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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

                                   (Mark One)

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

                   For the fiscal year ended December 31, 2002

                                       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:

                             PAINCARE HOLDINGS, INC.
             (Exact Name of Registrant as Specified in its Charter)

                 Florida                                      06-1110906
  (State or other jurisdiction of incor-                   (I.R.S. Employer
poration or organization)                               Identification Number)

       37 N. ORANGE AVENUE, SUITE 500
              ORLANDO, FLORIDA                                   32801
(Address of principal executive offices)                       (Zip Code)

       Registrant's telephone number, including area code: (407) 926-6615

                             HelpMate Robotics, Inc.

                                   Connecticut
                         (State or other jurisdiction of
                         incorporation or organization)

          Shelter Rock Lane, Danbury, Connecticut 06810: (203) 798-8988
           (Former name, former address, if changed since last report)

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

                         Common Stock, $.0001 par value
                                (Title of Class)

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B (Section 29.405 of this chapter) is not contained in this form,
and no disclosure will be contained, to the best of Registrant's

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knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this
Form 10-KSB. [ ]

The Registrant's revenues for the year ended December 31, 2002 were $7,497,942.

As of March 19, 2003, the aggregate market value of the voting and non-voting
common equity of the Registrant based upon the last sale price of $1.45 for such
common stock as quoted by the NASDAQ Over-The-Counter Bulletin Board (symbol
"PANC") held by non-affiliates of the Registrant was approximately $20,549,289.

As of March 19, 2003, there were 18,125,437 shares of the common stock of the
Registrant issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

The description in this Report relating to the contents of any agreements or
other documents are qualified in their entirety by reference to those documents,
copies of which are filed with this Report or otherwise filed with the
Securities and Exchange Commission.

FORWARD-LOOKING STATEMENTS

IN ADDITION TO HISTORICAL INFORMATION, THIS REPORT CONTAINS "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995, AND CAN BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS
"MAY", "EXPECT," "ANTICIPATE," "ESTIMATE," OR "CONTINUE" OR THE NEGATIVE
THEREOF, OR OTHER VARIATIONS THEREOF AND WHICH ARE THUS PROSPECTIVE. THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
REFLECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, COMPETITIVE PRESSURES, CHANGING
ECONOMIC CONDITIONS, FACTORS DISCUSSED IN THE SECTION ENTITLED "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS", AND
OTHER FACTORS, SOME OF WHICH WILL BE OUTSIDE THE CONTROL OF MANAGEMENT. READERS
ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS,
WHICH REFLECT MANAGEMENT'S ANALYSIS ONLY AS OF THE DATE HEREOF. THE COMPANY
UNDERTAKES NO OBLIGATION TO PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES THAT ARISE AFTER THE DATE HEREOF. READERS SHOULD
REFER TO AND CAREFULLY REVIEW THE INFORMATION DESCRIBED IN FUTURE DOCUMENTS THE
COMPANY FILES WITH THE SECURITIES AND EXCHANGE COMMISSION.

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                                TABLE OF CONTENTS

PART I......................................................................   1

   Item 1.  Description of Business.........................................   1
   Item 2.  Description of Property.........................................  11
   Item 3.  Legal Proceedings...............................................  11
   Item 4.  Submission of Matters To A Vote of Security Holders.............  11

PART II.....................................................................  13

   Item 5.  Market for Common Equity and Related Stockholder Matters........  13
   Item 6.  Management's Discussion and Analysis of Financial Condition and
               Results of Operations........................................  15
   Item 7.  Financial Statements............................................  28
   Item 8.  Changes in and Disagreements with Accountants on Accounting and
               Financial Disclosure.........................................  28

PART III....................................................................  29

   Item 9.  Directors, Executive Officers, Promoters and Control Person.....  29
   Item 10. Executive Compensation..........................................  33
   Item 11. Security Ownership of Management and Principal Stockholders.....  36
   Item 12. Transactions with Management and Other Related Parties..........  38
   Item 13. Exhibits and Reports on Form 8-K................................  39
   Item 14. Controls and Procedures.........................................  40

SIGNATURES..................................................................  41

PART F/S.................................................................... F-1

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                                     PART I

Item 1. Description of Business

Overview

          PainCare Holdings, Inc. (the "Company" or "PainCare") is a high-tech
health care services company that provides pain management, minimally invasive
spine surgery and orthopedic rehabilitation services to patients seeking pain
relief. The Company has developed its "Three Pillar" business approach to
provide an integrated combination of products and services to patients seeking
pain relief through Pain Management technologies, Minimally Invasive Spine
Surgery (MIS) and Orthopedic Rehabilitation. MIS or "band-aid" surgery is a
specialized surgical technique based on currently available endoscopic
technologies, which allows physicians to provide the most technically advanced
treatment of back and neck pain in an outpatient environment. Orthopedic
Rehabilitation is a comprehensive program that advances functional restoration
of the musculoskeletal system utilizing state of the art computerized MedX
medical exercise machines.

The Company has two profit centers:

     .    We provide a turn-key orthopedic rehabilitation program utilizing MedX
          equipment for select orthopedic, neurosurgery, physiatry and pain
          physician practices. We currently have eighteen centers in operation
          or in the process of being deployed.

     .    We acquire or manage highly profitable pain management and orthopedic
          physician practices to serve as a delivery platform for the companies
          three integrated musculoskeletal services. We currently own one spine
          surgery and two pain management practices, and manage a minimally
          invasive pain procedures practice.

          We began our business in August 2000 through the reorganization of a
predecessor corporation. The Company maintains its principal executive offices
at 37 N. Orange Avenue, Suite 500, Orlando, Florida 32801. Our telephone number
is (407) 926-6615. Our Internet website addresses is as follows:
www.paincareinc.com

Historical Background

               The Company was initially incorporated in State of Connecticut in
May, 1984 under the name of HelpMate Robotics, Inc. Prior to the sale of its
business in December 1999, HelpMate was primarily engaged in the design,
manufacture, and sale of HelpMate's flagship product, the HelpMate's courier
system, a trackless robotic courier used primarily in the health care industry
to transport materials. On December 30, 1999, HelpMate sold substantially all of
its assets to Pyxis Corporation ("Pyxis").

          Following the sale to Pyxis in December 1999, HelpMate's business plan
was to effect a business combination with an operating business, which HelpMate
believed to have the potential to increase stockholder value.

          On December 20, 2001, HelpMate entered in an Agreement and Plan of
Merger with PainCare, Inc., a Nevada corporation (the "Merger Agreement"), which
was consummated on July 17, 2002 (the "Merger"). Pursuant to the Merger,
PainCare, Inc. became a wholly-owned

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subsidiary of HelpMate. In connection with the Merger, the shareholders of
PainCare, Inc. received voting common stock of HelpMate.

          The Merger was accounted for in accordance with accounting principles
generally accepted in the United States. No goodwill or intangibles were
recorded because the merger is essentially a recapitalization transaction and
has been accounted for in a manner similar to a reverse acquisition, identifying
PainCare, Inc. as the accounting acquirer.

          Holders of PainCare, Inc. common stock received shares of HelpMate
common stock at a conversion rate of one (1) share of HelpMate common stock for
each one share of PainCare, Inc. common stock surrendered. As of the date the
Merger was consummated there were 7,555,357 shares of PainCare's common stock
issued and outstanding. Holders of PainCare, Inc. options, warrants and other
derivatives have the right to exercise those derivatives for HelpMate's common
stock.

          HelpMate had 900,122 shares of common stock outstanding as of the date
of the Merger. There were no other shares of HelpMate capital stock or
derivatives issued or outstanding.

          In summary, PainCare, Inc. security holders received an aggregate of
11,789,816 shares of HelpMate common stock in the merger, or approximately 93%
of the issued and outstanding shares of HelpMate common stock, assuming the
exercise or conversion of all issued and outstanding PainCare, Inc. stock
options, warrants and convertible notes.

          On December 12, 2002, the Company completed the acquisition of the
outstanding capital stock of Pain and Rehabilitation Network, Inc., a pain
management physician practice headquartered in Orange Park, Florida. The capital
stock was acquired from Andrea Trescot, M.D., the sole shareholder. Dr. Trescot
had no prior relationships with the Company. The purchase price consisted of
$1,000,000 in cash and 1,000,000 shares of the Company's common stock valued at
$1.00 per share. The Company may also make additional payments of up to
$2,000,000 in cash and common stock if certain net earnings goals are achieved
in each of the first three fiscal years following the closing. The acquisition
has been accounted for using the purchase method of accounting. The Company
funded the cash portion of the purchase price of Pain and Rehabilitation
Network, Inc. from the proceeds of a debt financing obtained from Arthur J.
Hudson, a director of the Company. The terms of the loan from Mr. Hudson require
the Company to make monthly interest payments at the annual rate of 8% with the
entire principal and unpaid interest due on December 31, 2004. In addition, the
Company issued Mr. Hudson a warrant to purchase 100,000 shares of the Company's
common stock at an exercise price of $0.70 per share.

Annual Meeting

          On September 27, 2002 the Company filed a Definitive Proxy Statement
with the SEC with respect to the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of its stockholders (the
"Annual Meeting"), which was held on November 8, 2002. With respect to the
proposals set forth in the Proxy Statement, the Company set the record date as
of the close of business on October 4, 2002 (the "Record Date") for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, there were 8,788,812 shares issued to Company
stockholders which were entitled to vote.

                                       2

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          At the Annual Meeting of the Company stockholders, the following
matters were approved:

          1. Election of Directors. The board of directors of the Company
          nominated and the stockholders elected the following individuals to
          serve on the Company's board until the next annual meeting of the
          stockholders or until their successors are nominated and appointed:

                                  First Became a       Office Held
Name of Nominee        Age   Director of the Company   with Company
---------------        ---   -----------------------   ------------
Randy Lubinsky          50             2002            Director /CEO
Jay L. Rosen, M.D.      44             2002            Director/President
Mark Szporka            47             2002            Director/CFO
Peter Rothbart, M.D.    64             2002            Director
Merrill Reuter, M.D.    42             2002            Director
Ron Riewold             55             2002            Director
Arthur J. Hudson        51             2002            Director
Robert Fusco            52             2002            Director

          2. Approval of Reincorporation in Florida. The stockholders approved a
proposal by the board to change the Company's state of incorporation from
Connecticut to Florida. The Reincorporation was effected on November 18, 2002 by
merging the Company with and into PainCare Holdings, Inc., a Florida
corporation, a corporation formed by the Company for the purpose of the
reincorporation.

          As a result of the reincorporation, each outstanding share of
HelpMate's common stock has been automatically exchanged for one share of the
common stock of PainCare Holdings, Inc.. The Company has ceased to exist as a
Connecticut corporation, and PainCare Holdings, Inc. is the continuing or
surviving corporation of the reincorporation. Thus, PainCare Holdings, Inc. has
succeeded to all of the business and operations, owns all of the assets and
other properties and has assumed and become responsible for all of the
liabilities and obligations of the combined companies. The Reincorporation, did
not involve any change in the business, properties or management of the Company.

          The reincorporated Company's Articles of Incorporation authorizes
75,000,000 shares of common stock, par value $0.0001 per share and 10,000,000
shares of Preferred Stock, par value $0.0001. No shares of any capital stock
were issued in connection with the reincorporation.

          Shareholders whose shares of the Company's common stock were freely
tradable before the reincorporation now own freely tradable shares of PainCare
Holdings, Inc. Similarly, any shareholders holding securities with transfer
restrictions before the reincorporation hold shares of PainCare Holdings, Inc.
that have the same transfer restrictions.

                                       3

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          The Company continues to be a publicly held company and is now quoted
on the OTC Bulletin Board under the symbol "PANC."

          In accordance with accounting principles generally accepted in the
United States, the reincorporation has been accounted for as a reorganization of
entities under common control and recorded at historical cost.

          Florida law differs in certain respects from Connecticut law. For a
discussion of these differences, prospective investors are urged to review the
Company's Proxy Statement.

          3. Approval of Name Change of Helpmate Robotics, Inc. to PainCare
Holdings, Inc. While the stockholders also approved an amendment to the
Company's Certificate of Incorporation for the purpose of changing the name of
the Company from HelpMate Robotics, Inc. Inc. to PainCare Holdings, Inc., this
matter became moot as a result of the approval of the Company's stockholders of
the reincorporation of the Company in the State of Florida with the attendant
name change as noted above.

          4. Amendment to Increase the Number of Authorized Common Stock to
75,000,000 and to Add a Class of Stock. Likewise, the stockholders also approved
an amendment to the Company's Certificate of Incorporation to authorize an
increase from 40,000,000 shares of common stock to 75,000,000 shares of common
stock, no par value and to authorize up to 10,000,000 shares of common stock, no
par value. However, this matter became moot as a result of the approval of the
Company's stockholders of the reincorporation of the Company in the State of
Florida with the attendant change in capital structure as noted above.

          5. Ratification of Parks, Tschopp, Whitcomb, and Orr as Our Auditors.
Parks, Tschopp, Whitcomb, and Orr was engaged on August 6, 2002 following the
merger with PainCare, Inc. as the Company's independent certified public
accountants. As recommended by the board, the stockholders of the Company
ratified and approved Parks, Tschopp, Whitcomb, and Orr as the Company's
auditors.

Our Business

          The Company has been reorganized for the purpose of establishing a
North American network of pain management, minimally invasive surgery and
orthopedic rehabilitation centers. The Company has developed its "Three Pillar"
business approach to provide an integrated combination of products and services
to patients seeking pain relief through Company Management technologies,
Minimally Invasive Spine Surgery (MIS) and Orthopedic Rehabilitation. MIS or
"band-aid" surgery is a specialized surgical technique based on currently
available endoscopic technologies, which allows physicians to provide the most
technically advanced treatment of back and neck pain in an outpatient
environment. Orthopedic Rehabilitation is a comprehensive program that advances
functional restoration of the musculoskeletal system utilizing state of the art
computerized MedX medical exercise machine

          It is the intention of management that the PainCare's Pain Management
and Orthopedic Centers will specialize in the full spectrum of diagnosis and
treatment of pain, with a concentration on chronic back and neck pain. The basic
premise, after accurate diagnosis, is to establish the least invasive course of
treatment possible. A common cause of persistent back pain is disc herniation.
The Company's management believes that many herniated discs can be easily
treated on an outpatient basis with minimally invasive surgery ("MIS").
Unfortunately, spine surgeons not trained in this procedure often resort to more
invasive back surgery. This adds anxiety and potentially frightens away
qualified patients in need of surgery. Patients visiting a

                                       4

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PainCare Center will know, in advance, that participating physicians will avoid
major surgery whenever possible while providing the latest treatment techniques
in pain management, thus immediately relieving their level of anxiety.

          The Company has packaged a broad spectrum of pain management
treatments and therapies in its Pain Management and Orthopedic Centers. MIS
surgical procedures are revenue producing, cost effective, profitable, and very
time efficient. Management believes that by establishing a chain of Pain
Management and Orthopedic Centers that provide minimally invasive spinal surgery
and orthopedic rehabilitation services, it will generate significant new
revenues and be highly profitable. This multidisciplinary approach is very
appealing to:

               .    Patients, due to its non-threatening and effective approach;
               .    Insurance companies, because MIS reduces costs;
               .    Physicians, due to its potential to significantly increase
                    their net income; and
               .    Investors, because of its innovative approach and its
                    profitability.

Industry Background

          The Company believes that overall healthcare expenditures will
continue to increase with the aging of the population and the extension of
healthcare coverage to previously uninsured groups. In recent years, government
programs, private insurance companies, managed care organizations and
self-insured employers have implemented various cost containment measures to
limit the growth of healthcare expenditures. These cost containment measures,
together with technological advances, have resulted in a significant shift in
the delivery of healthcare services away from traditional inpatient hospitals to
more cost effective alternatives, including outpatient surgery, pain management,
and minimally invasive spine surgery.

          Managed care organizations, with significant numbers of covered lives,
are seeking to direct large numbers of patients to high quality, low cost
providers and provider groups. In order to compete for the growing number of
managed care patients, some hospitals, physicians, and other providers,
including alternate site outpatient providers, are forming integrated delivery
systems or provider joint ventures. Management believes that its business model
fits well within this system, with its proposed multidisciplinary practice
approach, its joint venture relationships with existing surgery and MRI centers,
and its cost effective and efficient new surgical and treatment techniques.

          Pain management has been quite varied throughout the years, including
such treatment courses as medication, exercise, physiotherapy, chiropractic
manipulation, and surgery. If surgery is indicated, traditional methods have
involved a major traumatic procedure, including a long and expensive stay in a
hospital plus a lengthy and painful recuperation. This fragmented approach has
caused inconsistent results, and has created a sense of anxiety and apprehension
among many patients regarding the direction to take for diagnosis and treatment.
Therefore, many patients prefer the least invasive and painful course, avoid
surgery, or manage their pain independently. Many continue to live with pain
rather than undergoing major back surgery. This concern appears to be changing
with the growing acceptance of Minimally Invasive Spine Surgery.

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          According to Stifel, Nicolaus & Company, Inc., in 1998 an estimated
816,000 spinal surgeries were performed in the U.S., creating a potential market
of approximately 408,000 MIS procedures. The number of outpatient spinal
surgeries is not available but management of the Company believes that the total
outpatient surgery is increasing significantly. Management also believes that
the number of outpatient MIS procedures will continue to increase significantly
in the future.

