private placements of equity instruments and the private issuance of short
and long-term notes payable. The Company raised $1,060,000 during the fiscal
year ended April 30, 2001 using interest bearing Notes Payable. The Company
is continuing its efforts to raise capital. The Company hopes to satisfy its
short-term (i.e., the next 12-month period) capital requirements with the use
of proceeds from the private placement of its 9% Convertible Cumulative
Preferred Stock and notes payable. The Company is currently attempting to
raise additional capital through an offering of such Preferred Stock. The
exact terms of this offering have not been finalized. The Company hopes to
satisfy its longer-term capital needs with additional proceeds of offerings
of the Company's equity and/or debt securities, improvements in operational
cash flow, warrant exercise proceeds, and traditional credit facilities.
There can be no assurance that at any time a sufficient market for the
Company's equity offerings or debt financings will be of offerings of its
equity securities and notes payable available upon commercially reasonable
terms, if at all.


                                    21
<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

3.       GOING CONCERN UNCERTAINTY (CONT.)

         Further, there can be no assurance, assuming the Company does
successfully raise additional capital, that the Company will achieve
profitable operations or positive cash flow. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
No adjustments to the amounts or classification of assets and liabilities
which could result from the outcome of this uncertainty are reflected in the
consolidated financial statements.

4.       INVENTORIES

         At April 30, 2001 and April 30, 2000 inventories consisted of the
following:

<Table>
<Caption>

                                                          2001                      2000
                                                    -----------------         ---------------
<S>                                                 <C>                      <C>
Raw Materials                                               $608,000                $742,000
Work-in-process                                              142,000                 225,000
Finished goods                                               264,000                 314,000
                                                    -----------------         ---------------
                                                         $ 1,014,000             $ 1,281,000
                                                    =================         ===============

</Table>

The above amounts are net of an obsolescence reserve of $622,000 and $479,000
at April 30, 2001 and April 30, 2000, respectively.

5.       FINANCING ARRANGEMENTS

         At April 30, 2001 and April 30, 2000 long-term debt consisted of the
following:

<Table>
<Caption>

                                                                        2001                     2000
                                                                  ----------------         ---------------
<S>                                                              <C>                      <C>
Note payable to bank                                                     $ 213,000               $ 231,000
Note payable - Private party                                             2,997,000               1,902,000
(Less  unamortized discount of $114,000 and $148,000
FY 2001 and FY 2000, respectively.)
Other                                                                        1,000                   5,000
                                                                  ----------------         ---------------
                                                                         3,211,000               2,138,000
Less amounts due within one year                                           (19,000)                (19,000)
                                                                  ----------------         ---------------
Total long-term debt                                                    $3,192,000              $2,119,000
                                                                  ================         ===============

</Table>

         The note payable to bank, which is secured by the Company's
headquarters facility, has an adjustable interest rate (9.03% at April 30,
2001) which may not increase or decrease by more than 2% once every three
years. The maximum increase or decrease is 6% over the life of the loan.
Principal and interest payments of $4,013 are payable monthly with the
remaining balance due October 1, 2005. At April 30, 2001, the collateralizing
facility and improvements thereto have a net book value of $461,000.

         On August 1, 1999, the Company renegotiated most of the 10% APR,
short term notes to a 5 year, 10% APR Promissory Note that comes due on
August 1, 2004. These notes are collatoralized with the intellectual property
of the Company. In return for converting the short term note to long term,
the Company issued 5 year warrants to purchase 2,500,000 Shares of common
stock at then current market price of $.10 per share. The warrants have been
valued at $175,000 using the Black-Scholes Option Pricing Model, using the
following weighted average assumptions: A Risk-Free interest rate of 6.355%
and an expected volatility of 88.55%. A discount on the notes payable has
been recorded for that amount which will be amortized on a straight-line
basis over the term of the notes.

Maturities of long-term debt for the five years subsequent to April 30, 2001
are as follows: 2002--$19,000; 2003--$19,000, 2004--$3,018,000 and
2005--$23,000 and 2006--$132,000.


