content: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM 8-K
  
  
  
                                   CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
  
  
  
  
  
       Date  of  Report  (Date  of  earliest  event  reported):     AUGUST 1, 2001
                                                                    --------------
  
  
  
                        DYNAMIC  HEALTHCARE  TECHNOLOGIES,  INC.
                        ----------------------------------------
                  (Exact Name of Registrant as Specified in its Charter)
  
  
  
  
       Florida                         0-12516                    65-0624640
       -------                         -------                    ----------
  (State  or  Other            (Commission  File  Number)      (IRS  Employer
  Jurisdiction Incorporation)                                  Identification
                                                                    Number)
  
  
  
  
  
     615  Crescent  Executive  Court,  Fifth  Floor,  Lake  Mary,  FL  34210-2801
  
  -------------------------------------------------------------------  ----------
    (Address  of  Principal  Executive  Offices)                       (Zip  Code)
  
  
  
  
  Registrant's  telephone  number,  including  area code:  (407) 333-5300
                                                           ---------------
  
  
                                     Page 1 of 3
  <PAGE>
  
  
  ITEM  5.  OTHER  EVENTS.
  
       On  August  1,  2001,  the Dynamic Healthcare Technologies, Inc., a Florida
  corporation  (the "Company"), issued a press release announcing its earnings for
  the  second  quarter  ended  June  30,  2001.
  
       A  copy  of  the  press  release  is attached hereto as Exhibit 99.1 and is
  incorporated  herein  by  reference.
  
  
  ITEM  7.  FINANCIAL  STATEMENTS  AND  EXHIBITS.
  
  (a)     Not  Applicable
  
  (b)     Not  Applicable
  
  (c)     Exhibits  required  by  Item  601  of  Regulation  S-K
  
  EXHIBIT  NO.  DESCRIPTION
  ------------  -----------
     99.1      Press release, issued August 1, 2001, regarding the announcement of
                its earnings for the second quarter.
  
         [Rest of Page Intentionally Blank.  Signatures on following Page.]
  
                                     Page 2 of 3
  <PAGE>
  
  
                                      SIGNATURE
  
       Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
  registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
  undersigned  hereunto  duly  authorized.
  
  
                                          DYNAMIC  HEALTHCARE  TECHNOLOGIES,  INC.
  Date:  August  1,  2001                 By:   /s/  Brian  Greco
                                                ------------------
                                                     Brian  Greco
                                                     Vice  President  of  Finance
                                                     and Secretary
  
                                     Page 3 of 3
  <PAGE>
  
                                    EXHIBIT INDEX
                                    -------------
  
  EXHIBIT  NO.  DESCRIPTION
  ------------  -----------
      99.1       Press release, issued August 1, 2001, regarding the announcement
                 of its earnings  for  the  second  quarter.
  
  
  <PAGE>
  
  
  
  
  
  
  
                                    EXHIBIT 99.1
                                    ------------
  
  
  
  
  
  
  
  
  
  <PAGE>
  
  
  Contact:   Dynamic  Healthcare  Technologies  Inc.
             Christopher  Assif  (investors)
             Chief  Executive  Officer
             cassif@dht.com
             --------------
             800  832  3020
  
             Bernadette  Di  Re  (media)
             Director,  Marketing
             bdire@dht.com
             -------------
             800  832  3020
  
  
                     DYNAMIC REPORTS SECOND QUARTER 2001 RESULTS
  
  LAKE  MARY,  FLORIDA  -  AUGUST  1, 2001 - Dynamic Healthcare Technologies, Inc.
  (Nasdaq:  DHTI  Nasdaq:  DHTID),  a  leading  provider of information technology
  geared  to transform diagnostic medicine, today announced results for the second
  quarter  ended  June  30, 2001.  The Company reported second quarter revenues of
  $6.3  million  and  a  net  loss  of  $(0.04) per common share, which excludes a
  non-recurring  realignment  charge in connection with the elimination of certain
  duplicative  staff  and middle management positions of $465,000 taken during the
  quarter.  This  compares  to  revenues of $6.5 million and a net loss of $(0.08)
  per  common share, on a reverse split adjusted basis, for the same period a year
  ago.
  