          Management of the Company believes that the number of outpatient
procedures will increase along with the expected increase in the number and use
of outpatient surgery centers. The ratio of procedures performed in these
freestanding surgery centers is expected to increase due to their greater
convenience and the continuing pressure by payers to reduce cost.

          Due to market and demographic changes in the fields of Anesthesiology,
Neurology and Orthopedic Surgery, the experience of the management of the
Company reflects that physician salaries have remained stagnant or have
decreased. Management believes that this, in turn, has resulted in an increased
interest in pain treatment, as a means of revenue enhancement in these
specialties.

          Pain medicine has long been the province of the specialty of
Anesthesiology. As a result of this, the majority of pain treatment centers or
clinics are run by Anesthesiologists.

          Nationally, modest growth in the number of pain centers occurred until
the mid-1980's, and even at the present time, the overwhelming majority of pain
centers were located within hospitals and outpatient centers. However, the pain
medicine marketplace is experiencing substantial growth as evidenced by the
continual media attention given to this topic. With the introduction of safer
anti-convulsant medications, safer anti-depressants, and improved intervention
procedures, management believes that the practice of Pain Medicine is maturing
rapidly into an important, if not essential component to the delivery of basic
medical services.

Company Products and Services

          Minimally Invasive Spine Surgery (MIS)

          MIS responds to the market demand with an effective and less traumatic
alternative treatment. It is frequently performed as an ambulatory procedure at
an outpatient surgery center, requiring only a local or light general
anesthetic. There is only a tiny incision, usually requiring only local
anesthetic, with the entire procedure being performed through a small sleeve.
Micro-spinal discectomy instruments, a high tech endoscope and a laser probe are
inserted into the sleeve, under fluoroscopic x-ray guidance, during surgery.
Part of the disc is cut and removed, relieving the pressure on the nerve root
causing the pain. Then the affected disc is shrunk and tightened with the laser.
The actual operating time is approximately 30-45 minutes per disc, considerably
less than traditional surgery.

          The benefits of this mode of treatment over traditional open disc
surgery are many. The patient experiences decreased anxiety from not having to
undergo major surgery. The risks associated with major surgery are potentially
reduced. The surgery is relatively quick and effective, often resulting in
immediate relief of pain. There is minimal surrounding tissue damage as compared
to traditional open surgery, and nerve pain is often reduced. The patient is
often able to walk out of the outpatient surgery center, and to return to normal
activities within a short period of time, and without significant pain. Finally,
it is cost effective, with the entire procedure costing up to

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40% less than that of traditional open disc surgery. MIS is a new technique that
seeks to maximize patient and payer satisfaction, with a reduction of residual
symptoms.

          Orthopedic Rehabilitation

          It is anticipated that PainCare's Orthopedic Rehabilitation program
will provide advanced testing, strengthening and rehabilitation utilizing state
of the art MedX equipment. Medical outcomes data along with extensive research
performed both clinically and academically demonstrate the efficacy of the MedX
technology for the rehabilitation of soft-tissue injuries. MedX has committed to
provide to PainCare Management Services, Inc., pursuant to a lease agreement,
MedX equipment for 15% of the net revenues of PainCare Management Services, Inc.
The program will increase strength, range of motion, decrease or eliminate pain
and increase functional abilities, thus enhancing quality of life. The equipment
will be utilized in PainCare's Pain Management and Surgery Centers. In addition
the program will be offered to select orthopedic surgeon practices on a turnkey
basis.

"Three Pillars" of Expanded Ancillary Services

          By providing Pain Management, Orthopedic Rehabilitation and developing
the MIS technology within each Center, the Company anticipates expanding through
organic growth the existing billable practice revenues. The Company's model is
based on the "Three Pillars" of expanded services. Within this model, the
Company has identified three profitable outpatient services that are typically
referred to providers outside of the private physician's practice. The Company
model incorporates these services, and their additional revenues, into the
practice structure to significantly increase profits. The Company's Three Pillar
Model includes:

               .    Pain Management
               .    Orthopedic Rehabilitation
               .    Minimally Invasive Surgery

          Within this service delivery structure, the practice will be able to
bill for the facility charges in addition to the customary professional services
of a medical/surgical practice when combined with an out-patient surgery center.
Likewise, the expansion of practice specialties will be evaluated and
implemented as appropriate to potentially include an additional spine surgeon,
internist/GP, neurologist, pain specialist, physiotherapist, and others. These
will also contribute to potential increases in practice revenues.

Sales and Marketing

          The Company has limited internal marketing and sales resources and
personnel. In order to market any services it may develop, the Company will have
to develop a marketing and sales force with technical expertise and distribution
capability (or out source such duties to independent contractors). There can be
no assurance that the Company will be able to establish sales and distribution
capabilities or that the Company will be successful in gaining market acceptance
for any services it may develop. There can be no assurance that the Company will
be able to recruit and retain skilled sales, marketing, service or support
personnel, that agreements with payors will be available on terms commercially
reasonable to the Company, or at all, or that the Company's marketing and sales
efforts will be successful. Failure to successfully establish a

                                       7

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marketing and sales organization, whether directly or through third parties,
would have a material adverse effect on the Company's business, financial
condition, cash flows, and results of operations.

Product Development

          New advances in technologies and anesthesia have opened the doors to
develop new techniques, such as MIS and pain management, allowing them to be
performed in more accommodating and cost effective settings such as outpatient
freestanding facilities. Lasers, fiberoptic endoscopes, real time x-ray
visualization, digital photography, micro-surgical instruments, and advanced
video monitoring have reduced the trauma and recovery time of these once major
surgical procedures. Improved anesthesia has shortened recovery time by
maximizing the use of local anesthesia and minimizing post-operative side
effects such as nausea and drowsiness, thereby in many instances avoiding the
need for overnight hospitalization. With MIS, the surgical procedure is often
significantly reduced, and the recovery period is minimized due to limited
trauma and the primary use of local anesthesia. Patients are usually able to
walk out of the facility within approximately one to two hours after the
completion of surgery. Many even go out for dinner the evening of surgery.

Competition

          Minimally invasive spinal surgery and pain management are relatively
recent and evolving specialties and techniques, with few well trained physicians
having the expertise to perform the procedures. There are, to the Company's
knowledge, only two large networks, HealthSouth, Inc. and U.S. Physical Therapy,
Inc., dedicated primarily to MIS, orthopedic rehabilitation and pain management,
although numerous companies compete in one or more segments of the Company's
business.

Employees

          As of March 20, 2003, the Company and its subsidiaries employed 114
persons, of which 94 are full time and 20 are licensed physicians.

          The Company's ability to provide its services is dependent upon
recruiting, hiring, and retaining qualified technical personnel. To date, the
Company has been able to recruit and retain sufficient qualified personnel. None
of the Company's employees is represented by a labor union. The Company has not
experienced any work stoppages and considers its relations with its employees to
be good.

Regulatory Environment

          A substantial portion of the Company's business operations including
its corporate offices are located in Florida. Florida's prohibition on
self-referrals, Fla. Stat. (S)455.654 ("Self-Referral Act"), prohibits health
care providers from referring patients, regardless of payment source (not just
Medicare and Medicaid beneficiaries), for the provision of certain designated
health services ("Florida Designated Health Services") to an entity in which the
health care provider is an investor or has an investment interest. Under the
Self-Referral Act, Florida Designated Health Services are defined as clinical
laboratory, physical therapy, and comprehensive rehabilitative,
diagnostic-imaging and radiation therapy services. The Company

                                       8

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plans to purchase and currently operates facilities that provide some or all of
these Florida Designated Health Services. All health care products and services
not considered Florida Designated Health Services are classified as "other
health services." The Self-Referral Act also prohibits the referral by a
physician of a patient for "other health services" to an entity in which that
physician is an investor, unless (i) the physician's investment interest is in
the registered securities of a publicly traded corporation whose shares are
traded on a national exchange or over-the-counter market and which has net
equity at the end of its most recent fiscal quarter in excess of $50,000,000; or
(ii) the physician's investment interest is in an entity whereby (a) no more
than 50% of the value of the investment interests in the entity may be held by
investors who are in a position to make referrals to the entity; (b) the terms
under which an investment interest is offered must be the same for referring
investors and non-referring investors; (c) the terms under which an investment
interest is offered may not be related to the investor's volume of referrals to
the entity; and (d) the investor must not be required to make referrals or be in
the position to make referrals to the entity as a condition for becoming or
remaining an investor.

          Entities that meet either exception must also (i) not lend to or
guarantee a loan to an investor who is in a position to make referrals if the
investor uses any part of that loan to obtain the investment interest, and (ii)
distribute profits and losses to investors in a manner that is directly
proportional to their capital investment.

          The Self-Referral Act excludes from the definition of "referral"
certain services provided by specific health care providers such as referrals by
a cardiologist for cardiac catheterization services. There are, however, no
assurances that the definition of what constitutes a referral will remain in
place.

          The definition of referral also excludes services by a health care
provider who is a sole provider or member of a group practice that are provided
solely for the referring health care provider's or group practice's own
patients. Physician investors cannot refer to the Company for Florida Designated
Health Services based upon this exception under the Self-Referral Act because
the Company does not provide Florida Designated Health Services solely for the
referring physician's or his or her group practices own patients. So long as
physician investors do not refer to the Company for Florida Designated Health
Services, the Company believes it will be in compliance with the Self-Referral
Act. Although the Company will have mechanisms in place to monitor referrals
from physician investors, it is the responsibility of the physician investors to
comply with the Self-Referral Act and there can be no assurances that physician
investors will comply with such law. Violations thereof could adversely affect
the Company, as well as result in regulatory action against it.

          The Self-Referral Act also imposes certain disclosure obligations on
the Company and physician investors that are referring physicians. Under the
Self-Referral Act, a physician may not refer a patient to an entity in which he
or she is an investor, even for services that are not Florida Designated Health
Services, unless, before doing so, the patient is given a written statement
disclosing, among other things, the physician's investment interest in the
entity to which the referral is made. The Self-Referral Act also imposes
disclosure obligations on the entities to which physician investors refer
patients. Appropriate disclosures will be required for physician investors. It
is the responsibility of any referring physician investor to comply with such
statutes, regulations and professional standards. However, this law may
discourage certain physician investors from making referrals to the Company or
encourage patients to choose

                                       9

<PAGE>

alternative health care providers. In addition, the violation thereof could
adversely affect the Company, as well as result in regulatory action against it.

          The Federal statute relating to self-referrals, 42 USC (S)1395 nn (the
"Stark Law"), restricts the ability of a physician to refer patients for the
furnishing of certain designated health services ("Designated Health Services")
to health care entities when the physician (or immediate family member) has a
financial relationship, directly or indirectly, with the entity receiving the
referral. Moreover, the entity may not present or cause to be presented a claim
or bill for the Designated Health Services, either to the Medicare or Medicaid
programs or any other individual or third-party payor. The financial
relationship may be either an investment interest (either equity or debt) or a
compensation arrangement. Designated Health Services for purposes of the Stark
Law include: (i) clinical laboratory services, (ii) physical therapy services,
(iii) occupational therapy services, (iv) radiology services, including magnetic
resonance imaging, computerized axial tomography scans, and ultrasound services,
(v) radiation therapy services and supplies, (vi) durable medical equipment and
supplies, (vii) parenteral and enteral nutrients, equipment, and supplies,
(viii) prosthetics, orthotics, and prosthetic devices and supplies, (ix) home
health services, (x) outpatient prescription drugs, and (xi) inpatient and
outpatient hospital services.

          There are exceptions to the Stark Law that apply (i) to both ownership
or investment interests and compensation arrangements, (ii) only to ownership or
investment interests, or (iii) only to compensation arrangements. The current
structure of the Company will not meet any of the exceptions to permit a
physician investor's referral for Designated Health Services. Therefore,
physician investors cannot refer to the Company for Designated Health Services.
Although the Company will have mechanisms in place to monitor referrals from
physician investors, it is the responsibility of physician investors to comply
with the Stark Law and no assurance can be given that physician investors will
comply with such law.

          Two of the exceptions that protect only compensation arrangements are
for employees and personal services, and their requirements are similar to the
Safe Harbor requirements discussed above. However, unlike the Safe Harbors to
the Anti-Kickback Law, the exceptions to the Stark Law must be complied with
fully. The Company believes it currently meets the requirements of both of these
exceptions.

          Notwithstanding the Company's belief that it currently is in
compliance with the Stark Laws, no assurance can be given that a federal agency
charged with enforcement and/or interpreting the Stark Law, or a private party,
might not successfully assert a contrary position, or that future federal
statutes, regulations, administrative interpretations and/or judicial decisions
would cause an investor's referral to be prohibited, or result in the imposition
of penalties on the Company or investors. Even the assertion of a violation
could have a material adverse effect upon the financial condition and results of
the operation of the Company.

          Violations of the Florida and Federal self-referral laws may result in
substantial civil penalties and administrative sanctions for individuals or
entities, including exclusion from participation in the Medicare and Medicaid
programs, as well as the suspension or revocation of a physician's license to
practice medicine and surgery in Florida. Such sanctions, if applied to the
Company or any of its physician investors, would result in significant loss of
reimbursement and could have a material adverse effect on the Company.

                                       10

<PAGE>

          Florida also has a criminal prohibition regarding the offering,
soliciting, or receiving of remuneration, directly or indirectly, in cash or in
kind, in exchange for the referral of patients (the "Patient Brokering Act").
One of the exceptions to this prohibition is for business and compensation
arrangements that do not violate the Anti-Kickback Law. Accordingly, so long as
the Company is in compliance with the Anti-Kickback Law, then it will be in
compliance with the Patient Brokering Act.

          An Advisory Opinion procedure similar to that discussed above and the
Declaratory Statement procedure also are available for parties seeking guidance
as to whether a specific transaction violates the Stark Law or the Self-Referral
Act, as the case may be. Potential investors should be aware that the Company
does not intend to seek the guidance available under either of these procedures.

Item 2. Description of Property

          The Company leases approximately 1,200 square feet of office space in
Orlando, Florida for its corporate offices at an average monthly net rent of
$3,908 over the term of the lease. The lease expires in February 2004. Rothbart
Pain Management Clinic Inc. leases approximately 7,055 square feet of space in
Toronto, Canada that expire in 2003 and has a net monthly rental of
approximately $7,900. Advanced Orthopedics of South Florida, Inc. leases
approximately 5,900 square feet of space in Lake Worth, Florida under three
separate leases which expire at different dates ranging from 2003 to 2007. The
leases have a total net monthly rental of approximately $9,200. In connection
with the acquisition of Pain and Rehabilitation Network, Inc., the Company
leases approximately 6,067 square feet of space in Orange Park, Florida and has
a net monthly rental of approximately $7,838. The lease expires in 2013.

Item 3. Legal Proceedings

          Neither the Company, nor any of its subsidiaries are a party to any
legal action or proceeding which would have a material adverse effect on its
business or results of operation.


Item 4. Submission of Matters To A Vote of Security Holders

          On September 27, 2002 the Company filed a Definitive Proxy Statement
with the SEC with respect to the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of its stockholders (the
"Annual Meeting"), which was held on November 8, 2002. With respect to the
proposals set forth in the Proxy Statement, the Company set the record date as
of the close of business on October 4, 2002 (the "Record Date") for the
determination of stockholders entitled to notice of and to vote at the Annual
Meeting. As of the Record Date, there were 8,788,812 shares issued to Company
stockholders which were entitled to vote.

                                       11

<PAGE>

          At the Annual Meeting of the Company stockholders, the following
matters were approved:

    Vote  1: Election of Directors. The board of directors of the Company
nominated and the stockholders elected the following individuals to serve on the
Company's board until the next annual meeting of the stockholders or until their
successors are nominated and appointed:

NAME                        SHARES FOR       SHARES AGAINST         ABSTAIN
----                        ----------       --------------         -------

                        Proxy   In Person   Proxy   In Person   Proxy  In Person

Randy Lubinsky         7,155,380     0      3,518        0        0         0

Mark Szporka           7,155,380     0      3,518        0        0         0

Dr. Jay Rosen          7,155,380     0      3,518        0        0         0

Dr. Peter Rothbart     7,155,380     0      3,518        0        0         0

Dr. Merrill Reuter     7,155,380     0      3,518        0        0         0

Ronald Riewold         7,155,380     0      3,518        0        0         0

Arthur J. Hudson       7,155,380     0      3,518        0        0         0

Robert Fusco           6,789,774     0      3,992                346

    Vote  2: Approval of Reincorporation in Florida. The stockholders approved a
proposal by the board to change the Company's state of incorporation from
Connecticut to Florida as follows:

SHARES FOR:  Proxy: 5,879,427     SHARES AGAINST:  Proxy: 121,807
             In Person: 0                          In Person: 0

ABSTAIN:     Proxy: 1,970
             In Person: 0

          The Reincorporation was effected on November 18, 2002 by merging the
Company with and into PainCare Holdings, Inc., a Florida corporation, a
corporation formed by the Company for the purpose of the reincorporation.

          As a result of the reincorporation, each outstanding share of
HelpMate's common stock has been automatically exchanged for one share of the
common stock of PainCare Holdings, Inc. The Company has ceased to exist as a
Connecticut corporation, and PainCare Holdings, Inc. is the continuing or
surviving corporation of the reincorporation. Thus, PainCare Holdings, Inc. has
succeeded to all of the business and operations, owns all of the assets and
other properties and has assumed and become responsible for all of the
liabilities and obligations of the combined companies. The Reincorporation, did
not involve any change in the business, properties or management of the Company.