                                      22

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

5.       FINANCING ARRANGEMENTS (CONT.)

SHORT TERM NOTES PAYABLE

In August, 1997 the Company began issuing notes payable through a private
placement in multiples of $12,500, or fractions thereof. The notes accrue
interest at the rate of 10%, with principal and interest paid at maturity.
The initial maturity date was June 30, 1998, however, the Company had the
option, which it exercised, to extend the maturity date to December 31, 1998.
The Company further extended the maturity date through negotiations with the
note-holders until December 31, 1999, and again until December 31, 2000.
Attached to the notes are redeemable common stock purchase warrants to
purchase 5,000 shares of the Company's common stock at a price of $1.25 per
share. The warrants are exercisable for a period of five years commencing on
the date of issuance. The warrants have been valued at $63,000 using the
Black-Scholes option pricing model using the following weighted-average
assumptions: a risk free interest rate of 6.37% and expected volatility of
82%, a total of 124,000 warrants were issued. In consideration for extending
the initial maturity date, per the terms of the notes, the Company issued to
each note-holder an additional 5,000 warrants to purchase common stock of the
Company at a price of $1.25. The warrants have been valued at $50,000 using
the Black-Scholes option pricing model, using the following weighted-average
assumptions: a risk free interest rate of 6.50% and expected volatility of
287%. A total of 134,000 warrants were issued to satisfy this extension. In
August, 1999 the Company renegotiated $1,660,000 of these notes to a five (5)
year, 10% APR Promissory Note as described above.

         During the year ended April 24, 1999, The Company began issuing
notes payable through a private placement in multiples of $10,000 or
fractions thereof. The notes accrue interest at a rate of 10% with principal
and interest paid at maturity. A total of $390,000 were issued with $260,000
using the building as collateral and $130,000 using the technology of the
Company as collateral. These notes were renegotiated to a five (5) year, 10%
APR Promissory Note as described above.

6.       INCOME TAXES

         Deferred income taxes are provided for the temporary differences
between the financial reporting basis and the tax basis of Company assets and
liabilities.

         The components of the Company's deferred income taxes at April 30,
2001 and April 30, 2000 are as follows:

<Table>
<Caption>

                                                             2001                  2000
                                                         ------------           -----------
<S>                                                     <C>                   <C>
Net operating loss carry-forwards                         $ 9,505,000           $ 9,125,000
Inventories                                                   307,000               239,000
Other                                                         349,000                80,000
                                                         ------------           -----------
Total deferred tax asset                                   10,161,000             9,444,000
Valuation allowance for deferred taxes                    (10,161,000)           (9,444,000)
                                                         ------------           -----------
  Net deferred taxes                                     $          0           $         0
                                                         ============           ===========

</Table>

At April 30, 2001, the Company had Federal net operating loss carry-forwards
for tax reporting purposes of approximately $24,000,000. The net operating
loss carry-forwards expire in varying amounts through the fiscal year ended
April 30, 2020. It is uncertain if benefits relating to these deferred tax
assets are realizable and accordingly, a valuation allowance equal to the
amount of such deferred tax assets has been recorded. The change in the
valuation allowance for fiscal years 2001, 2000 and 1999 was $717,000,
$182,000 and $1,161,000, respectively.


                                       23

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

7.       STOCK OPTIONS AND WARRANTS

STOCK OPTION PLANS

         The Company has non-qualified stock option plans under which
directors, officers and key employees may be granted incentive stock options
for the purchase of the Company's common stock. An aggregate of 500,000
shares of the Company's common stock were reserved for issuance under the
Company's 1990 Stock Option Plan and 1,750,000 shares were reserved for
issuance under the Company's 1995 Stock Option Plan and amendments thereto.
All granted options are exercisable after six months from the grant date
provided the employee has at least one year of service. Grant options expire
five years after grant date or 90 days after the Employee's or Director's
relationship with the Company is terminated. The Company also may grant
incentive stock warrants, generally at current market prices, to purchase the
common stock of the Company to directors, officers and key employees.

         A summary of the Company's stock option plans and employee stock
warrants, and related information for the years ended April 30, 2001, April
30, 2000, and April 24, 1999, is as follows:

<Table>
<Caption>

                                                    2001                         2000                            1999
                                          ---------------------------    ------------------------     -----------------------
                                                          Weighted                    Weighted                      Weighted
                                                           Average                     Average                       Average
                                            Shares     Exercise Price     Shares   Exercise Price     Shares   Exercise Price
                                          ---------    --------------    --------  --------------     ------   --------------
<S>                                      <C>          <C>              <C>        <C>               <C>         <C>
Outstanding - beginning of year           2,930,485    $       0.64     2,074,085    $       0.94    1,898,219     $     1.39
                                          ---------                     --------