  Second-quarter  EBITDA,  (earnings  before  interest,  taxes,  depreciation, and
  amortization)  was  a positive $0.08 per common share, excluding the realignment
  charge.  This  marks  the  first  time the Company has generated positive EBITDA
  since  second  quarter 2000.  The Company also generated positive cash flow from
  operations  during  the  quarter.  This  represents  the  Company's  eleventh
  consecutive  quarter  of  generating  positive  cash  flow  from  operations.
  
  Key  highlights  for  the  six-month  period  ended  June  30,  2001  include:
  
       -    Near  record  bookings  of  Company's  clinical  systems.  A  total of
            twenty-three  systems  across  all diagnostic disciplines were sold to
            new  and current clients spanning all major market segments during the
            first  half  of  2001.
  
       -    Systems  and  support  services  backlog  grew  to  $23  million.
  
       -    The  Company  sold and implemented its CoMed suite of Internet and ASP
            delivered  products  to multiple client sites during the first half of
            2001.
  
       -    Proposal  activity  is  up  90%  over the same period from a year ago.
  
  
                                       (more)
  
  <PAGE>
  
  
  
  DYNAMIC  REPORTS  SECOND  QUARTER  2001  RESULTS
  PAGE  TWO
  
  
  Christopher  Assif, CEO of Dynamic, commented: "We are pleased with our progress
  evidenced  by this quarter's improved operating results.  The Company reiterates
  its  previously issued revenue and earnings expectations for 2001 and 2002 based
  on  revenue visibility from our backlog and the increased marketplace demand for
  its  clinical  and  diagnostic  focused  information  technology  products  and
  services."
  
  As  previously  announced, the Company will host a conference call at 10:00 a.m.
  (EST)  on  Thursday, August 2, 2001, to discuss these results.  The call will be
  led  by  Dynamic's  Chief  Executive  Officer,  Christopher  Assif.  Interested
  investors  can  access  the  call  via a webcast through the Company's web site,
  www.dht.com,  or  via  the StreetEvents web site, www.streetevents.com.  Replays
  will  be  available  on  these  web  sites for 30 days.  Investors interested in
  participating  in  the  live  conference  call  may  dial  877-721-9309.
  
  About  Dynamic
  Dynamic  Healthcare Technologies is transforming diagnostic medicine through its
  clinical  and  diagnostic  workflow  solutions  for  pathology,  laboratory  and
  radiology  services  in  hospitals,  clinics  and ambulatory care settings.  The
  company's  systems  are  installed  in more than 640 client locations, including
  half  of the nation's "Best Hospitals" and 40% of the "Best Hospitals" in cancer
  treatment,  as  reported  in  US  News  and  World Reports magazine.  Dynamic is
  expanding  its  reach  even  deeper into the care process through Internet-based
  clinical  connectivity  and  application  service provider capabilities marketed
  under  the  name  CoMed.
  
                              Forward  Looking  Statement
  
  This  press release contains forward looking statements that involve a number of
  risks and uncertainties, including, but not limited to, certain areas beyond the
  Company's  control  with  respect  to  future  business  events  and other risks
  detailed  from  time  to  time  in the Company's filings with the Securities and
  Exchange  Commission.
  