          The reincorporated Company's Articles of Incorporation authorizes
75,000,000 shares of common stock, par value $0.0001 per share and 10,000,000
shares of preferred stock, par value $0.0001. No shares of any capital stock
were issued in connection with the reincorporation.

          Shareholders whose shares of the Company's common stock were freely
tradable before the reincorporation now own freely tradable shares of PainCare
Holdings, Inc. Similarly, any shareholders holding securities with transfer
restrictions before the reincorporation hold shares of PainCare Holdings, Inc.
that have the same transfer restrictions.

          The Company continues to be a publicly held company and is now quoted
on the OTC Bulletin Board under the symbol "PANC."

          In accordance with accounting principles generally accepted in the
United States, the reincorporation has been accounted for as a reorganization of
entities under common control and recorded at historical cost.

    Vote  3: Approval of Name Change of Helpmate Robotics, Inc. to PainCare
Holdings, Inc. While the stockholders also approved an amendment to the
Company's Certificate of

                                       12

<PAGE>

Incorporation for the purpose of changing the name of the Company from HelpMate
Robotics, Inc. Inc. to PainCare Holdings, Inc., this matter became moot as a
result of the approval of the Company's stockholders of the reincorporation of
the Company in the State of Florida with the attendant name change as noted
above.

SHARES FOR:  Proxy: 7,155,139     SHARES AGAINST:  Proxy: 1,982
             In Person: 0                          In Person: 0

ABSTAIN:     Proxy: 1,777
             In Person: 0

     Vote 4: Amendment to Increase the Number of Authorized Common Stock to
75,000,000 and to Add a Class of Stock. Likewise, the stockholders also approved
an amendment to the Company's Certificate of Incorporation to authorize an
increase from 40,000,000 shares of common stock to 75,000,000 shares of common
stock, no par value and to authorize up to 10,000,000 shares of common stock, no
par value. However, this matter became moot as a result of the approval of the
Company's stockholders of the reincorporation of the Company in the State of
Florida with the attendant change in capital structure as noted above.

SHARES FOR:  Proxy: 5,864,798     SHARES AGAINST:  Proxy: 133,394
             In Person: 0                          In Person: 0

ABSTAIN:     Proxy: 5,006
             In Person: 0

     Vote 5: Ratification of Parks, Tschopp, Whitcomb, and Orr as Our Auditors.
Parks, Tschopp, Whitcomb, and Orr was originally engaged by PainCare, Inc. upon
its inception as the Company's independent certified public accountants. As
recommended by the board, the stockholders of the Company ratified and approved
the continuation of Parks, Tschopp, Whitcomb, and Orr as the Company's auditors.

SHARES FOR:  Proxy: 7,157,979     SHARES AGAINST:  Proxy: 325
             In Person: 0                          In Person: 0

ABSTAIN:     Proxy: 594
             In Person: 0

                                     PART II

Item 5. Market for Common Equity and Related Stockholder Matters

          The Company's common stock has traded on the Over-the-Counter Bulletin
Board under the symbol HELP since September 29, 1997. On March 18, 2002, the
Company in accordance with the Merger Agreement with PainCare, Inc. consummated
a 22.19 to 1 reverse stock split. Contemporaneous with the stock split, the
Company's symbol was changed to HMRB. Effective as of November 18, 2002, the
Company was reincorporated in the State of Florida and in connection with such
reincorporation, the Company's symbol was changed to PANC. On March 19, 2003,
the last sales price for the shares of common stock as reported on the
Over-the-Counter Bulletin Board was $1.45 per share.

          The table below sets forth, for the periods indicated, the reported
high and low sale prices (calculated based on the 22.19 to 1 reverse stock split
that occurred on March 18, 2002) of the Company's common stock on the
Over-the-Counter Bulletin Board.

                                                                   Common Stock
                                                                  -------------
                                                                  High     Low
                                                                  -----   -----
CALENDAR 2001

Quarter ending March 31, 2001..................................   $2.22   $1.11
Quarter ending June 30, 2001...................................   $1.78   $1.33
Quarter ending September 30, 2001..............................   $1.55   $1.33
Quarter ending December 31, 2001...............................   $2.22   $1.33

CALENDAR 2002

Quarter ending March 31, 2002..................................   $1.20   $1.20
Quarter ending June 30, 2002...................................   $1.20   $0.12

                                       13

<PAGE>

Quarter ending September 30, 2002..............................   $1.74   $0.12
Quarter ending December 31, 2002...............................   $1.01   $0.40

               The last sales price of our c ommon stock on March 19, 2003 as
reported on the NASDAQ OTC:BB was $1.45 per share.

          (b) Shareholders. As of March 19, 2003, we had 18,125,437 shares of
common stock outstanding and approximately 1,200 common stockholders of record.

          (c) Dividends. Since our Reincorporation we have not declared or paid
any cash dividends on our common stock and do not anticipate paying any cash
dividends in the foreseeable future. We currently intend to retain future
earnings, if any, to finance operations and the expansion of our business. Any
future determination to pay cash dividends will be at the discretion of the
board of directors and will be based upon our financial condition, operating
results, capital requirements, plans for expansion, restrictions imposed by any
financing arrangements and any other factors that the board of directors deems
relevant.

          (d) Recent Sales of Unregistered Securities.

          The following information sets forth certain information for all
securities sold by the Company during the past year without registration under
the Securities Act of 1933, as amended (the "Securities Act").

          From September 1, 2002 through December 31, 2002, our wholly-owned
subsidiary sold to certain accredited investors approximately 32 Units of its
Series A, 8% Senior Convertible Preferred Stock for $1,624,500 consisting of
approximately 384,000 shares of its Series A, 8% Senior Convertible Preferred
Stock. In accordance with the conversion privileges provided and exercised by
certain of these investors, the Company issued 2,979,526 shares of its common
stock in exchange for the Preferred Stock. The Company paid no commissions with
respect to these transactions. This Offering was terminated on January 10, 2003.

          On December 12, 2002, the Company completed the acquisition of the
outstanding capital stock of Pain and Rehabilitation Network, Inc., a pain
management physician practice headquartered in Orange Park, Florida. The Company
paid $1,000,000 in cash and delivered 1,000,000 shares of its common stock
valued at $1.00 per share.

          Beginning in October 2002, through a Board authorized private
placement of our common stock, the Company sold 2,538,461 common shares of the
Company at $0.65 per share, to two accredited investors. This offering was
closed in December 2002.

          With respect to the foregoing offers and sales of restricted and
unregistered securities, the Company relied on the provisions of Sections 3(b)
and 4(2) of the Securities Act and rules and regulations promulgated thereunder,
including, but not limited to Rules 505 and 506 of Regulation D, in that such
transactions did not involve any public offering of securities and were exempt
from registration under the Securities Act. The offer and sale of the securities
in each instance was not made by any means of general solicitation, the
securities were acquired by the investors without a view toward distribution,
and all purchasers represented to the Company that they were sophisticated and
experienced in such transactions and investments and able to bear the economic
risk of their investment. A legend was placed on the certificates and
instruments

                                       14

<PAGE>

representing these securities stating that the securities evidenced by such
certificates or instruments, as the case may be, have not been registered under
the Securities Act and setting forth the restrictions on their transfer and
sale. Each investor also signed a written agreement that the securities would
not be sold without registration under the Securities act or pursuant to an
applicable exemption from such registration.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

The following discussion should be read in conjunction with the Consolidated
Financial Statements and the related notes that appear elsewhere in this
document.

          This Report includes forward-looking statements made based on current
management expectations pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are not guarantees of
future performance and actual outcomes may differ materially from what is
expressed or forecasted. Factors that could cause future results to differ from
the Company's expectations include the factors described on page ii of this
Report under "Forward-Looking Statements" as well as under "Factors Affecting
Operating Results And Market Price Of Securities".

Outlook

          The Company has been reorganized for the purpose of establishing a
North American network of pain management, minimally invasive surgery and
orthopedic rehabilitation centers. The Company's strategy is to rapidly grow by
establishing a network of pain management, minimally invasive spine surgery and
orthopedic rehabilitation centers. The Company has developed its "Three Pillar"
business approach to provide an integrated combination of products and services
to patients seeking pain relief through Pain Management technologies, Minimally
Invasive Spine Surgery (MIS) and Orthopedic Rehabilitation. MIS or "band-aid"
surgery is a specialized surgical technique based on currently available
endoscopic technologies, which allows physicians to provide the most technically
advanced treatment of back and neck pain in an outpatient environment.
Orthopedic Rehabilitation is a comprehensive program that advances functional
restoration of the musculoskeletal system utilizing state of the art
computerized MedX medical exercise machines.

          It is the intention of management that the Company's Pain Management
and Orthopedic Centers will specialize in the full spectrum of diagnosis and
treatment of pain, with a concentration on chronic back and neck pain.
Management believes that by establishing a chain of Pain Management and
Orthopedic Centers that provide minimally invasive spinal surgery and orthopedic
rehabilitation services, it will generate significant revenues and will be
profitable.

Actual results may vary depending on the Company's results of operations.

Significant Accounting Policies and Estimates

          Management's Discussion and Analysis of Financial Condition and
Results of Operations discusses PainCare's consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial statements
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at

                                       15

<PAGE>

the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgments, including those related to marketing expenses,
customer incentives, student attrition rates, bad debts, intangible assets,
income taxes, financing operations, contractual obligations, restructuring
costs, retirement benefits, and contingencies and litigation. Management bases
its estimates and judgments on historical experience and on various other
factors that are believed to be reasonable under the circumstances, the results
of which form the basis for making judgments about the carrying values of assets
and liabilities that are not readily apparent from other sources. Actual results
may differ from these estimates under different assumptions or conditions.

          Our significant accounting policies are more fully described in Note 2
to our consolidated financial statements. However, certain of our accounting
policies are particularly important to the portrayal of our financial position
and results of operations and require the application of significant judgment by
our management; as a result they are subject to an inherent degree of
uncertainty. In applying those policies, our management uses its judgment to
determine the appropriate assumptions to be used in the determination of certain
estimates. Those estimates are based on our historical experience, terms of
existing contracts, our observance of trends in the industry, information
provided by our customers and information available from other outside sources,
as appropriate. Management believes the following critical accounting policies,
among others, affect its more significant judgments and estimates used in the
preparation of its consolidated financial statements.

          Our critical accounting policies include:

     . Revenue Recognition. Revenue from management fees is recognized under the
terms of the contract which is as the services are performed. Patient service
revenue is recognized at the time the service is performed at the estimated net
realizable amounts from patients, third-party payors and others for services
rendered. The Company is a provider under the Medicare program and various other
third-party payor arrangements which provide for payments to the Company at
amounts different from its established rates. Provisions for estimated
third-party payor settlements, if necessary, are provided in the period the
related services are rendered.

     . Financial Accounting Standards. In July 2001, the FASB issued Statement
of Financial Accounting Standards No. 142 ("SFAS 142"), which establishes
accounting standards for the recognition and measurement of an asset retirement
obligation and its associated asset retirement cost. The changes in these rules
may have a significant impact on our reported financial results. In June 2001,
the FASB issued Statement of Financial Accounting Standard (SFAS) No. 141,
Business Combinations and SFAS No.142, Goodwill and Other Intangible Assets.
These statements would continue to require recognition of goodwill as an asset
but would not permit amortization of goodwill as is currently required by
Accounting Principles Board (APB) Opinion No. 17, Intangible Assets. Under the
SFAS 142, goodwill would be separately tested for impairment using a
fair-value-based approach when an event occurs indicating the potential for
impairment. Any required goodwill impairment charges would be presented as a
separate line item within the operating section of the income statement. The
change from an amortization approach to an impairment approach would apply to
previously recorded goodwill, as well as goodwill arising from acquisitions
completed after the application of the new standard. The Company adopted SFAS
No. 142 for its fiscal year beginning January 1, 2002 and as a result, the
Company no longer amortized goodwill.

                                       16

<PAGE>

Analysis of Financial Condition and Results of Operations For The Twelve Months
Ended December 31, 2002 Compared To Twelve Months Ended December 31, 2001

          Total revenues increased to $7,497,942 for fiscal 2002, from
$4,852,153 in fiscal 2001, representing an increase of 54%. This increase is
primarily due to increased revenues at company-owned physician practices, the
management agreement with SpineOne, P.C. initiated in August 2001, the
acquisition of Pain & Rehabilitation Network, Inc. in December 2002, and the
addition of six new MedX Direct rehabilitation centers.

          Gross profit increased to $4,799,492 for fiscal 2002, from $2,738,458
in fiscal 2001, representing an increase of 75%. This increase is also
attributed to growth at the existing centers, the SpineOne, P.C. management
agreement, the acquisition of the Pain and Rehabilitation Network, Inc., and the
opening of new rehabilitation centers.

          Operating expenses increased by $1,462,501 to $3,675,464 for fiscal
2002, from $2,212,963 for fiscal 2001, representing an increase of approximately
66%. The increase is primarily due to costs incurred in fulfilling the Company's
obligations under the SpineOne, P.C. management agreement, the incidental costs
of being a publicly traded company, the staff and overhead expense associated
with the addition of a corporate business development group, an increase in
depreciation expense and the acquisition of the Pain and Rehabilitation Network,
Inc.

          Net interest expense increased by $178,855 in fiscal 2002, as a result
of the issuance of $300,000 of convertible debentures in December 2001 and an
increase of MedX equipment leases.

          Other income increased to $173,992 in fiscal 2002, from $0 in fiscal
2001. This increase is attributed to the forgiveness of accrued liabilities for
rent at Rothbart Pain Management Centers, which was accrued, but not paid.

          As a result of the above changes, net income was $705,034 in fiscal
2002, compared with net income of $345,804 in fiscal 2001.

          Actual revenues for the twelve months ended December 31, 2002 were
$7,497,942 and were derived from the following sources:

Government                                   $1,712,784   22.8%
Private Insurance                            $1,229,463   16.4%
Personal Injury                              $  878,189   11.7%
Workers Compensation                         $  702,550    9.4%
Management Fees                              $2,974,956   39.7%

                                       17

<PAGE>

Liquidity And Capital Resources

          Our cash and cash equivalents equaled $2,078,684 at December 31, 2002,
compared to $344,655 at December 31, 2001. The net cash used by our operations
was $(1,169,508) for fiscal 2002, compared to net cash provided in fiscal 2001
of $923,821.

          Cash used in investing activities was $(509,905) during fiscal 2002
compared with $(719,493) in fiscal 2001. This use is primarily due to the MedX
equipment purchased for the new orthopedic rehabilitation centers opened during
fiscal 2002 and the payment of debentures.

          Cash provided from financing activities was $3,413,442 in fiscal 2002,
compared with $29,716 during fiscal 2001. The increased financing activity in
2002 was the result of the proceeds of a convertible preferred stock offering
whose shares were subsequently converted to common stock, proceeds from a
private placement of common stock, an increase in capital leases on MedX
equipment purchases, and an increase in notes payable to finance the acquisition
of Pain and Rehabilitation Network, Inc.

          Considering our current cash position as well as our projected cash
flows for fiscal 2003, we believe, based upon current operations, business
strategies and reasonable expectations and assumptions, that our cash position
will be sufficient to fund our business operations. However, we will be unable
in the near term to continue to develop new product offerings, expand our
infrastructure and acquire new companies and businesses for which cash would be
required to consummate these transactions without obtaining an infusion of
additional capital.

Special Note Regarding Forward-Looking Statements and Risk Factors

          Certain statements in this Annual Report on Form 10-KSB contain
forward-looking statements. Forward-looking statements are any statements other
than statements of historical fact. Examples of forward-looking statements
include projections of earnings, revenues or other financial items, statements
of the plans and objectives of management for future operations, and statements
concerning proposed new products and services, and any statements of assumptions
underlying any of the foregoing. In some cases, you can identify forward-looking
statements by the use of words such as may, will, expects, should, believes,
plans, anticipates, estimates, predicts, potential, or continue, and any other
words of similar meaning.

          Statements regarding the Company's future financial performance or
results of operations, including expected revenue growth, EBITDA growth, future
expenses, future operating margins and other future or expected performance are
subject to the following risks: that projected operating efficiencies and
cost-reduction initiatives will not be achieved due to implementation
difficulties or contractual spending commitments that can't be reduced; the
acquisition of businesses or the launch of new lines of business, which could
increase operating expenses and dilute operating margins; the inability to
attract new customers; increased competition, which could lead to negative
pressure on the Company's pricing and the need for increased marketing; the
inability to maintain, establish or renew relationships with customers, whether
due to competition or other factors; costs associated with the Company's
initiatives to upgrade its technology platforms or the failure of the Company to
successfully complete that initiative; and to the general risks associated with
the Company's businesses.

                                       18

<PAGE>

FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF SECURITIES

          You should consider the risks described below before making an
investment decision. We believe that the risks and uncertainties described below
are the principal material risks facing our company as of the date of this Form
10-KSB. In the future, we may become subject to additional risks that are not
currently known to us. Our business, financial condition or results of
operations could be materially adversely affected by any of the following risks.
The trading price of our common stock could decline due to any of the following
risks.

THERE IS A LIMITED PUBLIC MARKET FOR OUR COMMON SHARES AND NO ASSURANCE THAT AN
ACTIVE TRADING MARKET WILL BE DEVELOPED OR MAINTAINED.