     Granted                              1,790,000    $       0.08     1,162,900    $       0.21      700,000     $     0.23
     Exercised                                    0    $                             $                             $
     Canceled                              (472,098)   $      1.08       (306,500)   $       1.08     (524,134)    $     1.62
                                          ---------                     ---------                    ---------

Outstanding - end of year                 4,248,387    $       0.35     2,930,485    $       0.64     2,074,085    $     0.94
                                          =========                     =========                     =========

Exercisable at end of year                3,687,720    $       0.38     2,034,085    $       0.81     1,230,085    $     1.25
                                          =========                     =========                     =========

Available for grant                       1,933,009                     1,736,796                     1,623,796
                                          =========                     =========                     =========

Weighted average fair value of options
     granted during the year                $  0.08                       $  0.17                        $ 0.22

</Table>

         The following table summarizes information about stock options and
employee stock warrants outstanding and exercisable by price range as of April
30, 2001:

<Table>
<Caption>

                                                         Outstanding                                   Exercisable
                                         --------------------------------------------      ---------------------------------
                                                         Weighted
                                                          Average
                                                         Remaining         Weighted                             Weighted
                                                        Contractual        Average                               Average
Range of Exercise Prices                    Shares         Life         Exercise Price         Shares         Exercise Price
------------------------                  ---------     -----------     --------------      ----------        --------------
<S>                                      <C>           <C>             <C>                 <C>               <C>
   $ 0.08 - $ 0.14                         1,760,000         9.61            $  0.08          1,700,000           $ 0.08

   $ 0.20 - $ 0.28                         1,576,000         7.77             $ 0.21          1,075,333           $ 0.21

   $ 0.41 - $ 0.84                           100,000         7.25            $  0.50            100,000           $ 0.50

   $ 1.00 - $ 1.38                           812,387         1.17             $ 1.24            812,387           $ 1.24
                                           ---------                                          ---------
                                           4,248,387                                          3,687,720
                                           =========                                          =========

</Table>


                                        24

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

7.       STOCK OPTIONS AND WARRANTS (CONT.)

ACCOUNTING FOR STOCK BASED COMPENSATION


         The Company has elected to follow Accounting Principles Board
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES (APB 25) and related
interpretations in accounting for its employee stock based compensation. The
exercise price of each stock option and employee stock warrant equals the
market price of the Company's stock on the date of grant. Accordingly, no
compensation cost has been recognized for the plans.

         During 1995, the Financial Accounting Standard Board issued
Statement of Financial Accounting Standards No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION (SFAS 123). SFAS 123 defines a fair valued based
method of accounting for an employee stock option and similar equity
instrument and encourages all entities to adopt that method of accounting for
all of their employee stock compensation plans. However, SFAS 123 allows an
entity to continue to measure compensation cost for those plans using the
method of accounting prescribed in APB 25. Entities that elect to continue
using APB 25 must make pro forma disclosures of net income and earnings per
share as if the fair value based method of accounting defined in SFAS 123 had
been adopted.

         The Company has computed, for pro forma disclosure purposes, the
value of all options granted during the fiscal years ending April 30, 2001,
April 30, 2000 and April 24, 1999, using the Black-Scholes option pricing
model as prescribed by SFAS 123 using the following weighted average
assumptions:

<Table>
<Caption>

                                  2001             2000             1999
                                --------        ---------         --------
<S>                          <C>               <C>              <C>
Risk-free interest rate            5.28%           6.28%            6.50%

Dividend yield                       0 %             0 %              0 %

Volatility                          117%             96%             287%

Average life                  9.75 years        7.15 Years         5 Years

</Table>

         Using the Black-Scholes methodology, the total value of options
granted during fiscal 2001, 2000 and 1999 was $141,000, $199,000, and
$126,000 respectively. If the Company had accounted for its stock-based
compensation plans in accordance with SFAS 123, the Company's net loss and
net loss per share would approximate the pro forma disclosures below:

<Table>
<Caption>

                                           April 30, 2001       April 30,2000        April 24, 1999
                                           --------------       -------------        --------------
    <S>                   <C>             <C>                 <C>                   <C>
     Net Loss              As reported       $ (1,796,000)      $ (1,080,000)        $ (2,204,000)

                           Pro forma         $ (1,998,000)      $ (1,372,000)        $ (2,330,000)

     Basic and Diluted
     Earnings per share    As reported            $ (0.10)           $ (0.08)             $ (0.15)

                           Pro forma              $ (0.11)           $ (0.10)             $ (0.16)

</Table>


                                      25

<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
                NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

7.  STOCK OPTIONS AND WARRANTS (CONT.)

WARRANTS

On October 9, 1998, the Company granted 20,000 warrants to each Member of the
Board of Directors at $.2969 per share. These include: Norbert Lewandowski,
Herbert Luxenburg, C. Rand Michaels, William L. Shanklin, and Frank E. Vaughn.