  
                                   -tables follow-
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
  
  
  DYNAMIC HEALTHCARE TECHNOLOGIES, INC. REPORTS SECOND QUARTER 2001 EARNINGS                   (PAGE 3)
  <S>                             <C>           <C>              <C>               <C>              <C>
  
                                                SELECTED FINANCIAL DATA
                                           DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                                STATEMENTS OF OPERATIONS
  
  
                                                              THREE MONTHS ENDED                         SIX MONTHS ENDED
                                                        JUNE 30, 2000      JUNE 30, 2001          JUNE 30, 2000      JUNE 30, 2001
                                                        -------------    ---------------          -------------  ------------------
                                                         (UNAUDITED)         (UNAUDITED)           (UNAUDITED)        (UNAUDITED)
  Operating revenues:
      Computer system equipment sales and support              155,510   $      207,877                573,506   $      536,309
      Application software licenses                          1,996,275        1,748,330              3,505,958        3,247,507
      Software support                                       2,925,892        2,877,177              5,826,009        5,779,509
      Services and other                                     1,388,350        1,510,805              3,142,631        2,989,021
                                                        --------------   ---------------            ------------   -----------------
                 Total operating revenues                    6,466,027        6,344,190             13,048,104       12,552,346
                                                        --------------   ---------------            ------------   -----------------
  
  Costs and expenses:
      Cost of products sold                                    456,776          484,443                983,065        1,025,445
      Software amortization                                    569,462          328,960              1,149,483          639,893
      Client services expense                                2,560,281        2,224,993              5,146,707        4,723,449
      Software development costs                             1,123,561        1,109,613              2,350,572        2,168,427
      Sales and marketing                                    1,141,630        1,249,829              2,227,456        2,686,779
      General and administrative                             1,046,330        1,105,460              1,957,713        2,255,074
      Realignment costs                                              -          465,204                      -          465,204
                                                        --------------   ---------------            ------------   -----------------
                 Total costs and expenses                    6,898,040        6,968,502             13,814,996       13,964,271
                                                        --------------   ---------------            ------------   -----------------
  Operating income (loss)                                    (432,013)        (624,312)              (766,892)      (1,411,925)
                                                        --------------   ---------------            ------------   -----------------
  Other income (expense):
        Interest expense and financing costs                  (44,778)         (58,467)                (85,588)       (128,202)
        Interest income and other                               27,979           16,259                  54,239          64,421
        Gain/(Loss) on disposal of fixed assets               (30,493)               -*                (30,603)               -
                                                        --------------   ---------------            ------------   -----------------
                 Total other income (expense)                 (47,292)         (42,208)                (61,952)        (63,781)
                                                        --------------   ---------------            ------------   -----------------
  Earnings (loss) before income taxes                        (479,305)        (666,521)               (828,844)      (1,475,707)
  Income taxes                                                       -                -                       -                -
                                                        --------------   ---------------            ------------   -----------------
  Net earnings (loss)                                  $     (479,305)  $     (666,521)         $     (828,844)  $   (1,475,707)
                                                        ==============   ===============          ===============  =================
  
  Net earnings (loss) available for common
  shareholders                                         $     (519,305)   $    (706,521)         $     (908,844)  $   (1,555,707)
                                                        ==============   ===============          ===============  =================
  Weighted average number of common and potential
  common shares outstanding assuming full dilution
   - basic and diluted                                       6,304,521        6,476,047               6,295,487        6,475,301
                                                        ==============   ===============          ===============  =================
  
  Earnings (loss) per common share basic and
  diluted                                              $        (0.08)   $       (0.11)         $        (0.14)  $        (0.24)
                                                        ==============   ===============          ===============  =================
  
  EBITDA                                               $       360,255   $       50,655         $     1,012,767  $     (220,518)
                                                        ==============   ===============          ===============  =================
  