          There is a limited market for the Company's common stock. There can be
no assurance that an active trading market for the Company's common shares will
be developed or maintained. Historically, the market prices for securities of
development companies like the Company have been highly volatile. In fact,
during the last two (2) years, the Company's common stock price has ranged from
a low of $0.12 to a high of $2.22 (as determined on a reverse-split basis). The
market price of the shares could continue to be subject to significant
fluctuations in response to various factors and events, including the liquidity
of the market for the shares, announcements of potential business acquisitions,
and changes in general market conditions. The Company expects to continue to
file and be current in its Securities Exchange Act reporting requirements as it
pursues its business objective. Accordingly, management of the Company
anticipates that its stock will continue to be quoted in the near term on the
OTC Bulletin Board.

WE HAVE RECENTLY BEEN PROFITABLE BUT NO ASSURANCE CAN BE GIVEN THAT SUCH
PROFITABILITY WILL CONTINUE

          For the years ended December 31, 2001 and 2002, the Company realized
net income of $345,804 and $705,034, respectively.

          The Company expects to increase its spending significantly as it
continues to expand its product and service offerings and commercialization
activities. The Company will be dependent, in part, on the return of the market
for medical products and services. As a result, the Company will need to
generate significant revenues in order to continue to grow its business and
become profitable.

THE COMPANY'S BUSINESS PLAN MAY NOT BE SCALABLE OR COMMERCIALLY VIABLE AND AS A
RESULT THE EXPECTED INCREASE IN THE COMBINED COMPANY VALUE MAY NOT BE REALIZED

          There is no assurance that the Company's business plan will ever be
scalable or commercially viable and no assurance can be given that the Company
will maintain its profitability. In addition, prospects for the Company's
profitability will be affected by expenses, operational difficulties and other
factors frequently encountered in the development of a business enterprise in a
competitive environment, many of which factors may be unforeseen and beyond

                                       19

<PAGE>

the Company's control. Accordingly, the Company may never obtain the expected
growth and the value that would otherwise be expected.

OUR LACK OF OPERATING HISTORY MAKES EVALUATING OUR FUTURE PERFORMANCE DIFFICULT
AND THE CHALLENGE OF OPERATING A PUBLIC COMPANY WITHOUT EXPERIENCE MAY CAUSE THE
BUSINESS OPERATIONS AND FINANCIAL POSITION OF THE COMPANY TO BE ADVERSELY
AFFECTED.

          Because we have been operating only since August 2000, the market will
have little basis to evaluate our ability to develop, market and sell our
products and services. Our ability to commercialize these products and services
and generate operating profits and positive operating cash flow will depend
principally upon our ability to:

          attract and retain an adequate number of patients;

          enter new markets and compete successfully in them;

          manage operating expenses;

          raise additional capital to fund our capital expenditure plans; and

          attract and retain qualified personnel.

          The management of the Company will be challenged with the aspects of
operating a public company with the associated regulatory and compliance issues.
The diversion of the attention of management, which has little experience in
operating public companies, and any difficulties encountered in the process of
operating a public company could lead to possible unanticipated liabilities and
costs and cause the disruption of, or a loss of momentum in, the business
activities of the Company. This uncertainty may adversely affect the ability of
the Company to retain some of its key employees. As a consequence, we cannot
assure you that we will successfully or profitably manage the Company.

WE MAY NOT BE ABLE TO KEEP OUR TRADE SECRETS CONFIDENTIAL

          The Company relies significantly upon unpatented proprietary
technology, information, processes and know-how. We seek to protect this
information by confidentiality agreements with our employees, consultants and
other third-party contractors as well as through other security measures. These
confidentiality agreements may be breached, and we may not have adequate
remedies for any such breach. In addition, our trade secrets may otherwise
become known or be independently developed by competitors.

THE LOSS OF KEY PERSONNEL COULD MAKE IT DIFFICULT TO COMPLETE EXISTING PROJECTS
AND UNDERTAKE NEW PROJECTS

          The Company's success is dependent upon its ability to identify, hire
and retain its employees, including its physicians and a significant component
of the value of the business is in the know-how and experience of the Company
employees. If certain key employees were to

                                       20

<PAGE>

leave, the Company may be unable to operate is business profitably, complete
existing the Company projects or undertake certain new projects.

          The key employees and consultants of the Company include Merrill
Reuter, M.D., Peter Rothbart, M.D., Randy Lubinsky, Jay Rosen, M.D., Mark
Szporka, Andrea Trescot, M.D., and Ron Riewold. Employment agreements have been
executed with Randy Lubinsky (Chief Executive Officer and Director), Dr. Rosen
(President and Director), Mark Szporka (Chief Financial Officer and Director),
Dr. Merrill Reuter (President of AOSF), Dr. Andrea Trescot (President of PRNI),
and Ron Riewold (CEO of PainCare Management Services, Inc.). A consulting
agreement has been executed with Peter Rothbart, M.D. Should the services of Dr.
Reuter, Dr. Rothbart, Randy Lubinsky, Dr. Rosen, Mark Szporka, Dr. Andrea
Trescot, Ron Riewold or other key personnel become unavailable to the Company
for any reason, the business of the Company could be adversely affected. There
is no assurance that the Company will be able to retain these key individuals
and/or attract new employees of the caliber needed to achieve the Company's
objectives. The Company does not maintain any key employee life insurance
policies.

          Under the employment agreements of Mr. Lubinsky and Mr. Szporka, in
the event of a change of control, they may terminate the agreement and receive a
lump sum severance payment. Under the employment agreement of Dr. Reuter, he is
to receive a lump-sum severance payment of $500,000 if his employment is
terminated "Without Cause" or if he terminates the agreement "For Cause."

          To date, the Company has experienced no difficulties in attracting key
personnel and has been able to retain all such key personnel, saving Stanley
Swartz whose employment agreement was not renewed. The Company does not believe
that the loss of Mr. Swartz's services will have a material adverse effect on
the Company's business. To the best of the Company's knowledge and belief, there
are no other key personnel that are planning to retire or leave the Company in
the near future.

GROWTH STRATEGY MAY NOT PROVE VIABLE AND EXPECTED GROWTH AND VALUE MAY NOT BE
REALIZED.

          .    Establishment of Pain Management Centers

          The Company's strategy is to rapidly grow by establishing a network of
pain management, minimally invasive spine surgery and orthopedic rehabilitation
centers. Identifying appropriate physician groups and proposing, negotiating and
implementing economically attractive affiliations with them can be a lengthy,
complex and costly process. There can be no assurance that the Company will be
successful in identifying and establishing relationships with orthopedic surgery
and pain management groups. If the Company is successful in implementing its
strategy of rapid growth, such growth may impair the Company's ability to
efficiently provide non-professional support services, facilities, equipment,
non-professional personnel, supplies and non-professional support staff to
medical practices. The Company's future financial results could be materially
adversely affected if it is unable to manage growth effectively.

          There can be no assurance that physicians, medical providers or the
medical community in general will accept the business strategy of the Company
and adopt the strategy offered by the Company. The extent that, and rate of
which, these services achieve market acceptance and penetration will depend on
many variables including, but not limited to, a timely penetration of

                                       21

<PAGE>

the market, the establishment and demonstration in the medical community of the
clinical safety, efficacy and cost-effectiveness of these services, the
advantage of these services over existing technology, and third-party
reimbursement practices. There can be no assurance that the medical community
and third-party payors will accept the Company's technology. Similar risks will
confront any other services developed by the Company in the future. Failure of
the Company's services to gain market acceptance would have a material adverse
effect on the Company's business, financial condition, and results of operations

          .    Growth Through Acquisitions

          The Company intends to grow through acquisitions. There can be no
assurance that suitable acquisitions will be available or that acquisitions can
be negotiated on acceptable terms, or that the operations of acquired businesses
can be integrated effectively into the operations of the Company. Competition
for suitable acquisition candidates is expected to be intense and many of the
Company's competitors will have greater resources than the Company. The failure
of the Company to implement its acquisition strategy could have a material
adverse effect on the Company's expected financial performance and, moreover,
the attendant risks of expansion could also have a material adverse effect on
the Company's business.

          The Company's growth strategy will result in significant additional
demands on its infrastructure, and will place a significant strain on the
Company's management, administrative, operational, financial and technical
resources, and increased demands on its systems and controls. Additional capital
will be needed to fund expected acquisitions and there can be no assurance that
the Company will be able to obtain sufficient resources to support this planned
growth strategy. The inability to continue to upgrade the operating and
financial control systems, the emergence of unexpected expansion difficulties or
failure to manage the Company's proposed expansion properly could have a
material adverse effect on the Company's business, financial condition and
results of operations.

SIGNIFICANT RISK ASSOCIATED WITH REIMBURSEMENTS BY THIRD PARTY PAYORS

          Approximately 60% of the Company's revenues are directly dependent on
the acceptance of its services as covered benefits under third party payor
programs, including private insurance, HMO's and other managed care entities.
The healthcare industry is undergoing significant changes, with third party
payors taking measures to reduce reimbursement rates or in some cases denying
reimbursement fees for previously acceptable treatment modalities. There is no
assurance that third party payors will continue to pay for minimally invasive
surgery (MIS) services provided by the Company under its payor programs. Failure
of third party payors to adequately cover MIS will have a materially adverse
affect on the Company.

                                       22

<PAGE>

THERE ARE RISKS INHERENT IN THE PROVISION OF MEDICAL SERVICES WHICH COULD
ADVERSELY IMPACT OUR BUSINESS

          The Company's affiliated physician groups are involved in the delivery
of healthcare services to the public and are exposed to the risk of professional
liability claims. Claims of this nature, if successful, could result in damage
awards to the claimants in excess of the limits of any applicable insurance
coverage. Insurance against losses related to claims of this type can be
expensive and varies widely from state to state. There can be no assurance that
the Company will not be subject to such claims, that any claim will be
successfully defended or, if the Company is found liable, that the claim will
not exceed the limits of the Company's insurance. Professional liability claims
could have a material adverse effect on the Company.

SUCCESS OF BUSINESS STARTEGY IS DEPENDANT ON MARKET ACCEPTANCE

THE COMPANY HAS LIMITED MARKETING AND SALES CAPABILITY WHICH COULD ADVERSELY
AFFECT ITS GROWTH PLANS

          The Company has limited internal marketing and sales resources and
personnel. In order to effectively market any services, the Company will have to
develop a marketing and sales force with technical expertise and distribution
capability (or out-source such duties to independent contractors). There can be
no assurance that the Company will be able to establish sales and distribution
capabilities or that the Company will be successful in gaining market acceptance
for any services it may develop. There can be no assurance that the Company will
be able to recruit and retain skilled sales, marketing, service or support
personnel, that agreements with payors will be available on terms commercially
reasonable to the Company, or at all, or that the Company's marketing and sales
efforts will be successful. Failure to successfully establish a marketing and
sales organization, whether directly or through third parties, would have a
material adverse effect on the Company's business, financial condition, cash
flows, and results of operations.

BUSINESS IS SUBJECT TO SUBSTANTIAL COMPETITION WHICH COULD HAVE A MATERIAL
IMPACT ON ITS BUSINESS AND FINANCIAL CONDITION

          The healthcare industry in general, and the market for orthopedic and
rehabilitation services in particular, are highly competitive. The Company
competes with companies like HealthSouth, Inc. and U.S. Physical Therapy, Inc.
that are larger in size than the Company and have access to considerably greater
financial resources than the Company. The Company competes by providing more
personalized care to the patients they serve. The Company competes against other
contract providers on the basis of quality of services, price and reliability.
In the State of Florida, in particular, competition with respect to healthcare
providers is highly competitive. The Company relies on reputation and service to
market its services.

CASH FLOW AND FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED BY THE ASSUMPTION OF
CREDIT RISKS

          The Company will bill the patients and/or their insurance carriers for
services provided by its client clinics and/or physicians, including physician
fees, facility fees and technical fees. By undertaking the responsibility for
patient billing and collection activities, the Company will assume the credit
risk presented by the patient base, as well as the risk of payment delays
attendant to reimbursement through governmental programs or third party payors.
If the Company is

                                       23

<PAGE>

unsuccessful in collecting a substantial amount of such fees it will have a
material adverse affect on the financial condition of the Company.

CONTROL BY MANAGEMENT WILL LIMIT THE ABILITY OF OTHER SHAREHOLDERS TO HAVE ANY
INFLUENCE ON THE OPERATION OF THE COMPANY'S BUSINESS

          Officers and Directors of the Company and its subsidiaries will hold
common shares which will represent approximately 40% of the outstanding shares
entitled to vote on matters presented to stockholders of the Company. Management
of the Company will therefore have voting control of the Company. See "Voting
Securities and Principal Stockholders."

PROVISIONS IN ARTICLES OF INCORPORATION LIMIT LIABILITY OF MANAGEMENT AN AS A
RESULT LIMITS SHAREHOLDERS RIGHTS

          The Company has adopted provisions in its Articles of Incorporation
which limit the liability of their officers and directors and provisions in its
By-laws which provide for indemnification of its officers and directors to the
full extent permitted by law. The Articles of Incorporation generally provides
that the directors shall have no personal liability to the Company or its
stockholders for monetary damages for breaches of their fiduciary duties as
directors, except for breaches of their duties of loyalty, acts or omissions not
in good faith or which involve intentional misconduct or knowing violation of
law, acts involving unlawful payment of dividends or unlawful stock purchases or
redemptions, or any transaction from which a director derives an improper
personal benefit. Such provisions substantially limit the stockholders' ability
to hold directors liable for breaches of fiduciary duty.

INVESTORS SHOULD NOT RELY ON THE PAYMENT OF DIVIDENDS IN CONSIDERING AN
INVESTMENT IN THE COMPANY

          Any determination to pay dividends in the future will be at the
discretion of the Board of Directors of the Company and will be dependent upon
the Company's results of operations, financial condition, capital requirements,
contractual restrictions and other factors deemed relevant by the Board of
Directors. The Board of Directors is not expected to declare dividends or make
any other distributions in the foreseeable future, but instead intends to retain
earnings, if any, for use in business operations. Accordingly, investors should
not rely on the payment of dividends in considering an investment in the
company.

CURRENT CAPITAL MAY BE INSUFFICIENT

          The Company believes that the current capital will be sufficient to
support the Company's operations and planned capital expenditures (saving
acquisitions) through fiscal 2003, without additional fundraising. The Company's
future need for capital will depend on a number of factors, including the level
of marketing activities, the amount of funding required to establish a network
of minimally invasive spinal surgery and pain management clinics by purchasing,
owning, establishing and expanding certain assets used in minimally invasive
spine surgery and pain management; managing and developing spine treatment and
pain management clinics, diagnostic and rehabilitation services and outpatient
surgery facilities; and provide non-professional support services, facilities,
equipment, non-professional personnel, supplies and non-professional support
staff to medical practices. Moreover, the Company's business plans may change or
unforeseen events may occur which affect

                                       24

<PAGE>

the amount of additional funds required by the Company. If the Company does not
raise additional funds if and when required, the lack thereof could have a
material adverse effect on the Company. Further, there is no assurance that the
terms on which any funds obtained by the Company will be favorable to
stockholders of the Company at that time.

OUR COMMON SHARES ARE SUBJECT TO LOW PRICED STOCK RISK DISCLOSURE REQUIREMENTS

          The Company common shares are considered a low priced security under
rules promulgated under the Securities Exchange Act of 1934. Under these rules,
broker-dealers participating in transactions in low priced securities must first
deliver a risk disclosure document which describes the risks associated with
such stocks, the broker-dealer's duties, the customer's rights and remedies, and
certain market and other information, and make a suitability determination
approving the customer for low priced stock transactions based on the customer's
financial situation, investment experience and objectives. Broker-dealers must
also disclose these restrictions in writing to the customer, obtain specific
written consent of the customer, and provide monthly account statements to the
customer. With all these restrictions, the likely affect of designation as a low
priced stock will be to decrease the willingness of broker-dealers to make a
market for the stock, to decrease the liquidity of the stock and to increase the
transaction cost of sales and purchases of such stock compared to other
securities.

FAILURE TO OBTAIN MANAGED CARE CONTRACTS AND LEGISLATIVE CHANGES COULD ADVERSELY
AFFECT BUSINESS

          There can be no assurance that the Company will be able to obtain
managed care contracts. The future inability of the Company to obtain managed
care contracts in its markets could have a material adverse effect on its
business, financial condition or results of operation. In addition, federal and
state legislative proposals have been introduced that could substantially
increase the number of Medicare and Medicaid recipients enrolled in HMOs and
other managed care plans. The Company will derive a substantial portion of its
revenue from Medicare and Medicaid. In the event such proposals are adopted,
there can be no assurance that the Company will be able to obtain contracts from
HMOs and other managed care plans serving Medicare and Medicaid enrollees.
Failure to obtain such contracts could have a material adverse effect on the
business, financial condition and results of operations of the Company.