On January 14, 1999, the Company granted 25,000 warrants exercisable at $.35
per share to a former employee in connection with a termination agreement.

On February 12, 1999, the Company granted 600,000 warrants exercisable at
$.20 per share to Charles M. Stimac, Jr., President and CEO.

On June 30, 1999, the Company granted 100,000 warrants exercisable at $.20
per share for compensation of consulting services.

On July 15, 1999, the company granted 12,500 warrants exercisable at $0.28
per share to an employee of the Company.

On September 1, 1999 the company granted 529,400 warrants to all current
employees based on service and salary at an exercise price of $0.20 per
share. These warrants vest over a period of 3 years.

On September 1, 1999 the company granted 100,000 warrants exercisable at
$0.20 per share to each member of the Board of Directors. These include:
Frank Vaughn, Norbert Lewandowski, Herbert Luxenburg, William L. Shanklin,
and Charles M. Stimac Jr.

On December 15, 1999 the company granted 2,500,000 warrants exercisable at
$0.10 per share to a current investor in return for a five year extension of
existing Notes Payable.

On December 31, 1999 the company granted 100,000 warrants exercisable at
$0.20 per share for compensation of consulting services.

On February 24, 2000 the Company granted 100,000 warrants exercisable at
$0.28 per share to an employee of the Company.

On June 30, 2000 the company granted 100,000 warrants exercisable at $0.11
per share for compensation of consulting services.

On December 31, 2000 the company granted 100,000 warrants exercisable at
$0.11 per share for compensation of consulting services.

Stock warrants granted to consultants and other non-employees are accounted
for using the fair value approach of SFAS 123. The following is a summary of
stock warrants issued for services and debt:

<Table>
<Caption>

                                      FY 2001                            FY 2000                           FY 1999
----------------------------------------------------------------------------------------------------------------------------------
                             SHARES       WEIGHTED AVERAGE       SHARES      WEIGHTED AVERAGE      SHARES        WEIGHTED AVERAGE
                                           EXERCISE PRICE                     EXERCISE PRICE                      EXERCISE PRICE
----------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>              <C>                 <C>            <C>                  <C>            <C>
OUTSTANDING -               4,781,500         $1.09            2,081,500          $2.37           1,818,500          $2.58
BEGINNING OF YEAR
----------------------------------------------------------------------------------------------------------------------------------
GRANTED                       200,000         $0.11            2,700,000          $0.11             283,000          $1.06
----------------------------------------------------------------------------------------------------------------------------------
EXERCISED/                (2,036,500)         $2.39                                                  20,000          $2.00
CANCELLED
----------------------------------------------------------------------------------------------------------------------------------
OUTSTANDING -               2,945,000         $0.13            4,781,500          $1.09           2,081,500          $2.37
END OF YEAR
----------------------------------------------------------------------------------------------------------------------------------
EXERCISABLE -               2,945,000         $0.13            4,781,500          $1.09           2,081,500          $2.37
END OF YEAR
----------------------------------------------------------------------------------------------------------------------------------

</Table>

                        ABC DISPENSING TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

8.       NET LOSS PER SHARE

The following table sets forth the computation of net loss per share - basic and
diluted:

<Table>
<Caption>

                                                                                                Years Ended
                                                                    --------------------------------------------------------------
                                                                          April 30,               April 30,             April 24,
                                                                            2001                    2000                  1999
                                                                    -----------------        -----------------      --------------
<S>                                                                 <C>                      <C>                    <C>
Numerator:
  Net Loss                                                             $ (1,796,000)           $ (1,080,000)         $( 2,204,000)
  Preferred Stock Dividends                                               ( 505,000)              ( 503,000)             (441,000)
                                                                    ---------------           -------------          ------------
  Numerator for net loss per share - loss attributable
    to common shareholders                                             $ (2,301,000)           $ (1,583,000)         $( 2,645,000)