  
                                                                BALANCE SHEETS
  
                                                     December 31, 2000      JUNE 30, 2001
                                                     -----------------      -------------
                                                                             (UNAUDITED)
  ASSETS
  Current assets:
      Cash and cash equivalents                      $       3,197,743    $     893,094
      Accounts receivable, net                               5,309,700        3,767,561
      Unbilled receivables                                   3,633,931        4,751,559
      Contracts receivable - current                           329,255          286,795
      Other current assets                                     848,652          724,974
                                                     -----------------      -------------
          Total current assets                              13,319,281       10,423,983
  Property and equipment, net                                3,507,870        3,149,277
  Capitalized software development costs, net                4,093,560        3,509,540
  Goodwill, net                                                847,934          644,159
  Contracts receivable - non-current                           713,052          597,763
  Other assets                                                  22,872           17,479
                                                     -----------------      -------------
                                                     $      22,504,569    $  18,342,201
                                                     =================      =============
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
      Accounts payable and accrued expenses          $       3,061,461    $   2,733,558
      Deferred revenue                                       5,929,122        5,992,778
      Advance billings                                       1,197,266        1,993,429
      Line of credit                                         2,875,000                0
      Deferred lease incentives                                190,230          190,230
      Other current liabilities                                380,335          306,483
                                                     -----------------      -------------
          Total current liabilities                         13,633,414       11,216,478
  Deferred lease incentives - non-current                      602,403          507,288
  Other                                                        639,740          504,983
                                                     -----------------      -------------
          Total liabilities                                 14,875,557       12,228,749
                                                     -----------------      -------------
  
  Shareholders' equity:
     Series C preferred stock                                1,811,327        1,811,327
     Common stock                                               64,494           64,761
     Warrants                                                    3,000            3,000
     Additional paid-in capital                             45,830,110       45,789,990
     Deficit                                              (39,837,199)     (41,312,906)
                                                     -----------------      -------------
     Less: notes receivable from officer                     (242,720)        (242,720)
                                                     -----------------      -------------
          Total shareholders' equity                         7,629,012        6,113,452
                                                     -----------------      -------------
                                                     $      22,504,569   $   18,342,201
                                                     =================      =============
  
  The financial data should be read in conjunction with the disclosures contained in the Company's Form 10-K
  For the year ended December 31, 2000. Prior years common shares have been retroactively adjusted to reflect reverse stock split.
  </TABLE>
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "doc1.txt", "secsgml_size_bytes": 18272}]
metadata_filer: {"company-data": {"conformed-name": "DYNAMIC HEALTHCARE TECHNOLOGIES INC", "cik": "0000720481", "assigned-sic": "7373", "irs-number": "650624640", "state-of-incorporation": "FL", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-12039", "film-number": "1695545"}, "business-address": {"street1": "615 CRESCENT EXECUTIVE COURT FIFTH FL", "city": "LAKE MARY", "state": "FL", "zip": "32751", "phone": "4073335300"}, "mail-address": {"street1": "615 CRESCENT EXECUTIVE COURT", "street2": "5TH FLOOR", "city": "LAKE MARY", "state": "FL", "zip": "32746"}, "former-company": {"former-conformed-name": "TERRANO CORP", "date-changed": "19920703"}}
text: SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(D) OF THE
                           SECURITIES EXCHANGE ACT OF 1934
  
       Date  of  Report  (Date  of  earliest  event  reported):     AUGUST 1, 2001
                                                                    --------------
  
                        DYNAMIC  HEALTHCARE  TECHNOLOGIES,  INC.
                        ----------------------------------------
                  (Exact Name of Registrant as Specified in its Charter)
  
       Florida                         0-12516                    65-0624640
       -------                         -------                    ----------
  (State  or  Other            (Commission  File  Number)      (IRS  Employer
  Jurisdiction Incorporation)                                  Identification
                                                                    Number)
  
     615  Crescent  Executive  Court,  Fifth  Floor,  Lake  Mary,  FL  34210-2801
  
  -------------------------------------------------------------------  ----------
    (Address  of  Principal  Executive  Offices)                       (Zip  Code)
  
  Registrant's  telephone  number,  including  area code:  (407) 333-5300
                                                           ---------------
  
                                     Page 1 of 3
  ITEM  5.  OTHER  EVENTS.
  
       On  August  1,  2001,  the Dynamic Healthcare Technologies, Inc., a Florida
  corporation  (the "Company"), issued a press release announcing its earnings for
  the  second  quarter  ended  June  30,  2001.
  
       A  copy  of  the  press  release  is attached hereto as Exhibit 99.1 and is
  incorporated  herein  by  reference.
  