RISKS ASSOCIATED WITH HIGHLY REGULATED INDUSTRY

          The Company's centers and its affiliated physicians are subject to
numerous regulatory, accreditation and certification requirements, including
requirements related to licensure, certificate of need, reimbursement from
insurance companies and other private third party payors, Medicare and Medicaid
participation and reimbursement, and utilization and quality review
organizations. An adverse determination by any authority could have a material
adverse effect on the Company. Set forth immediately below is a list of the most
significant regulatory risks associated with the Company's business:

                                       25

<PAGE>

..         Future Healthcare Reforms Could Have an Adverse Impact on the Business

          The public has recently focused significant attention on reforming the
healthcare system in the United States. A broad range of healthcare reform
measures have been introduced in Congress and in certain state legislatures.
Legislative interest recently has also focused on the role of HMO's in the
provision of healthcare and the effect of managed care reimbursement mechanisms
on healthcare service utilization and quality of service. It is not clear at
this time what proposals, if any, will be adopted or, if adopted what effect, if
any, such proposals would have on the Company's business. There can be no
assurance that any proposals adopted would be coordinated at the federal or
state level, and therefore the Company, as a national participant in the
healthcare industry, is subject to varying state regulatory environments.
Certain proposals, such as cutbacks in the Medicare and Medicaid programs,
containment of healthcare costs that could include a negative affect on prices
charged by physicians, hospitals or other healthcare providers, and greater
state flexibility in the administration of Medicaid, could adversely affect the
Company. There can be no assurance that currently proposed or future healthcare
programs, laws, regulations or policies will not have a material adverse effect
on the Company's operating revenue.

          The Company believes that trends in cost containment in the health
care industry will continue to result in reductions from historical levels in
per-patient revenue. The federal government has implemented, through the
Medicare program, the resource-based relative value scale ("RBRVS") payment
methodology for physicians' services. The RBRVS is a fee schedule that, except
for certain geographical and other adjustments, pays similarly situated
physicians the same amount for the same services. The RBRVS is adjusted each
year and is subject to increases or decreases at the discretion of Congress. To
date, the implementation of RBRVS has reduced payment rates for certain of the
procedures historically perform by the Company's affiliated physicians. There
can be no assurance that any reduced operating margins could be recouped by
through cost reductions, increased volume, and introduction of additional
procedures or otherwise.

          Rates paid by non-governmental insurers, including those that provide
Medicare supplemental insurance, are based on established physician, ambulatory
surgery center and hospital charges, and are generally higher than Medicare
payment rates. A change in the makeup of the patient mix of the Company's
ancillary services that results in a decrease in patients covered by private
insurance or a shift by private payors to RBRVS or similar payment structures
could adversely affect the Company's business, financial condition and results
of operations.

..         Laws Severely Restrict Physicians Ability to Make Referrals Which
          Could Impact Our Business

          The Company's centers and their physicians are also subject to the
Ethics in Patient Referrals Act of 1989 (the "Stark Law"). Unless excepted, a
physician may not make a referral of a Medicare or Medicaid patient to any
clinical laboratory services provider with whom he/she has a financial
relationship (either investment or compensation) for such restricted services,
and any provider who accepts such a referral may not bill for the service
provided pursuant to the referral. Sanctions for violating the Stark Law can
include civil monetary penalties and exclusion from Medicare and Medicaid. In
August 1993, Congress passed legislation ("Stark II") that, effective January 1,
1995, expanded the self-referral ban to include a number of healthcare services
provided by entities with which the physicians may have an ownership interest or
a financial relationship, although it does not specifically prohibit referrals
by physicians with an

                                       26

<PAGE>

ownership interest in, or financial relationship with, an ambulatory surgery
center, provided that the surgery services are not provided as "outpatient
hospital services".

          In addition to the federal Stark Laws, certain states have enacted
similar patient referral legislation. Ambulatory surgery is not included in the
list of restricted services and the Company does not believe that ambulatory
surgery is subject to the Stark restrictions. Likewise, services that are a part
of a physician's private practice do not apply to the restrictions. Violation of
the Stark Law or Stark II or related state laws by the Company may have a
materially adverse effect on the Company.

..         Corporate Practice of Medicine Regulations Will Affect the Way We
          Transact Business in Certain States

          Organizations that employ physicians directly or exercise significant
control over a physician's practice may be subject to challenge in states that
prohibit the corporate practice of medicine. In states that still prohibit the
corporate practice of medicine, agreements with physicians must provide the
physicians with sufficient control over their practices to avoid being deemed
employees for corporate practice purposes. Violation of the corporate practice
of medicine laws by the Company which presently has operations in Colorado and
expects to have operations in South Carolina, North Carolina and California (all
of which prohibit the corporate practice of medicine) may have a materially
adverse effect on the Company.

..         Many States Prohibit Fee-Splitting Which Will Limit Our Expansion
          Plans

          The laws of many states prohibit physicians from splitting fees with
non-physicians (or other physicians) and prohibit non-physician entities from
practicing medicine. These laws vary from state to state and are enforced by the
courts and by regulatory authorities with broad discretion. The Company's
business operations have not been the subject of judicial or regulatory
interpretation; thus, there can be no assurance that review of the Company's
business by courts or regulatory authorities will not result in determinations
that could materially adversely affect its operations of the Company, or that
the healthcare regulatory environment will not change so as to restrict the
Company's operations or their expansion. In addition, the regulatory framework
of certain jurisdictions may limit the Company's expansion into such
jurisdictions if they are unable to modify their operational structure to
conform to such regulatory framework.

..         The Company May Face Increased Scrutiny by Medicare and Medicaid

          Federal law prohibits the offer, payment, solicitation or receipt of
any form of remuneration in return or, or in order to induce: (i) the referral
of a person in connection with the provision of medical services; (ii) the
furnishing or arranging for the furnishing of items or services reimbursable
under Medicare and Medicaid programs; and (iii) the purchase, lease, order,
arranging or recommending of any items or service reimbursable under Medicare or
Medicaid (the "Anti-Kickback Law"). Pursuant to the Anti-Kickback Law, the
federal government has announced a policy of increased scrutiny of joint
ventures and other transactions among health care providers in an effort to
reduce potential fraud and abuse relating to Medicare costs. The applicability
of this policy to many business transactions in the health care industry will be
subject to continuing judicial and regulatory interpretation. Although the
Company

                                       27

<PAGE>

believes its operations and structure do not violate the Anti-Kickback Law,
there can be no assurance that its activities will not be challenged by
regulatory authorities. If such a challenge were successful, it could have a
material adverse effect on the business, financial condition and results of
operations of the Company. Noncompliance with the Anti-Kickback Law can result
in exclusion from Medicare and Medicaid programs and civil and criminal
penalties.

Item 7. Financial Statements

Financial Statements. The Financial Statements required by this Item are
included at the end of this report beginning on Page F-1 as follows:

Index to Financial Statements                                        F-1

Report of Independent Certified Public Accountants Parks, Tschopp,
Whitcomb & Orr, P.A.                                                 F-2

Consolidated Balance Sheets
As of December 31, 2002 and 2001                                     F-3

Consolidated Statements of Operations
For The Years Ended December 31, 2002 and 2001                       F-4

Consolidated Statements of Cash Flows
For The Years Ended December 31, 2002 and 2001                       F-5

Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2002 and 2001                       F-6

Notes To Consolidated Financial Statements
December 31, 2002 and 2001                                           F-7

Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure

          Although HelpMate Robotics, Inc. had previously engaged Arthur
Andersen LLP ("Andersen") as its Auditor, by virtue of the merger with PainCare
on July 17, 2002 PainCare became the predecessor company for accounting
purposes. And because Parks, Tschoop, Whitcomb and Orr, P.A. has been the
Company's accountant since its inception, no change in accountant's is deemed to
have occurred.

                                       28

<PAGE>

                                    PART III

Item 9. Directors, Executive Officers, Promoters and Control Person

Board of Directors and Executive Officers

          The following table sets forth the directors and executive officers of
the Company and where indicated its subsidiaries as of December 31, 2002.
Directors are elected for a period of one year and thereafter serve until the
next annual meeting at which their successors are duly elected by the
stockholders. Officers and other employees serve at the will of the Board of
Directors.

<TABLE>
<CAPTION>
Executive Officer's Name   Age   Positions
------------------------   ---   ---------
<S>                         <C>  <C>
Peter Rothbart, M.D.        64   Director
Randy Lubinsky              50   Chief Executive Officer and Director
Jay Rosen, M.D              44   President and Director
Mark Szporka                47   Chief Financial Officer and Director
Merrill Reuter, M.D         42   President - AOSF and Chairman of the Board
Ron Riewold                 55   CEO - PCMS, President and Director
Arthur J. Hudson            51   Director
Robert Fusco                52   Director
Andrea Trescot, M.D.        45   President - Pain and Rehabilitation Network, Inc.
</TABLE>

          Peter J. Rothbart, M.D., a Director of the Company, is one of the
leading pain physicians in North America. Dr. Rothbart signed a consulting
agreement with PainCare on November 1, 2000 and pursuant to such agreement he is
currently providing consulting services to the Company. From 1994 to November
2000, Dr. Rothbart was President of Rothbart Pain Management Clinic Inc., one of
the largest pain management clinics in Toronto, Canada. He was responsible for
the overall management of the operation including supervising over fourteen
physicians. From 1989 to 1994, Dr. Rothbart was Director of the Whiplash and
Headache Clinic in Toronto. He served as Director, Pain Facility at Centenary
Hospital in Scarsborough, Ontario from 1987 to 1989. Dr. Rothbart received
Bachelor of Medicine and Bachelor of Surgery degrees from the University of
Edinburgh in Scotland. He was Resident in Anesthesia at Vancouver General
Hospital, Resident in Medicine at Shaughnessy Hospital in Vancouver, and Senior
Resident in Anesthesia at Sunnybrook Medical Centre (University of Toronto). Dr.
Rothbart is a Diplomat of the American Board of Anesthesiology, American Academy
of Pain Management and American Board of Pain Medicine.

          Randy Lubinsky, Chief Executive Officer and Director of the Company,
joined PainCare on August 1, 2000 and brings over 25 years experience as a
healthcare entrepreneur and investment banker. He has successfully built
businesses from the start-up phase in the healthcare and real estate industries,
and has assisted several public companies in implementing roll-up strategies. In
March of 2000, Mr. Lubinsky co-founded Quest Capital Partners, LC in Orlando,
Florida, an investment banking firm specializing in healthcare where he acted as
Managing Director until he joined PainCare in August of 2000. From September of
1999 until March of 2000, Mr. Lubinsky served as a Director of Cloverleaf
Capital Advisors, L.L.C., an investment banking firm specializing in healthcare
and e-learning, located in Ocoee, Florida. From November of 1998 until May of
2000, Mr. Lubinsky was Executive Vice President of Ivanhoe Medical Systems,
Inc., an Ocoee, Florida based healthcare company which was acquired by
publicly-traded Medical Industries of America, Inc. He also assisted Medical
Industries of America in implementing its active acquisition strategy and served
as Chief Executive Officer of its Air Ambulance division. From 1994 to 1998, Mr.
Lubinsky was founding Director and Chief Executive Officer of Pain
Rehabilitation Network, a Maitland, Florida medical management company which
owned or managed 40 medical practices. From 1987 until 1994, he was Chief
Executive Officer of Medical Equity, Inc., an investment banking and management
company focused on the healthcare industry. During this period, Mr. Lubinsky
also founded MedX West, Inc., a distributor of medical equipment. From 1981 to
1987, Mr. Lubinsky served as President

                                       29

<PAGE>

and Chief Executive Officer of Florida Equity Group, a real estate development
and mortgage banking entity. Prior to founding Florida Equity Group, he served
as Senior Vice President of real estate lending for American Savings of Miami, a
New York Stock Exchange company. Mr. Lubinsky received a BA degree in finance
from Florida International University.

          Jay L. Rosen, M.D., President and Director of the Company, joined
PainCare on October 1, 2000. Dr. Rosen resigned as President effective February
7, 2003, but remains on the Company's board. Dr. Rosen has over 15 years
experience as a healthcare entrepreneur. Since 1992, he has and continues to
serve as Chief Executive Officer and Executive Director of Tampa Bay Surgery
Center, Inc., an outpatient surgical facility that specializes in minimally
invasive spinal surgery and pain management procedures in Tampa, Florida. During
his tenure with Tampa Bay Surgery Center, Dr. Rosen has successfully developed
and managed outpatient surgery, diagnostic, specialized ambulatory treatment and
physical rehabilitation centers. He also is active in managing Seven Springs
Surgery Center in New Port Richey, Florida. From 1988 to 1992, Dr. Rosen served
as Vice President and Director of Development for Physician's Technical Systems,
Inc., a medical ambulatory development company located in New York. From 1983 to
1988, he was President and co-founder of NMR Diagnostic Centers, Inc., a
diagnostic center development and management company. Dr. Rosen received a BS
degree from Fordham University and Medical Degree from Cetec University. He did
graduate medical research at Hahnemann University in Philadelphia and the
Medical Center at SUNY at Stony Brook. Dr. Rosen is a Diplomat of the American
Board of Quality Assurance and Utilization Review Physicians. He currently
serves on the Board of Directors for Tampa Bay Surgery Center, Inc., Tampa Bay
Surgery Associates, Inc., Rehab One, Inc., Open MRI & Diagnostic Center, Inc.,
Immuvac, Inc., and Intellicare, Inc.

          Mark Szporka, Chief Financial Officer and Director of the Company,
joined PainCare on August 1, 2000 and has in excess of 20 years experience as an
investment banker, chief financial officer and strategic planner. In March of
2000, he co-founded Quest Capital Partners, LC in Orlando, Florida, an
investment banking firm specializing in healthcare where he acted as a Director
until he joined PainCare in August of 2000. From September of 1999 until March
of 2000, Mr. Szporka served as a Director of Cloverleaf Capital Advisors,
L.L.C., an investment banking firm specializing in healthcare and e-learning,
located in Ocoee, Florida. From May of 1999 until September of 2000, Mr. Szporka
served as Chief Financial Officer of BackGenesis, Inc., a publicly-traded
healthcare company headquartered in Ocoee, Florida. From October 1998 until May
of 1999, Mr. Szporka served as CFO for Ivanhoe Medical Systems, Inc. located in
Ocoee, Florida. From 1995 to 1998, Mr. Szporka was a principal of a private
investment company and during this period served as Chief Financial Officer of
Carpet Barn, Inc., a $40 million public floor covering company in Las Vegas,
Nevada. Prior to 1995, Mr. Szporka served as Managing Director of AMI Holding
Corporation, Inc., a healthcare company located in Westland, Michigan, where he
also served as Chief Financial Officer of all affiliates. Prior to joining AMI,
Mr. Szporka was Director of Corporate Finance Consulting for Arthur Andersen &
Co. where he established and managed investment banking practices for
middle-market companies in Detroit, Boston and Philadelphia. Mr. Szporka was
Managing Director at Security Pacific Merchant Bank with overall nationwide
responsibility for investment banking services for real estate and hospitality
companies. Previously, he served as Vice President in the investment banking
divisions of Paine Webber and E.F. Hutton. In addition, he was Director of
Strategic Planning at Joseph E. Seagram & Sons. Mr. Szporka received a MBA from
the University of Michigan and a BBA from the University of Notre Dame. He is a
Certified Public Accountant (non-active) in New York.

                                       30

<PAGE>

          Merrill Reuter, M.D., Chairman of the Board of the Company and
President of Advanced Orthopedics of South Florida, Inc. Dr. Reuter founded
Advanced Orthopedics of South Florida, Inc. in Lake Worth, Florida in 1992 and
from that until the present serves as its President and Medical Director. He
received a BS degree from Tulane University in 1982 and a Masters in Medical
Science and a Medical Degree from Brown University in 1986. Dr. Reuter completed
his General Surgical Internship and Orthopedic Surgery Residency Training
Program at the University of Texas Medical Branch in Galveston, Texas.

          Ronald L. Riewold, Director and Chief Executive Officer and President
of PainCare Management Services, Inc. Effective February 7, 2003 the Board
elected Mr. Riewold to succeed Dr. Rosen as President of the Company. From
December 1999 until January 2001, Mr. Riewold served as a consultant for
American Enterprise Solutions, Inc. ("AESI"), a healthcare delivery system and
internet utility located in Tampa, Florida which focused on the connectivity of
the Internet in the healthcare industry. Mr. Riewold later became Executive
Vice-President, then President and Chief Operating Officer of AESI. From
September 1996 until September 1999, Mr. Riewold served as Vice-President of
Corporate Development for Heart Labs of America, located in Boynton Beach,
Florida which later changed its name to Medical Industries of America and then
Cyber-Care. Mr. Riewold has a BA degree from Florida State University and a MBA
from Temple University.

          Arthur J. Hudson, was elected as a Director of the Company at its
annual meeting on November 8, 2002. Mr. Hudson has been employed with
Fidelitone, Inc. of Wauconda, Illinois since 1974. He currently serves as Senior
Vice President of Corporate Development for the full service inventory
management, distribution and logistics company. From 1998 to 2001, he also
served as head of international sales for Aero Products International, Inc., a
wholly owned subsidiary of Fidelitone. Mr. Hudson is a member of the board of
directors of Fidelitone. He received a B.S. degree in economics from Colorado
State University.

          Robert Fusco, was elected as a Director of the Company at its annual
meeting on November 8, 2002. Mr. Fusco has over twenty years experience in the
healthcare industry and was responsible for founding and building Olsten
Corporation into the largest home health and specialty pharmaceutical
distribution services company in North America. Since March 2000 when Olsten
Corporation was sold to Addecco Corporation, Mr. Fusco has been an independent
consultant. From January 1985 to April 2000, Mr. Fusco served in various
capacities including President of Olsten Health Services and Executive Vice
President of Olsten Corporation. He was responsible for growing the company from
$25 million in revenue in 1985 to over $1.5 billion in revenue when it was sold
in 2000. From 1979 to 1985, he served as Executive Vice President of Bio-Medical
Applications, inc., a subsidiary of National Medical Care, Inc., and had
complete profit and loss responsibility for over 180 dialysis clinics nationally
which generated $250 million per year in revenue. Mr. Fusco received a BS degree
from Manhattan College.