                                        26

<Page>

Denominator:
Denominator for basic and diluted earnings
    per share - weighted-average shares                                  22,700,396              19,084,100            17,774,000
                                                                    ---------------           -------------          ------------

Net loss per share -- basic and diluted                                $      (0.10)           $      (0.08)         $     ( 0.15)
                                                                    ===============          ==============         ============

</Table>

         In the above computation of net loss per share, preferred stock
dividends include dividends accumulated during the fiscal year on cumulative
preferred stock. The effect of potentially dilutive securities have not been
included in the above computations since such securities would have been
anti-dilutive for the periods presented. These potentially dilutive
securities consisted of options and warrants to purchase 7,193,387,
7,711,985, and 4,155,585 shares of Common Stock as of April 30, 2001, April
30, 2000, and April 24, 1999, respectively.

9.       PREFERRED STOCK

         In September 1996 the shareholders of the Company approved an
amendment to the Company's Certificate of Incorporation to authorize up to
5,000,000 shares of Preferred stock. To date, the Company has authorized 840
shares as Series A Preferred Stock, 160 shares of Series B Preferred Stock
and 200 shares of Series C Preferred Stock.

         The Company offered shares of 9% convertible cumulative redeemable
Preferred Stock, Series A ("Series A Preferred Stock") in exchange for the
surrender of the Company's outstanding $25,000, 9% Convertible Subordinated
Redeemable Notes due August 1, 1999 ("Notes").

         As of April 30, 2001, through private placements, the Company issued
399 shares of Series A Preferred Stock in exchange for notes or $12,500 cash
per share, generating net proceeds of $4,938,000 to the Company.

         The Series A Preferred Stock is convertible at the option of the
holder, in whole or in part, at any time after March 1, 1997 (the "Initial
Conversion Date") into Common Stock of the Company at a price per share of
Common Stock equal to (I) $1.00 per share, or (II) such adjusted price as may
from time to time be adjusted (the "Conversion Price"). If converted into
Common Stock, each Preferred Share will entitle the holder to receive
warrants to purchase a number of shares of Common Stock at a price of $1.25
per share, equal to the number of shares of Common Stock into which the
Preferred Shares were converted. The warrants will be valid for a period of
five years commencing from the date of issuance.

         The Series B Preferred Stock is convertible at the option of the
holder into Common Stock of the Company at a price of $.75 per share and is
identical to Series A Preferred Stock in all other aspects. The Company has
authorized 160 shares and sold 24 shares as of April 30, 2001, generating
gross proceeds of $300,000.

         The Series C Preferred Stock is a $10,000 denomination, 9%
convertible cumulative redeemable issue with a conversion price of $.25 per
share. There are no warrants attached to this issuance. The Company has
authorized 200 shares and sold 37 shares through April 30, 2001, generating
gross proceeds of $370,000.

         Series A, B, and C Preferred Shares pay dividends semi-annually each
February 1, and August 1, commencing on February 1, 1997. The Company may
elect to pay dividends in the form of Common Stock of the Company issued at
90% of the then current market price of the Common Stock. For the purposes of
this calculation the "current market price" shall mean the average of the
daily closing prices for each of the thirty consecutive business days prior
to such dividend date.

         On October 15, 1998, the Company paid its August 1, 1998 Preferred
Stock dividend requirement by issuing common stock. The total number of
common shares issued for the dividend was 274,985. The shares were valued at
$0.75 per share.

         On June 11, 1999, the Company paid its February 1, 1999, Preferred
Stock dividend requirement by issuing common stock. The total number of
common shares issued for the dividend was 1,231,565. The shares were valued
at $0.191 per share.

         On April 18, 2000, the Company paid its August 1, 1999, and February
1, 2000, Preferred Stock dividend requirements by issuing common stock. The
total number of shares issued for August 1, 1999, was 924,408 and were

                                       27

<Page>

valued at $0.2714 per share. The total number of shares issued for February
1,2000, was 1,795,880 and were valued at $0.1404 per share.

         On October 3, 2000, the Company paid its August 1, 2000, Preferred
Stock dividend requirement by issuing Common Stock. The total number of
shares issued were 1,381,640 and were valued at $0.1826 per share. The
Company plans to issue common stock to satisfy the February 1, 2001,
Preferred Stock dividend during the first quarter of FY 2002. The total
number of shares to be issued is 5,471,822 and will be valued at $0.0461 per
share.