  ITEM  7.  FINANCIAL  STATEMENTS  AND  EXHIBITS.
  
  (a)     Not  Applicable
  
  (b)     Not  Applicable
  
  (c)     Exhibits  required  by  Item  601  of  Regulation  S-K
  
  EXHIBIT  NO.  DESCRIPTION
  ------------  -----------
     99.1      Press release, issued August 1, 2001, regarding the announcement of
                its earnings for the second quarter.
  
         [Rest of Page Intentionally Blank.  Signatures on following Page.]
  
                                     Page 2 of 3
  SIGNATURE
  
       Pursuant  to  the  requirements of the Securities Exchange Act of 1934, the
  registrant  has  duly  caused  this  report  to  be  signed on its behalf by the
  undersigned  hereunto  duly  authorized.
  
                                          DYNAMIC  HEALTHCARE  TECHNOLOGIES,  INC.
  Date:  August  1,  2001                 By:   /s/  Brian  Greco
                                                ------------------
                                                     Brian  Greco
                                                     Vice  President  of  Finance
                                                     and Secretary
  
                                     Page 3 of 3
  EXHIBIT INDEX
                                    -------------
  
  EXHIBIT  NO.  DESCRIPTION
  ------------  -----------
      99.1       Press release, issued August 1, 2001, regarding the announcement
                 of its earnings  for  the  second  quarter.
  EXHIBIT 99.1
                                    ------------
  Contact:   Dynamic  Healthcare  Technologies  Inc.
             Christopher  Assif  (investors)
             Chief  Executive  Officer
             cassif@dht.com
             --------------
             800  832  3020
  
             Bernadette  Di  Re  (media)
             Director,  Marketing
             bdire@dht.com
             -------------
             800  832  3020
  
                     DYNAMIC REPORTS SECOND QUARTER 2001 RESULTS
  
  LAKE  MARY,  FLORIDA  -  AUGUST  1, 2001 - Dynamic Healthcare Technologies, Inc.
  (Nasdaq:  DHTI  Nasdaq:  DHTID),  a  leading  provider of information technology
  geared  to transform diagnostic medicine, today announced results for the second
  quarter  ended  June  30, 2001.  The Company reported second quarter revenues of
  $6.3  million  and  a  net  loss  of  $(0.04) per common share, which excludes a
  non-recurring  realignment  charge in connection with the elimination of certain
  duplicative  staff  and middle management positions of $465,000 taken during the
  quarter.  This  compares  to  revenues of $6.5 million and a net loss of $(0.08)
  per  common share, on a reverse split adjusted basis, for the same period a year
  ago.
  
  Second-quarter  EBITDA,  (earnings  before  interest,  taxes,  depreciation, and
  amortization)  was  a positive $0.08 per common share, excluding the realignment
  charge.  This  marks  the  first  time the Company has generated positive EBITDA
  since  second  quarter 2000.  The Company also generated positive cash flow from
  operations  during  the  quarter.  This  represents  the  Company's  eleventh
  consecutive  quarter  of  generating  positive  cash  flow  from  operations.
  
  Key  highlights  for  the  six-month  period  ended  June  30,  2001  include:
  
       -    Near  record  bookings  of  Company's  clinical  systems.  A  total of
            twenty-three  systems  across  all diagnostic disciplines were sold to
            new  and current clients spanning all major market segments during the
            first  half  of  2001.
  
       -    Systems  and  support  services  backlog  grew  to  $23  million.
  
       -    The  Company  sold and implemented its CoMed suite of Internet and ASP
            delivered  products  to multiple client sites during the first half of
            2001.
  
       -    Proposal  activity  is  up  90%  over the same period from a year ago.
  
                                       (more)
  DYNAMIC  REPORTS  SECOND  QUARTER  2001  RESULTS
  PAGE  TWO
  
  Christopher  Assif, CEO of Dynamic, commented: "We are pleased with our progress
  evidenced  by this quarter's improved operating results.  The Company reiterates
  its  previously issued revenue and earnings expectations for 2001 and 2002 based
  on  revenue visibility from our backlog and the increased marketplace demand for
  its  clinical  and  diagnostic  focused  information  technology  products  and
  services."
  