          Andrea Trescot, M.D., President of Pain and Rehabilitation Network,
Inc. Dr. Trescot founded Pain and Rehabilitation Network, Inc. in Orange Park,
Florida in July 1997 and serves as its President. From September 1996 to July
1997, she was an associate with Pain Institute of North East Florida in Orange
Park, Florida. She also was a Partner in Blue Ridge Pain Institute in Staunton,
Virginia from March 1994 to September 1996. Dr. Trescot is the current president
and founder of the Florida Society of Interventional Pain Practitioners,
immediate past-president of the Florida Academy of Pain Medicine and a director
of the American Society of Interventional Pain Practitioners. Dr. Trescot
received a BS degree from the University of Florida and a Medical Degree from
Medical University of South Carolina.

                                       31

<PAGE>

Committees and Meetings

          The Board of Directors held 2 meetings in 2002 and each director of
the Board attended either in person or via teleconference. All directors hold
office until the next annual meeting of stockholders and the election and
qualification of their successors. Directors receive compensation for serving on
the Board of Directors as described below.

          The Company has established a standing Audit Committee and a
Compensation Committee. The Audit Committee recommends to the Board of Directors
an accounting firm to serve as the Company's independent accountants, reviews
the scope and results of the annual audit of the Company's consolidated
financial statements, reviews nonaudit services provided to the Company by the
Company's independent accountants and monitors transactions among the Company
and its affiliates, if any. The Audit Committee currently consists of Mr.
Szporka, who is the Chairman, Dr. Reuter and Mr. Fusco, who is independent. The
Audit Committee met on March 20, 2003 and in connection with such meeting:

          .    Reviewed and discussed the registrant's audited financial
               statements with management;

          .    Discussed with the registrant's auditor the matters required to
               be discussed by Statement on Auditing Standards (SAS) No. 61

          .    Received the written disclosures and the letter from the
               registrant's auditor required by Independence Standards Board
               Standard No. 1 and discussed with the auditor its independence;
               and

          .    Based on the foregoing review, recommended to the Board of
               Directors that the audited financial statements be included in
               the registrant's Form 10-KSB.

          The Compensation Committee is responsible for supervising the
Company's compensation policies, administering the employee incentive plans,
reviewing officers' salaries and bonuses, approving significant changes in
employee benefits and recommending to the Board such other forms of remuneration
as it deems appropriate. The Compensation Committee currently consists of Mr.
Lubinsky, who is the Chairman, Dr. Rothbart and Mr. Hudson, who is independent.

          The Stock Option Committee is responsible for supervising and
administering the Company's Stock Option Plan, approving significant changes in
the Plan and recommending to the Board such other forms of remuneration as it
deems appropriate. The Compensation Committee currently consists of Mr.
Lubinsky, who is the Chairman, Dr. Rosen and Mr. Riewold.

                                       32

<PAGE>

Board of Directors Interlocks and Insider Participation

          No executive officer of the Company serves as a member of the board of
directors or compensation committee of any entity that has one or more executive
officers serving as a member of the Company board, saving subsidiary board(s).

Director Compensation

          Cash fees and stock options may be paid to non-employee directors of
the Company by the Company for service on the Board of Directors. For joining
the Company's board in November 2002, Arthur Hudson and Robert Fusco have each
received 70,000 options, exercisable at $.70 per share. Directors of the Company
who are also officers of the Company receive no additional compensation for
their service as directors. All directors are entitled to reimbursement for
reasonable expenses incurred in the performance of their duties as members of
the board of directors.

          Except for grants of stock options, directors of the Company do not
generally receive compensation for services provided as a director. The Company
also does not pay compensation for committee participation or special
assignments of the Company board. Non-employee Company Board members are
eligible for option grants pursuant to the provisions of the Company's Stock
Option Plans.

Section 16(A) Beneficial Ownership Reporting

          Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than 10% of
the Company's common stock, to file with the Securities and Exchange Commission
initial reports of ownerships and reports of changes in ownership, and to
furnish the Company with copies of all Section 16(a) reports they file. To the
Company's knowledge, based solely on review of the copies of such reports and
written statements from officers and directors furnished to the Company, all
Section 16(a) filing requirements applicable to its officers, directors and
beneficial owners of more than 10% of our common stock were complied with during
the year.

Item 10. Executive Compensation

          The following table sets forth compensation paid by the Company to
each person who served in the capacity of Chief Executive Officer during 2001
and 2002 and other officers of the Company whose total annual salary and bonus
for the fiscal years ended, December 31, 2001 and December 31, 2002 exceeded
$100,000 (collectively, the "Named Executive Officers").

                                       33

<PAGE>

<TABLE>
<CAPTION>
                                           SUMMARY COMPENSATION TABLE

                                                                          Long Term Compensation Awards
                                                                   ------------------------------------------
                                    Annual Compensation                        Awards               Payouts
                             -----------------------------------   ----------------------------   -----------

                                                                                    Securities
 Name & Principal                                   Other Annual    Restricted      Underlying       LTIP
     Position         Year   Salary($)   Bonus($)   Compensation   StockAward(s)$   Options (#)   Payouts ($)
-----------------     ----   ---------   --------   ------------   --------------   -----------   -----------
<S>                   <C>     <C>          <C>         <C>              <C>           <C>             <C>
Randy Lubinsky, CEO   2002    $200,000     $-0-        $18,299          $-0-          1,000,000       $-0-
(1)(3)                2001    $175,000     $-0-        $17,420          $-0-             -0-          $-0-

Mark Szporka, CFO     2002    $175,000     $-0-        $21,539          $-0-          1,000,000       $-0-
(2)(3)                2001    $150,000     $-0-        $20,207          $-0-             -0-          $-0-
</TABLE>

(1)  Randy Lubinsky has served as our Director and the Chief Executive Officer
     since our reorganization on August 1, 2000. Pursuant to an employment
     agreement entered into in August 2000 and amended on August 1, 2002, Mr.
     Lubinsky receives annual salary payments equal to $200,000 and certain
     perquisites and other benefits. For the fiscal year ended December 31,
     2002, the Company paid Mr. Lubinsky a car allowance of $12,000 and paid
     health insurance premiums of $6,299. See "Employment Agreements."

(2)  Mark Szporka has served as a Director and Chief Financial Officer since our
     reorganization on August 1, 2000. Pursuant to an employment agreement
     entered into in August 2000 and amended August 1, 2002. Mr. Szporka
     receives annual salary payments equal to $175,000 and certain perquisites
     and other benefits. For the fiscal year ended December 31, 2002, the
     Company paid Mr. Szporka a car allowance of $12,000 and paid health
     insurance premiums of $9,539. See "Employment Agreements."

(3)  Two hundred thousand (200,000) options were granted to Mr. Lubinsky and
     200,000 options were granted to Mr. Szporka on August 1, 2000 under the
     Company's 2000 Stock Option Plan. One million (1,000,000) options were
     granted to Mr. Lubinsky and (1,000,000) options were granted to Mr. Szporka
     on August 1, 2002 under the Company's 2001 Stock Option Plan. None of these
     options have been exercised to date.

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                        --------------------------   --------------------   ----------------------------------
                                                  (a)                        (b)                           (c)
                                        --------------------------   --------------------   ----------------------------------
                                                                                            Number  of  securities  remaining
                                        Number of securities to be   Weighted-average       available for future issuance
                                        issued upon exercise of      exercise price of      under equity compensation plans
                                        outstanding options,         outstanding options,   (excluding securities reflected in
                                        warrants and rights          warrants and rights    column (a))
                                        --------------------------   --------------------   ----------------------------------
<S>                                            <C>                           <C>                         <C>
Equity compensation plans
approved by security holders                   4,170,000                 $  0.74                         830,000

Equity compensation plans not
approved by security holders                           0                       0                               0
</TABLE>

                                       34

<PAGE>

Stock Option Grants

The following table sets forth information regarding grants of stock options
during fiscal year ending December 31, 2002 made to the Named Executive Officers
who have received Company option grants.

<TABLE>
<CAPTION>
                           Stock Option Grants In 2002

                    Number of Securities     Percent of Total Stock Options   Exercise or
                        Underlying           Granted to Employees in Fiscal    Base Price   Expiration
     Name        Stock Options Granted (#)               2002                    ($/Sh)        Date
--------------   -------------------------   ------------------------------   -----------   ----------
<S>                    <C>                                <C>                    <C>         <C>
Randy Lubinsky         1,000,000                          38.5%                  $1.00       7/31/07
Mark Szporka           1,000,000                          38.5%                  $1.00       7/31/07
</TABLE>

Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

          The following table sets forth information with respect to the
executive officers named in the Summary Compensation Table concerning the
exercise of options during the year ended December 31, 2002 and unexercised
options held as of the end of fiscal 2002.

<TABLE>
<CAPTION>
                                                      Number of Securities         Value of Unexercised
                                                     Underlying Unexercised      In-the-Money Options at
                 Shares Received                        Options at FY-End             FY-End ($) (1)
     Name          on Exercise     Value Realized   Exercisable/Unexercisable   Exercisable/Unexercisable
--------------   ---------------   --------------   -------------------------   -------------------------
<S>                     <C>              <C>            <C>                            <C>
Randy Lubinsky          0                0              600,000 / 600,000              160,000 / 0
Mark Szporka            0                0              600,000 / 600,000              160,000 / 0
</TABLE>

(1) Calculate based on the fair market value of $0.85 per share at the close of
trading on December 31, 2002 as reported by the OTC:BB, minus the exercise price
of the option.

Employment Agreements

          Randy Lubinsky, CEO. Mr. Lubinsky served as Chief Executive Officer of
the Company for a term expiring on July 31, 2005. The principal terms of Mr.
Lubinsky's employment agreement are as follows: (i) an annual salary of
$200,000, which may be increased from time to time at the discretion of the
board of directors; (ii) stock options to purchase 200,000 shares of PainCare's
common stock at an exercise price of $.05 per share; (iii) stock options to
purchase 1,000,000 (exercisable at $1.00 per share) shares of the Company's
common stock which vest prorata over the five years of the contract; (iv) health
and disability insurance coverage; (v) term life insurance; (v) an annual bonus
equal to 4% of PainCare's earnings before interest, taxes, depreciation and
amortization ("EBITDA"), and (vi) such as other benefits as the Company may
provide for its officers in the future.

          Jay Rosen, M.D., President. Dr. Rosen served as President of the
Company during 2002 but was not paid any compensation. Effective February 7,
2003 Dr. Rosen resigned as President of the Company.

          Mark Szporka, CFO. Mr. Szporka serves as Chief Financial Officer for
the Company for a term expiring on July 31, 2005. The principal terms of Mr.
Szporka's employment agreement are as follows: (i) an annual salary of $175,000,
which may be increased from time to time at the discretion of the board of
directors; (ii) stock options to purchase 200,000 shares of HelpMate's common
stock at an exercise price of $.05 per share; (iii) stock options to purchase
1,000,000 (exercisable at $1.00 per share) shares of the Company's common stock
which vest prorata over the 5 years of the contract; (iv) health and disability
insurance coverage; (v) term life insurance; (vi) an annual bonus equal to 4% of
the Company's EBITDA, and (vii) such as other benefits as the Company may
provide for its officers in the future.

          Merrill Reuter, M.D. Advanced Orthopedics of South Florida, Inc.
("AOSF"), a wholly-owned subsidiary of the Company, Inc. entered into an
employment agreement with Merrill Reuter, M.D. to serve as its President and
Medical Director for an initial term expiring on December 31, 2009. The
principal terms of Dr. Reuter's employment agreement are as follows: (i) an
annual salary of $300,000 during the first five years of the agreement, and
$500,000 per year for each year thereafter; (ii) stock options to purchase
shares of the Company's common stock as approved by the stock option committee
of the Company; and (iii) health and disability insurance coverage. In the event
that AOSF terminates the agreement "Without Cause" or Dr. Reuter terminates the
agreement "For Cause", Dr. Reuter will receive a lump sum severance payment of
$500,000.

          Ron Riewold. PainCare Management Services, Inc. ("PCMS"), a wholly
owned subsidiary of the Company entered into an employment agreement with Ron
Riewold to serve as Chief Executive Officer and President of PCMS for an initial
term of five years expiring on March 31,

                                       35

<PAGE>

2006. Effective February 7, 2003 Mr. Riewold was elected President of the
Company by the Board. For details with respect to Mr. Riewolds election, please
see the Company's Form 8-K filed with the SEC on February 24, 2003


Item 11. Security Ownership of Management and Principal Stockholders

          The following table sets forth certain information as of December 31,
2002 as to the number of shares of the Company common stock that will be
beneficially owned by: (i) each person that will beneficially owns more than 5%
of the outstanding shares of the Company common stock; (ii) each director of the
Company; (iii) the Chief Executive Officer and the four other most highly
compensated executive officers of the Company; and (iv) the Company executive
officers and directors as a group.

          The holders listed below will have sole voting power and investment
power over the shares beneficially held by them. The table below includes shares
subject to options, warrants and convertible notes.

<TABLE>
<CAPTION>
Beneficial Ownership (1)
Name of Beneficial Owner       Shares    Percent           Current Position
------------------------     ---------   -------   ---------------------------------------
<S>                          <C>          <C>      <C>
Merrill Reuter, M.D. (2)       2,308,966    11.2%    Chairman of the Board, President - AOSF
Peter Rothbart, M.D. (3)         563,133     2.7%    Director
Randy Lubinsky (4)             1,237,840     6.0%    CEO and Director
Jay Rosen, M.D. (5)              400,000     1.9%    President and Director
Mark Szporka (6)               1,377,340     6.7%    CFO and Director
Ron Riewold (7)                  925,000     4.8%    CEO/President, PCMS and Director
Arthur J. Hudson (8)             470,000     2.3%    Director
Robert Fusco (9)                  70,000     .08%    Director
Andrea Trescott, M.D (10)      1,000,000     4.8%    President - PRNI
Antonio DiSclafani, M.D. (11)  1,538,461     7.4%

All officers, directors        9,890,740    47.8%
and affiliates as a group
(10 persons)
</TABLE>

(1)  Based on an aggregate of 15,576,640 share of the Company's common stock
     outstanding, and giving effect to the exercise of 2,910,000 stock options
     that have been vested, the exercise of 996,000 warrants which have been
     vested, conversion of $1,651,219 in convertible debentures which can be
     converted into 1,203,736 common, which results in an aggregate of
     20,686,376 shares.

(2)  Includes the impact of the completion of the Merger Agreement on January 1,
     2001 between PainCare Acquisition Company I, Inc., a subsidiary of the
     Company, and Advanced Orthopaedics of South Florida, Inc., of which Dr.
     Reuter is a shareholder, at which time Dr. Reuter received 1,850,000 shares
     of Company common stock and $1,200,000 in convertible debentures with a
     conversion price of $2 per share into 600,000 common shares, of which
     $917,933 in convertible debentures, convertible into 458,966 shares was
     outstanding as of December 31, 2002. Does not include the impact of
     conversion of $350,000 of convertible

                                       36

<PAGE>

     debentures, at a conversion price of $2 per share, which debentures will be
     earned next year if certain earnings targets are satisfied.

(3)  Includes 210,000 shares which were obtained as a result of the November 1,
     2000 consulting agreement between PainCare, Inc. and Peter Rothbart, M.D.
     Includes 70% of conversion of $134,475 of convertible debentures, at an
     estimated conversion price of $1 per share, which was part of the
     consideration of the acquisition of the outstanding shares of Rothbart Pain
     Management Clinic Inc. by PainCare, Inc. on December 1, 2000 and 70% of the
     conversion of $170,000 which was earned with respect to such acquisition as
     of December 31, 2002. These shares are beneficially owned by Carol
     Rothbart, wife of Peter Rothbart, M.D. Does not include the impact of 70%
     of $170,000 of common stock of the Company at market rates, which stock
     will be earned next year if certain earnings targets are satisfied.
     Includes Plan options to acquire 140,000 shares for Dr. Rothbart, at an
     exercise price of $0.05 per share, which options are fully vested as part
     of being appointed to the board of directors.

(4)  Includes Plan options to acquire 200,000 shares of the Company's common
     stock at $0.05 per share and plan options to acquire 400,000 shares of the
     Company's common stock at $1.00 per share, which options are fully vested.

(5)  Includes Plan options to acquire 200,000 shares of the Company's common
     stock at $0.05 per share, which options are fully vested.

(6)  Includes Plan options to acquire 200,000 shares of the Company's common
     stock at $0.05 per share, and plan options to acquire 400,000 shares of the
     Company's common stock at $1.00 per share, which options are fully vested.

(7)  Includes warrants to acquire 25,000 shares of the Company's common stock at
     $0.75 per share and Plan options to acquire 775,000 shares of the Company's
     common stock at $1.00 per share, which options are fully vested.

(8)  Includes Plan options to acquire 70,000 shares of the Company's common
     stock at $0.70 per share for being appointed to the board of directors and
     Plan options to acquire 100,000 shares of the Company's common stock for
     supply the financing for the acquisition of Pain and Rehabilitation
     Network, Inc.

(9)  Includes Plan options to acquire 70,000 shares of the Company's common
     stock at $0.70 per share for being appointed to the board of directors.