10.      OPERATING LEASES

         Aggregate rental expense for fiscal years 2001, 2000, and 1999 was
$20,000, $31,000, and $45,000, respectively. The Company has no long term
operating leases

11.      PROPERTY, PLANT AND EQUIPMENT

         Property, plant and equipment consisted of the following at April
30, 2001 and April 30,2000:

<Table>
<Caption>

                                                 2001                 2000
                                             -----------         ------------
<S>                                       <C>                    <C>
Land                                            $ 57,000             $ 57,000
Building and building improvements               572,000              572,000
Machinery and equipment                        1,120,000            1,123,000
                                           -------------         ------------
                                               1,749,000            1,752,000
Less accumulated depreciation                 (1,200,000)          (1,090,000)
                                           -------------         ------------
                                            $    549,000          $   662,000
                                           =============         ============

</Table>

12.      RETIREMENT BENEFITS

         The Company sponsors a 401(k) plan which covers substantially all
full-time employees. Eligible employees may contribute up to 14% of their
compensation to this plan. The Company has agreed to match participants'
contributions at the rate of 25 cents on the dollar up to a maximum of 4% of the
participants' compensation. The cost of the Company's matching contribution was
approximately $10,000 in 2001, $12,000 in 2000, and $15,000 in 1999. The Company
has the discretion to make a profit-sharing contribution, but no such
contribution has been made by the Company.


                                       28
<Page>

                        ABC DISPENSING TECHNOLOGIES, INC.
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)

13.      LITIGATION SETTLEMENT/CONTINGENCIES

         The Company, from time to time, is subject to routine litigation
incidental to its business. The Company believes that any liability that may
finally be determined, would not have a material adverse effect on the
operations and financial conditions of the Company.

14.      SUBSEQUENT EVENTS (UNAUDITED)

         Subsequent to fiscal year end, April 30, 2001, and through July 5,
2001, the Company has received $250,000 from the issuance of promissory notes
that bear interest at 10% per annum. These funds will be used for necessary
operating expenses.

15.      QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>


                                    1ST QUARTER        2ND QUARTER         3RD QUARTER            4TH QUARTER        TOTAL YEAR
           04/30/01                 -----------        -----------         -----------            -----------        ----------
           --------
<S>                               <C>                 <C>                 <C>                    <C>                <C>

REVENUES                                387,000            418,000             334,000                532,000         1,671,000
GROSS PROFIT                             84,000             89,000              49,000                  9,000           231,000
NET LOSS                               (392,000)          (359,000)           (398,000)              (647,000)       (1,796,000)

NET LOSS PER SHARE -                  $   (0.02)        $    (0.03)         $    (0.02)            $    (0.03)      $     (0.10)
   BASIC AND DILUTED

<Caption>

           04/30/00
           --------
<S>                               <C>                 <C>                 <C>                    <C>                <C>
REVENUES                                356,000            565,000             518,000                745,000         2,184,000
GROSS PROFIT                            111,000            199,000             189,000                388,000           887,000
NET LOSS                               (411,000)          (218,000)           (233,000)              (218,000)       (1,080,000)

NET LOSS PER SHARE -                  $   (0.03)        $    (0.02)         $    (0.01)            $    (0.02)      $     (0.08)
   BASIC AND DILUTED

</Table>


*-Fourth quarter 2001 net loss includes $150,000 charge for inventory
obsolescence.





                                      29

<Page>

                ABC DISPENSING TECHNOLOGIES, INC. (CONSOLIDATED)

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>

Column A                                     Column B              Column C          Column D              Column E
----------------------------------------------------------------------------------------------------------------------
                                                                  Additions
                                           Balance at            Charged to                                 Balance
                                            Beginning             Costs and                                  at End
Description                                 of Period              Expenses        Deductions             of Period
----------------------------------------------------------------------------------------------------------------------
<S>                                       <C>                  <C>                <C>                   <C>
YEAR ENDED APRIL 30, 2001

Allowance for doubtful accounts            $  33,000             $ 126,000            $     -(a)         $ 159,000
                                           =========             =========            =======            =========
Allowance for inventory obsolescence       $ 479,000             $ 150,000            $ 7,000(b)         $ 622,000
                                           =========             =========            =======            =========