  As  previously  announced, the Company will host a conference call at 10:00 a.m.
  (EST)  on  Thursday, August 2, 2001, to discuss these results.  The call will be
  led  by  Dynamic's  Chief  Executive  Officer,  Christopher  Assif.  Interested
  investors  can  access  the  call  via a webcast through the Company's web site,
  www.dht.com,  or  via  the StreetEvents web site, www.streetevents.com.  Replays
  will  be  available  on  these  web  sites for 30 days.  Investors interested in
  participating  in  the  live  conference  call  may  dial  877-721-9309.
  
  About  Dynamic
  Dynamic  Healthcare Technologies is transforming diagnostic medicine through its
  clinical  and  diagnostic  workflow  solutions  for  pathology,  laboratory  and
  radiology  services  in  hospitals,  clinics  and ambulatory care settings.  The
  company's  systems  are  installed  in more than 640 client locations, including
  half  of the nation's "Best Hospitals" and 40% of the "Best Hospitals" in cancer
  treatment,  as  reported  in  US  News  and  World Reports magazine.  Dynamic is
  expanding  its  reach  even  deeper into the care process through Internet-based
  clinical  connectivity  and  application  service provider capabilities marketed
  under  the  name  CoMed.
  
                              Forward  Looking  Statement
  
  This  press release contains forward looking statements that involve a number of
  risks and uncertainties, including, but not limited to, certain areas beyond the
  Company's  control  with  respect  to  future  business  events  and other risks
  detailed  from  time  to  time  in the Company's filings with the Securities and
  Exchange  Commission.
  
                                   -tables follow-
  DYNAMIC HEALTHCARE TECHNOLOGIES, INC. REPORTS SECOND QUARTER 2001 EARNINGS                   (PAGE 3)
  SELECTED FINANCIAL DATA
                                           DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
                                                STATEMENTS OF OPERATIONS
  
                                                              THREE MONTHS ENDED                         SIX MONTHS ENDED
                                                        JUNE 30, 2000      JUNE 30, 2001          JUNE 30, 2000      JUNE 30, 2001
                                                        -------------    ---------------          -------------  ------------------
                                                         (UNAUDITED)         (UNAUDITED)           (UNAUDITED)        (UNAUDITED)
  Operating revenues:
      Computer system equipment sales and support              155,510   $      207,877                573,506   $      536,309
      Application software licenses                          1,996,275        1,748,330              3,505,958        3,247,507
      Software support                                       2,925,892        2,877,177              5,826,009        5,779,509
      Services and other                                     1,388,350        1,510,805              3,142,631        2,989,021
                                                        --------------   ---------------            ------------   -----------------
                 Total operating revenues                    6,466,027        6,344,190             13,048,104       12,552,346
                                                        --------------   ---------------            ------------   -----------------
  
  Costs and expenses:
      Cost of products sold                                    456,776          484,443                983,065        1,025,445
      Software amortization                                    569,462          328,960              1,149,483          639,893
      Client services expense                                2,560,281        2,224,993              5,146,707        4,723,449
      Software development costs                             1,123,561        1,109,613              2,350,572        2,168,427
      Sales and marketing                                    1,141,630        1,249,829              2,227,456        2,686,779
      General and administrative                             1,046,330        1,105,460              1,957,713        2,255,074
      Realignment costs                                              -          465,204                      -          465,204
                                                        --------------   ---------------            ------------   -----------------
                 Total costs and expenses                    6,898,040        6,968,502             13,814,996       13,964,271
                                                        --------------   ---------------            ------------   -----------------
  Operating income (loss)                                    (432,013)        (624,312)              (766,892)      (1,411,925)
                                                        --------------   ---------------            ------------   -----------------
  Other income (expense):
        Interest expense and financing costs                  (44,778)         (58,467)                (85,588)       (128,202)
        Interest income and other                               27,979           16,259                  54,239          64,421
        Gain/(Loss) on disposal of fixed assets               (30,493)               -*                (30,603)               -
                                                        --------------   ---------------            ------------   -----------------
                 Total other income (expense)                 (47,292)         (42,208)                (61,952)        (63,781)
                                                        --------------   ---------------            ------------   -----------------
  Earnings (loss) before income taxes                        (479,305)        (666,521)               (828,844)      (1,475,707)
  Income taxes                                                       -                -                       -                -
                                                        --------------   ---------------            ------------   -----------------
  Net earnings (loss)                                  $     (479,305)  $     (666,521)         $     (828,844)  $   (1,475,707)
                                                        ==============   ===============          ===============  =================
  