(10) Includes the impact of the completion of the Merger Agreement on December
     12, 2002 between PainCare Acquisition Company II, Inc., a subsidiary of the
     Company, and Pain and Rehabilitation Network, Inc., at which time Dr.
     Trescot received 1,000,000 shares of the Company's common stock and
     $1,000,000 in cash. Does not include the input of $1,000,000 of common
     stock of the Company, ($333,333 at $1.00 per share and $666,667 at market
     rates) which will vest over three years if certain earnings targets are
     satisfied.

(11) Dr. DiSclafani and a family trust acquired these shares in the Company's
     private placement of its common shares in the fourth quarter of 2002.

                                       37

<PAGE>

Item 12. Transactions with Management and Other Related Parties

          From January 1, 2000 through November 30, 2000, PainCare, Inc. paid
management fees in the amount of $75,000 to Quest Capital Partners, LC
("Quest"), an entity controlled by the Company's Chief Executive Officer, Randy
Lubinsky, and Chief Financial Officer, Mark Szporka. These payments were in lieu
of the payment of salaries to these two individuals. Based on the employment
contracts entered into between the Company and Mr. Lubinsky and Mr. Szporka on
August 1, 2000, these two individuals received accrued payments totaling $42,500
collectively, which payments were received in 2002.

          From July, 2000 through November, 2000, Quest entered into a
management services agreement with Advanced Orthopedics of South Florida, Inc.
During that period of time, Quest received management fees of $45,000. There is
no ongoing arrangement for these services as this relationship was terminated
effective November 30, 2000.

          From July, 2000 through November, 2000, Quest entered into a
management services agreement with Rothbart Pain Management Clinic Inc. During
that period of time, Quest accrued fees and expenses totaling $41,270. To date,
Quest has received $2,587 from Rothbart, and is still owed $38,683 in management
fees and expenses as of December 31, 2002. It is expected that these fees and
expenses will be paid once cash is available. There is no ongoing arrangement
for these services as this relationship was terminated effective November 30,
2000.

          On December 1, 2000, Peter Rothbart, M.D. was appointed to the board
of directors of the Company. In consideration for performing these services, he
was granted options to acquire 140,000 shares of common stock of the Company at
an exercise price of $.05 per share. These option shares are fully vested and
are exercisable for HelpMate common shares for a period of five years. On
December 1, 2000, the Company entered into a Share Purchase Agreement to acquire
51% of the outstanding shares of Rothbart Pain Management Clinic Inc., of which
Dr. Rothbart is a director of Rothbart. On March 1, 2001, the Company acquired
the remaining 49% of the outstanding shares of Rothbart from Naomi Investments
Limited. Dr. Rothbart was not involved in negotiating or approving the
transaction on behalf of the Company. In the event any conflict were to arise
regarding the purchase of the Rothbart shares, Dr. Rothbart will be unable to
cast a vote or exert any influence with respect to those issues.

          On December 12, 2002, Arthur Hudson, a member of the Board of
Directors, provided the Company with $952,599 debt financing for the acquisition
of Pain and Rehabilitation Network, Inc. The terms of the loan from Mr. Hudson
require the Company to make monthly interest payments at the annual rate of 8%
with the entire principal and unpaid interest due on December 31, 2004. On
December 31, 2002, there was $606,050 outstanding on this loan which was
subsequently paid in full in the first quarter of 2003. In addition, the Company
issued Mr. Hudson a warrant to purchase 100,000 shares of the Company's common
stock at an exercise price of $0.70 per share.

                                       38

<PAGE>

Item 13. Exhibits and Reports on Form 8-K

(a)  Documents filed as part of this Report.

1.   Financial Statements (appearing at the end of this Report)

     Index to Financial Statements                                        F-1

     Report of Independent Certified Public Accountants Parks, Tschopp,
     Whitcomb & Orr, PA                                                   F-2

     Consolidated Balance Sheets
     As of December 31, 2002 and 2001                                     F-3

     Consolidated Statements of Operations
     For The Years Ended December 31, 2002 and 2001                       F-4

     Consolidated Statements of Cash Flows
     For The Years Ended December 31, 2002 and 2001                       F-5

     Consolidated Statements of Changes in Stockholders' Equity
     for the years ended December 31, 2002 and 2001                       F-6

     Notes To Consolidated Financial Statements
     December 31, 2002 and 2001                                           F-7

2.   Exhibits

INDEX TO EXHIBITS

NO.  DESCRIPTION OF EXHIBIT


3.01        Articles of Incorporation+
3.02        By-Laws+
4.1         2000 Stock Option Plan of PainCare, Inc.+
4.2         2001 Stock Option Plan of PainCare, Inc.+
10.01       Agreement and Plan of Reorganization By and Among Helpmate Robotics,
            Inc., HelpMate Robotics Subsidiary, Inc. and PainCare, Inc.+
10.02       Agreement to Extend Closing By and Among Helpmate Robotics, Inc.,
            Helpmate Robotics Subsidiary, Inc. and PainCare, Inc.+
10.03       Employment Agreement by and between PainCare, Inc. and Randy
            Lubinsky dated August 1, 2001 +
10.04       Employment Agreement by and between PainCare, Inc. and Jay Rosen,
            M.D dated October 1, 2001 +
10.05       Employment Agreement by and between PainCare, Inc. and Mark Szporka
            dated August 1, 2001 +
21.1        Subsidiaries of the Company
99.1        Certification Pursuant to 18 U.S.C. ss. 1350 of Chief Executive
            Officer
99.2        Certification Pursuant to 18 U.S.C. ss. 1350 of Chief Financial
            Officer

+       Previously Filed with the SEC with the Company's Form S-4 on January 4,
        2002

          All Exhibits except as otherwise noted below are filed with this Form
10-KSB

     (b)  Reports on Form 8-K

          Form 8-K filed with the Commission on February 25, 2003.

          Form 8-K filed with the Commission on December 27, 2002.

ITEM 14. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures

          Under the supervision and with the participation of management,
including its President and Chief Financial Officer, the Company evaluated the
effectiveness of the design and operation of its disclosure controls and
procedures (as defined in Rule [13a-14(c)/15d-14(c)] under the Exchange Act)
related to the Company as of a date (the "Evaluation Date") within 90 days prior
to the filing date of this report. Based upon that evaluation, the President and
Chief Financial Officer concluded that, as of the Evaluation Date, the
disclosure controls and procedures are effective in timely alerting them to the
material information relating to the Company required to be included in periodic
SEC filings.

(b) Changes in internal controls

          There were no significant changes made in the Company's internal
controls during the period covered by this report or, to the Chief Executive
Officer's and Chief Financial Officer's knowledge, in other factors that could
significantly affect these controls subsequent to the date of their evaluation.

                                       39

<PAGE>

                                   SIGNATURES

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

                                            PAINCARE HOLDINGS, INC.


Date: March 24, 2003                        By: /s/ RANDY LUBINSKY
                                            ------------------------------------
                                            Chief Executive Officer and Director


Date: March 24, 2003                        By: /s/ MARK SZPORKA
                                            ------------------------------------
                                            Chief Financial Officer and Director

Pursuant to the requirements of the Securities and 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.

       Signature                   Title                 Date
       ---------                   -----                 ----

/s/ RON RIEWOLD            President and Director   March 24, 2003
---------------


/s/ JAY ROSEN, M.D.        Director                 March 24, 2003
-------------------


/s/ MERRILL REUTER, M.D.   Director                 March 24, 2003
------------------------


/s/ ARTHUR J. HUDSON       Director                 March 24, 2003
--------------------


/s/ ROBERT FUSCO           Director                 March 24, 2003
------------------


/s/ PETER ROTHBART, M.D.   Director                 March 24, 2003
------------------------

                                       40

<PAGE>


                                    PART F/S
                             PAINCARE HOLDINGS, INC.
                                    CONTENTS

Index to Financial Statements                                             F-1

Report of Independent Certified Public Accountants Parks, Tschopp,
Whitcomb & Orr, PA                                                        F-2

Consolidated Balance Sheets
As of December 31, 2002 and 2001                                          F-3

Consolidated Statements of Operations
For The Years Ended December 31, 2002 and 2001                            F-4

Consolidated Statements of Cash Flows
For The Years Ended December 31, 2002 and 2001                            F-5

Consolidated Statements of Changes in Stockholders' Equity
For the Years Ended December 31, 2002 and 2001                            F-6

Notes To Consolidated Financial Statements
December 31, 2002 and 2001                                                F-7

                                       F-1

<PAGE>


                          Independent Auditors' Report

The Board of Directors
PainCare Holdings, Inc.:

We have audited the accompanying restated consolidated balance sheets of
PainCare Holdings, Inc. as of December 31, 2002 and 2001, and the related
restated consolidated statements of operations, stockholder's equity, and cash
flows for the years then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements 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 audits to obtain reasonable assurance about whether the consolidated
balance sheets 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 financial position of PainCare Holdings,
Inc., as of December 31, 2002 and 2001, and the results of its consolidated
operations and its cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of America.

March 6, 2003
Maitland, Florida

                                         Parks, Tschopp, Whitcomb, and Orr, P.A.

                                       F-2

<PAGE>

                             PAINCARE HOLDINGS, INC.

                           Consolidated Balance Sheets

                           December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                      Restated
                                                                           2002         2001
                                                                       -----------   -----------
<S>                                                                    <C>           <C>
                                     Assets

Current assets:
   Cash                                                                $ 2,078,684   $   344,655
   Accounts receivable                                                   2,781,094     1,183,321
   Due from shareholder (Note 14)                                          339,325       339,325
   Note Receivable                                                         100,316            --
   Deposits & prepaid expenses                                             138,519            --
                                                                       -----------   -----------

      Total current assets                                               5,437,938     1,867,301

   Furniture and equipment, net (note 3)                                 3,012,615       839,176
   Goodwill (note 4 and 8)                                               5,012,552     3,408,355
   Other assets                                                            203,822       100,324
                                                                       -----------   -----------
      Total assets                                                     $13,666,927     6,215,156
                                                                       ===========   ===========

                    Liabilities and Stockholders' Equity
Liabilities:
   Current portion of notes payable (note 5)                           $   320,123       154,900
   Accounts payable and accrued expenses                                   529,031       885,952
   Current portion of convertible debentures (note 6)                      987,164     1,016,546
   Current portion of capital lease obligations (note 7)                   445,549        74,518
                                                                       -----------   -----------
      Total current liabilities                                          2,281,867     2,131,916

Notes payable, less current portion (note 5)                             1,009,391        33,334
Convertible debentures (note 6)                                            664,055     1,154,074
Shareholder loan                                                             1,890            --
Capital lease obligations, less current portion (note 7)                 2,155,733       441,326
                                                                       -----------   -----------
      Total liabilities                                                  6,112,936     3,760,650
                                                                       -----------   -----------

Stockholders' Equity:
   Common stock, $.0001 par value. Authorized 75,000,000
      shares; issued and outstanding 15,576,640 and 7,725,357 shares         1,557           772
   Preferred stock, $.0001 par value. Authorized 10,000,000
      shares; issued and outstanding -0- shares                                 --            --
   Additonal paid in capital                                             7,019,246     2,640,689
   Retained earnings (accumulated deficit)                                 556,487      (148,547)
   Cumulative translation adjustments                                      (23,299)      (38,408)
                                                                       -----------   -----------

      Total stockholders' equity                                         7,553,991     2,454,506
                                                                       -----------   -----------
Commitments (note 5, 6 and 10)

      Total liabilities and stockholders' equity                       $13,666,927   $ 6,215,156
                                                                       ===========   ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-3

<PAGE>

                             PAINCARE HOLDINGS, INC.

                      Consolidated Statements of Operations

                     Years ended December 31, 2002 and 2001

                                                                       Restated
                                                            2002         2001
                                                        -----------   ----------
Revenues:
   Patient Services                                     $ 4,522,987   $3,980,227
   Management Fees                                        2,974,955      871,926
                                                        -----------   ----------
      Total Revenues                                      7,497,942    4,852,153
                                                        -----------   ----------

                                                        -----------   ----------
Cost of sales                                             2,698,450    2,113,695
                                                        -----------   ----------

         Gross profit                                     4,799,492    2,738,458

General and administrative                                3,468,515    2,151,046
Depreciation expense                                        206,949       61,917
                                                        -----------   ----------

         Operating income (loss)                          1,124,028      525,495

Interest expense                                            358,546      179,691
Other income (note 9)                                       173,992           --
                                                        -----------   ----------

         Income (loss) before income taxes                  939,474      345,804

Provision for income taxes (note 17)                        234,440           --
                                                        -----------   ----------

            Net income (loss)                           $   705,034   $  345,804
                                                        ===========   ==========

Basic earnings per share                                $      0.07   $     0.05
                                                        ===========   ==========

Basic weighted average shares outstanding                10,591,258    7,402,190
                                                        ===========   ==========

Diluted earnings per share                              $      0.06   $     0.04
                                                        ===========   ==========

Diluted weighted average shares outstanding              12,583,653    9,118,856
                                                        ===========   ==========

See accompanying notes to consolidated financial statements.

                                       F-4

<PAGE>

                      Consolidated Statements of Cash Flows

                     Years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                                                                             Restated
                                                                                   2002        2001
                                                                               -----------   ---------
<S>                                                                            <C>           <C>
Cash flows from operating activities:
   Net income                                                                  $   705,034   $ 345,804
   Adjustments to reconcile net income to net cash
      used in operating activities:
         Stock issued for service                                                       --      10,000
         Depreciation and amortization                                             206,949     287,395
         Cumulative translation adjustments                                        (23,299)    (23,724)
         Change in operating assets and liabilities, net of assets acquired:
            Accounts receivable                                                 (1,597,773)   (202,658)
            Other assets                                                          (103,498)    (88,788)
            Accounts payable                                                      (356,921)    595,792
                                                                               -----------   ---------
               Net cash provided by (used in) operating activities              (1,169,508)    923,821
                                                                               -----------   ---------
Cash flows from investing activities:
   Purchase of furniture and equipment                                             (77,260)   (355,793)
   Payment of debentures                                                          (432,645)   (363,700)
                                                                               -----------   ---------
               Net cash used in investing activities                              (509,905)   (719,493)
                                                                               -----------   ---------
Cash flows from financing activities:
   Proceeds from issuance of debentures                                                 --     445,709
   Net proceeds from issuance of common stock                                    1,301,134     (14,300)
   Net proceeds from issuance of common stock
      for conversion of convertible preferred                                    1,505,277          --
   Net proceeds from notes payable                                               1,102,599          --
   Shareholder loans                                                                (1,890)   (360,033)
   Payments on notes payable                                                      (493,678)    (41,660)
                                                                               -----------   ---------
               Net cash provided by financing activities                         3,413,442      29,716
                                                                               -----------   ---------
               Net increase in cash                                              1,734,029     234,044
Cash at beginning of period                                                        344,655     110,611
                                                                               -----------   ---------
Cash at end of period                                                          $ 2,078,684   $ 344,655
                                                                               ===========   =========
Supplementary disclosure of cash flow information:
   Cash paid during the year for interest                                      $   358,546   $ 179,691
                                                                               ===========   =========

Supplementary disclosure of non-cash flow information:
   During 2001, the Company issued $1,690,000 of convertible debentures in
      connection with the acquisition of Rothbart and AOSF. The Company
      financed MEDX and other equipment under capital lease agreements with
      financing companies of $2,132,309 in 2002, and $515,844 in 2001.
</TABLE>

See accompanying notes to consolidated financial statements.

                                       F-5

<PAGE>

                             PAINCARE HOLDINGS, INC.

                 Consolidated Statements of Stockholders' Equity

                     Years ended December 31, 2002 and 2001

<TABLE>
<CAPTION>
                                        Common Stock       Additional                 Cumulative       Total
                                     -------------------     Paid in    Accumulated   Translation   Stockholders'
                                       Shares     Amount     Capital      Deficit     Adjustments      Equity
                                     ----------   ------   ----------   -----------   -----------   -------------
<S>                                  <C>          <C>       <C>           <C>           <C>           <C>
Balances at December 31, 2000         5,366,357   $  536      375,225     (494,351)     (14,684)       (133,274)
Common stock issued in acquisition    1,850,000      185    1,849,815           --           --       1,850,000
Common stock issued in acquisition      250,000       25      196,175           --           --         196,200
Common stock issued for cash             79,000        8       39,492           --           --          39,500
Common stock issued for services         10,000        1        9,999           --           --          10,000
Common stock issued for earnout         170,000       17      169,983           --           --         170,000
Foreign currency translation                 --       --           --           --      (23,724)        (23,724)
Net income                                   --       --           --      345,804           --         345,804
                                     ----------   ------    ---------     --------      -------       ---------
Balances at December 31, 2001         7,725,357      772    2,640,689     (148,547)     (38,408)      2,454,506
Common stock issued for earnout         163,333       16      163,317           --           --         163,333
Common stock issued in merger           900,122       90      239,508           --           --         239,598
Common stock issued for conversion                                              --           --              --
   of convertible preferred           2,979,526      298    1,504,979                                 1,505,277
Common stock issued for cash          2,538,461      254    1,300,880           --           --       1,301,134
Common stock issued in acquisition    1,000,000      100      999,900           --           --       1,000,000
Common stock issued for earn out        269,841       27      169,973           --           --         170,000
Foreign currency translation                 --       --           --           --       15,109          15,109
Net income                                   --       --           --      705,034           --         705,034
                                     ----------   ------    ---------     --------      -------       ---------
Balances at December 31, 2002        15,576,640   $1,557    7,019,246      556,487      (23,299)      7,553,991
                                     ==========   ======    =========     ========      =======       =========
</TABLE>

See accompanying notes to consolidated financial statements

                                       F-6

<PAGE>

                             PAINCARE HOLDINGS, INC.