YEAR ENDED APRIL 30,2000

Allowance for doubtful accounts            $  60,000             $ (11,000)           $16,000(a)         $  33,000
                                           =========             =========            =======            =========

Allowance for inventory obsolescence       $ 474,000             $   5,000            $     -(b)         $ 479,000
                                           =========             =========            =======            =========


YEAR ENDED APRIL 24,1999

Allowance for doubtful accounts            $  84,000             $ (22,000)           $ 2,000(a)         $  60,000
                                           =========             =========            =======            =========

Allowance for inventory obsolescence       $ 909,000             $   5,000            $440,000(b)        $ 474,000
                                           =========             =========            ========           =========

</Table>

(a)  Uncollectible accounts written off, net of recoveries.

(b)  Inventory written off and/or disposed of.

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

         None.


                                        30

<Page>

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Information regarding the Directors and Executive Officers of the
Company is incorporated herein by reference from the Company's definitive Proxy
Statement. Certain information concerning the Executive Officers is also
included below:

<Table>
<Caption>

         Name                                        Position
         ----                                        --------
        <S>                                         <C>
         Charles M. Stimac, Jr.                      President and Director

         Herbert L. Luxenburg                        Director

         Norbert J. Lewandowski                      Director

         William L. Shanklin                         Director

</Table>

         Mr. Charles M. Stimac, Jr. has been President of the Company since
July 15, 1996, replacing Mr. Robert A. Cutting, who was President of the
Company since April 1990 and was President of the Company's wholly-owned
subsidiary, ABC Dispensing Technologies, Inc., since September 1986.

         Mr. Herbert L. Luxenburg has been a Director of the Company since
         September, 1988.

         Mr. Norbert J. Lewandowski has been a Director of the Company since
         December 1998.

         Dr. William L. Shanklin has been a Director of the Company since
         December 1998.

         Mr. C. Rand Michaels resigned his position as director of the Company
         effective June 23, 1999.

         Mr. Frank E. Vaughn resigned his position as director of the Company
         effective February 2, 2000.

ITEM 11.  EXECUTIVE COMPENSATION

         Incorporated herein by reference from the Company's definitive Proxy
Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         Incorporated herein by reference from the Company's definitive Proxy
Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Incorporated herein by reference from the Company's definitive Proxy
Statement.

                                      31

<Page>

                                    PART IV

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


(a)      The financial statements listed on the index set forth in Item 8 of
         this Annual Report on Form 10-K are filed as part of this Annual
         Report.

(b)      The following exhibits are incorporated by reference herein or annexed
         to this Annual Report:

 3.1     Certificate of Incorporation of the Registrant.*

 3.2     By-law's of the Registrant.*

10.1     Employment agreement dated March 1, 1997 and between the Registrant and
         Charles M. Stimac,Jr.*

10.2     Form of Director Option Agreement dated October 30, 1998.

10.3     Amended 1995 Stock Option Plan.*

10.4     Amendment #1 to Employment agreement between the Registrant and Charles
         M. Stimac, Jr.

11.1     Statement regarding computation of per share earnings (see Item 8 of
         this Annual Report in Form 10-K).

21.1     Subsidiaries of the Registrant.*

         *Incorporated by reference to a similarly numbered exhibit to the
registrants registration on for S-1 filed with the Commissar on April 8, 1998.

(c)      Current reports on Form 8-K during the quarter ended April 30, 2001.

         During the fourth quarter ended April 30, 2001, the Company filed no
reports on Form 8-K.

                                      32

<Page>



SIGNATURES

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

ABC DISPENSING TECHNOLOGIES, INC.


By:  /s/
     ---------------------------------------
     Charles M. Stimac, Jr.
     President
     Principal Executive Officer

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

<Table>
<Caption>

     Name                                        Title                           Date
     ----                                        -----                           ----
    <S>                                         <C>                             <C>

     /s/                                         President & Director            July 24, 2001
     ---------------------------------------
     Charles M. Stimac, Jr.


     /s/                                         Director                        July 24, 2001
     ---------------------------------------
     Herbert L. Luxenburg


     /s/                                         Director                        July 24, 2001
     ---------------------------------------
     Norbert J. Lewandowski


     /s/                                         Director                        July 24, 2001
     ---------------------------------------
     William L. Shanklin


</Table>

                                              33

</TEXT>
</DOCUMENT>