  Net earnings (loss) available for common
  shareholders                                         $     (519,305)   $    (706,521)         $     (908,844)  $   (1,555,707)
                                                        ==============   ===============          ===============  =================
  Weighted average number of common and potential
  common shares outstanding assuming full dilution
   - basic and diluted                                       6,304,521        6,476,047               6,295,487        6,475,301
                                                        ==============   ===============          ===============  =================
  
  Earnings (loss) per common share basic and
  diluted                                              $        (0.08)   $       (0.11)         $        (0.14)  $        (0.24)
                                                        ==============   ===============          ===============  =================
  
  EBITDA                                               $       360,255   $       50,655         $     1,012,767  $     (220,518)
                                                        ==============   ===============          ===============  =================
  
                                                                BALANCE SHEETS
  
                                                     December 31, 2000      JUNE 30, 2001
                                                     -----------------      -------------
                                                                             (UNAUDITED)
  ASSETS
  Current assets:
      Cash and cash equivalents                      $       3,197,743    $     893,094
      Accounts receivable, net                               5,309,700        3,767,561
      Unbilled receivables                                   3,633,931        4,751,559
      Contracts receivable - current                           329,255          286,795
      Other current assets                                     848,652          724,974
                                                     -----------------      -------------
          Total current assets                              13,319,281       10,423,983
  Property and equipment, net                                3,507,870        3,149,277
  Capitalized software development costs, net                4,093,560        3,509,540
  Goodwill, net                                                847,934          644,159
  Contracts receivable - non-current                           713,052          597,763
  Other assets                                                  22,872           17,479
                                                     -----------------      -------------
                                                     $      22,504,569    $  18,342,201
                                                     =================      =============
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
      Accounts payable and accrued expenses          $       3,061,461    $   2,733,558
      Deferred revenue                                       5,929,122        5,992,778
      Advance billings                                       1,197,266        1,993,429
      Line of credit                                         2,875,000                0
      Deferred lease incentives                                190,230          190,230
      Other current liabilities                                380,335          306,483
                                                     -----------------      -------------
          Total current liabilities                         13,633,414       11,216,478
  Deferred lease incentives - non-current                      602,403          507,288
  Other                                                        639,740          504,983
                                                     -----------------      -------------
          Total liabilities                                 14,875,557       12,228,749
                                                     -----------------      -------------
  
  Shareholders' equity:
     Series C preferred stock                                1,811,327        1,811,327
     Common stock                                               64,494           64,761
     Warrants                                                    3,000            3,000
     Additional paid-in capital                             45,830,110       45,789,990
     Deficit                                              (39,837,199)     (41,312,906)
                                                     -----------------      -------------
     Less: notes receivable from officer                     (242,720)        (242,720)
                                                     -----------------      -------------
          Total shareholders' equity                         7,629,012        6,113,452
                                                     -----------------      -------------
                                                     $      22,504,569   $   18,342,201
                                                     =================      =============
  
  The financial data should be read in conjunction with the disclosures contained in the Company's Form 10-K
  For the year ended December 31, 2000. Prior years common shares have been retroactively adjusted to reflect reverse stock split.