                          Notes to Financial Statements

                                December 31, 2002

(1)  Summary of Significant Accounting Policies

     History of the Company

          The Company was initially incorporated in State of Connecticut in May,
          1984 under the name of HelpMate Robotics, Inc. Prior to the sale of
          its business in December 1999, HelpMate was primarily engaged in the
          design, manufacture, and sale of HelpMate's flagship product, the
          HelpMate's courier system, a trackless robotic courier used primarily
          in the health care industry to transport materials. On December 30,
          1999, HelpMate sold substantially all of its assets to Pyxis
          Corporation ("Pyxis").

          Following the sale to Pyxis in December 1999, HelpMate's business plan
          was to effect a business combination with an operating business, which
          HelpMate believed to have the potential to increase stockholder value.

          On December 20, 2001, HelpMate entered in an Agreement and Plan of
          Merger with PainCare, Inc., a Nevada corporation (the "Merger
          Agreement"), which was consummated on July 17, 2002 (the "Merger").
          Pursuant to the Merger, PainCare, Inc. became a wholly-owned
          subsidiary of HelpMate. In connection with the Merger, the
          shareholders of PainCare, Inc. received voting common stock of
          HelpMate.

     History of PainCare, Inc.

          PainCare, Inc. was incorporated in the State of Nevada on February 19,
          1997, under the name of Hi-Profile Corporation. PainCare, Inc. had
          approximately 128 shareholders of record prior to the Merger with
          HelpMate. The combined Company now has approximately 1,200
          shareholders of record.

          PainCare, Inc. was reorganized in the fall of 2000 for the purpose of
          establishing a North American network of pain management, minimally
          invasive surgery and orthopedic rehabilitation centers.

          On December 1, 2000, PainCare, Inc. acquired 51% of the outstanding
          shares of Rothbart Pain Management Clinic Inc. ("Rothbart"). Rothbart
          was incorporated in Ontario, Canada in November, 1994. Rothbart is one
          of the largest providers of pain management services in Canada with
          over 14 pain management physicians practicing in its center. On March
          1, 2001, PainCare, Inc. acquired the remaining 49% of the outstanding
          shares of Rothbart.

                                       F-7

<PAGE>

          On January 1, 2001, PainCare, Inc. closed a merger pursuant to a
          merger agreement by and among PainCare, Inc., its wholly-owned
          subsidiary, PainCare Acquisition Company I, Inc. ("PNAC I"), and
          Advanced Orthopedics of South Florida, Inc.("AOSF"), a Florida
          corporation. AOSF is an orthopedic surgery, pain management and
          orthopedic rehabilitation center located in Lake Worth, Florida.

          PainCare, Inc. through PainCare Management Services, Inc. ("PCMS"), a
          wholly owned subsidiary of PainCare, Inc. entered into on March 1,
          2001 a lease agreement with MedX 96, Inc. ("MedX"), whereby MedX will
          supply rehabilitation equipment to PCMS in exchange for 15% of the net
          revenues of PCMS. The mission of PCMS is to deliver a turnkey
          musculoskeletal rehabilitation program for select orthopedic surgeon
          practices. The lease was subsequently amended on May 1, 2002.

          On August 31, 2001, PainCare, Inc. consummated the closing of an Asset
          Purchase Agreement with Perry Haney, M.D., whereby PainCare, Inc.
          acquired certain assets used by Dr. Haney in his pain management
          practice located in Aurora, Colorado. Pursuant to a Management
          Agreement between PainCare, Inc. and Dr. Haney, PainCare, Inc.
          provides Dr. Haney's practice with various business, administrative
          and management services including support services, non-professional
          personnel, office space, management, administration, marketing,
          advertising, billing, collection, and financial record keeping
          services.

          On July 17, 2002 PainCare, Inc. consummated the Merger with HelpMate.

     The Merger

          As indicated above, on December 20, 2001, HelpMate Robotics, Inc.
          entered in a Merger Agreement with PainCare, Inc. whereby a
          wholly-owned subsidiary of HelpMate, formed for the purpose of the
          Merger, would merge into PainCare, Inc. and PainCare, Inc. would
          become a subsidiary of HelpMate. The shareholders of PainCare, Inc.
          would receive voting common stock of HelpMate. In connection with the
          Merger, the companies filed a Form S-4 with the SEC which was
          effective on July 12, 2002. Immediately thereafter, a Certificate of
          Merger was filed with the Secretary of State of the State of
          Connecticut and Articles of Merger were filed with the Secretary of
          State of the State of Nevada. The Merger became effective on July 17,
          2002.

          The Merger was accounted for in accordance with accounting principles
          generally accepted in the United States. No goodwill or intangibles
          were recorded because the merger is essentially a recapitalization
          transaction and has been accounted for in a manner similar to a
          reverse acquisition, identifying PainCare, Inc. as the accounting
          acquirer.

          Holders of PainCare, Inc. common stock received shares of HelpMate
          common stock at a conversion rate of one (1) share of HelpMate common
          stock for each one share of PainCare, Inc. common stock surrendered.
          As of the date the Merger was consummated there were 7,555,357 shares
          of PainCare's common stock issued and outstanding. Holders of
          PainCare,

                                       F-8

<PAGE>

          Inc. options, warrants and other derivatives have the right to
          exercise those derivatives for HelpMate's common stock.

          HelpMate had 900,122 shares of common stock outstanding as of the date
          of the Merger. There were no other shares of HelpMate capital stock or
          derivatives issued or outstanding.

          In summary, PainCare, Inc. security holders received an aggregate of
          11,789,816 shares of HelpMate common stock in the merger, or
          approximately 93% of the issued and outstanding shares of HelpMate
          common stock, assuming the exercise or conversion of all issued and
          outstanding PainCare, Inc. stock options, warrants and convertible
          notes.

          On November 8, 2002, the Board of Directors and shareholders approved
          an amendment to the Company's Certificate of Incorporation for the
          purpose of changing the name of the Company from HelpMate Robotics,
          Inc. to PainCare Holdings, Inc. This name change reflects the revised
          strategic vision and marketing strategy of the Company following the
          completion in July 2002 of the merger with PainCare, Inc. In
          conjunction with the Company name change, the trading symbol for the
          Company's common stock changed from "HMRB" to "PANC" in December 2002.
          The currently outstanding stock certificates evidencing shares of the
          Company's common stock bearing the name "HelpMate Robotics, Inc." will
          continue to be valid and represent shares of the Company following the
          name change. All shares issued after November 8, 2002, will be issued
          bearing the new name.

          On November 8, 2002, the Board of Directors and shareholders approved
          a proposal to change the Company's state of incorporation from
          Connecticut to Florida. The Board of Directors believe that this
          change in domicile is in the best interests of the Company and its
          shareholders. The Reincorporation was effected by merging the Company
          with and into PainCare Holdings, Inc., a Florida corporation, a
          corporation formed by the Company for the purpose of the
          Reincorporation.

          On December 12, 2002, the Company completed the acquisition of the
          outstanding capital stock of Pain and Rehabilitation Network, Inc., a
          pain management physician practice headquartered in Orange Park,
          Florida. The capital stock was acquired from Andrea Trescot, M.D., the
          sole shareholder. Dr. Trescot had no prior relationships with the
          Company.

          The purchase price consisted of $1,000,000 in cash and 1,000,000
          shares of the Company's common stock valued at $1.00 per share. The
          Company may also make additional payments of up to $2,000,000 in cash
          and common stock if certain net earnings goals are achieved in each of
          the first three fiscal years following the closing. The acquisition
          has been accounted for using the purchase method of accounting. The
          Company funded the cash portion of the purchase price of Pain and
          Rehabilitation Network, Inc. from the proceeds of a debt financing
          obtained from Arthur J. Hudson, a director of the Company. The terms
          of the loan from Mr. Hudson require the Company to make monthly
          interest payments at the annual rate of 8% with the entire principal
          and unpaid interest due on December 31, 2004. In addition, the Company
          issued Mr. Hudson a warrant to purchase 100,000 shares of the
          Company's common stock at an exercise price of $0.70 per share.

                                       F-9

<PAGE>

     (b)  Property and equipment

          Property and equipment are recorded at cost and depreciated over the
          estimated useful lives of the assets which range from three to five
          years, using the straight-line method.

     (c)  Income taxes

          Deferred tax assets and liabilities are recognized for the future tax
          consequences attributable to temporary differences between the
          financial statement carrying amounts of existing assets and
          liabilities and their respective tax bases and operating loss and tax
          credit carry-forwards. Deferred tax assets and liabilities are
          measured using enacted tax rates expected to apply to taxable income
          in the years in which those temporary differences are expected to be
          recovered or settled. Changes in tax rates are recognized in the
          period that includes the enactment date.

     (d)  Financial Instruments Fair Value, Concentration of Business and Credit
          Risks

          The carrying amount reported in the balance sheet for cash and
          accounts payable approximates fair value because of the immediate or
          short-term maturity of these financial instruments. Fair values for
          convertible debentures and shareholder loans were based on interest
          rates that are currently available to the Company for issuance of debt
          with similar terms and remaining maturities, and approximate carrying
          value.

     (e)  Use of Estimates

          Management of the Company has made certain estimates and assumptions
          relating to the reporting of assets and liabilities and the disclosure
          of contingent assets and liabilities to prepare these financial
          statements in conformity with generally accepted accounting
          principles. Actual results could differ from those estimates.

     (f)  Cash Flows

          For purposes of cash flows, the Company considers all highly liquid
          debt instruments with original maturities of three months or less to
          be cash equivalents.

     (g)  Preferred Stock

          The Board of Directors is expressly authorized at any time to provide
          for the issuance of shares of Preferred Stock in one or more series,
          with such voting powers, full or limited, but not to exceed one vote
          per share, or without voting powers, and with such designations,
          preferences and relative participating, optional or other special
          rights and qualifications, limitations or restrictions, as shall be
          fixed and determined in the resolution or resolutions providing for
          the issuance thereof adopted by the Board of Directors.

                                      F-10

<PAGE>

     (h)  Revenue Recognition

          Revenue from management fees is recognized under the terms of the
          contract which is as the services are performed. Patient service
          revenue is recognized at the time the service is performed at the
          estimated net realizable amounts from patients, third-party payors and
          others for services rendered. The Company is a provider under the
          Medicare program and various other third-party payor arrangements
          which provide for payments to the Company at amounts different from
          its established rates. Provisions for estimated third-party payor
          settlements, if necessary, are provided in the period the related
          services are rendered.

          Changes in the allowance for credit losses and contractual allowance
          for the years ended December 31, were as follows:

<TABLE>
<CAPTION>
                                                                        2002          2001
                                                                     -----------   -----------
<S>                                                                  <C>           <C>
          Balance at beginning of year (including balances
             from purchased business combination)                    $ 1,149,220   $ 1,182,352

          Provision for credit losses and contractual allowance        6,675,955     4,745,336
          Charge offs                                                 (5,263,370)   (4,808,468)
                                                                     -----------   -----------

          Balance at end of year                                     $ 2,561,805   $ 1,149,220
                                                                     ===========   ===========
</TABLE>

(2)  Stock Options and Warrants

          The Company's Board of Directors has adopted a Stock Option Plan (the
          Plan) which authorizes the issuance of options to acquire up to
          5,000,000 shares of the Company's common stock to employees and
          Directors. Options granted under the Plan have exercise prices not
          less than the fair market value of the underlying stock at the date of
          grant as determined by the Company's Board of Directors. The number of
          shares, terms and exercise period of options and warrants granted
          under the Plan are determined by the Company's Board of Directors on a
          case-by-case basis. The Company has granted 4,170,000 options of
          common stock to employees and directors. Additionally, the Company has
          granted 996,000 warrants of which 25,000 were to employees and 971,000
          were to non-employees.

          The acquisition of AOSF on January 1, 2001 established a contractual
          stock price of $1.00 per share. All stock issued for services in 2001
          was valued by the Company at $1.00 per share. All options and warrants
          granted in 2002 were at or above fair market value, therefore these
          options and warrants were deemed by the Company to have no value at
          time of grant.

                                      F-11

<PAGE>

          In August 2000, the Board adopted a Year 2000 Stock Option Plan
     (the "Plan"), pursuant to which it authorized and granted the Company
     options to purchase up to 2,000,000 shares of the Company's common
     stock. The exercise price shall not be less than the fair market value of
     the underlying common stock on the grant date and no option may be
     exercised beyond five years from the grant date.

     In August 2001, the Board adopted a Year 2001 Stock Option Plan, which
     authorizes 3,000,000 shares of common stock available for grants to the
     Company's officers, directors, and employees. The exercise price shall be
     at least equal to the fair market value of the underlying common stock on
     the grant date and no option may be exercised beyond five years from the
     grant date.

     Had total compensation expense been calculated using SFAS 123, the
     Company's net loss and loss per common share for the years ended December
     31, 2002 and 2001, would have been changed to the following pro forma
     amounts:

                                            2002       2001
                                          --------   --------
     Net income:            As reported   $705,034   $345,804
                            Pro forma     $363,325   $345,804
     Diluted earnings
        per common share:   As reported   $   0.06   $   0.04
                            Pro forma     $   0.03   $   0.04

     The weighted average fair value of options granted is estimated on the date
     of the grant using the Black-Scholes option pricing model for employee and
     non-employee options with the following assumptions for the years ended
     December 31, 2001 and 2000:

                                2002      2001
                               -------   -------
     Risk-free interest rate   4.5%      5.0%
     Expected life             5 years   5 years
     Volatility                50%       50%
     Dividend yield            0.00%     0.00%

                                      F-12

<PAGE>

     A summary of options granted to purchase common stock under the Company's
     2001 and 2000 Stock Plans are presented below:

                                                          Weighted
                                                          Average
                      2002                   Shares    Exercise Price
     -----------------------------------   ---------   --------------

     Outstanding as of December 31, 2000     800,000       $0.05
        Granted                              775,000        1.00
        Exercised                                -0-         -0-
                                           ---------       -----
     Outstanding as of December 31, 2001   1,575,000       $0.52
                                           =========       =====
        Granted                            2,595,000        0.88
        Exercised                                -0-         -0-
        Forfeited                                -0-         -0-
                                           ---------       -----
     Outstanding as of December 31, 2002   4,170,000       $0.74
                                           =========       =====

     Options exercisable at year-end       2,910,000       $0.63
                                           =========       =====

(3)  Furniture, Equipment and Leasehold Improvements

          Furniture, equipment and leasehold improvements, stated at cost at
          December 31, consisted of:

                                             2002        2001
                                          ----------   --------

          Furniture                       $  143,539   $ 60,646
          Medical equipment                3,121,647    855,047
          Leasehold improvements              29,602     28,439
                                          ----------   --------

                                           3,294,788    944,132
          Less accumulated depreciation      282,173    104,956
                                          ----------   --------

                                          $3,012,615   $839,176
                                          ==========   ========

(4)  Goodwill

          In connection with the Advanced Orthopaedics of South Florida,
          Rothbart, and Pain and Rehabilitation Network, Inc. acquisitions,
          consideration paid exceeded the estimated fair value of the assets
          acquired (including estimated liabilities assumed as part of the
          transaction) by approximately $4,300,000. The excess of the
          consideration paid over the fair value of the net assets acquired has
          been recorded as goodwill. At each balance sheet date, management
          assesses whether there has been any permanent impairment in the value
          of intangibles. The factors considered by management include trends
          and prospects as well as the effects of obsolescence, demand,
          competition and other economic factors. No impairment losses have been
          recognized in any of the periods presented.

          In January 2002, contingent consideration was paid on the Advanced
          Orthopaedics of South Florida acquisition in the amount of $350,000 in
          the form of a convertible debenture. This resulted in a $350,000
          increase to goodwill. In March 2002, contingent consideration was paid
          on the Rothbart acquisition in the amount of $163,333 in the form of
          163,333 shares of common stock. This resulted in a $163,317 increase
          to goodwill. In December 2002, contingent consideration was paid on
          the Rothbart acquisition in the amount of $170,000 in

                                      F-13

<PAGE>

          the form of 269,841 shares of common stock. This resulted in a
          $169,973 increase to goodwill.

          In June 2001, FASB issued Statement of Accounting Standards (SFAS) No.
          142, "Goodwill and Other Intangible Assets." This Statement addresses
          financial accounting and reporting for acquired goodwill and other
          intangible assets and supercedes Accounting Principles Board (APB)
          Opinion No. 17, "Intangible Assets." It addresses how intangible
          assets that are acquired individually or with a group of other assets
          (but not those acquired in a business combination) should be accounted
          for in financial statements upon their acquisition. This Statement
          also addresses how goodwill and other intangible assets should be
          accounted for after they have been initially recognized in the
          financial statements. Effective July 1, 2002, the Company will adopt
          SFAS 142.

                                                           2002         2001
                                                        ----------   ----------
          Goodwill                                      $5,238,030   $3,633,833
          Accumulated amortization                        (225,478)    (225,478)
                                                        ----------   ----------

                                                        $5,012,552   $3,408,355
                                                        ==========   ==========

(5)  Long-Term Debt

     Long-term debt consists of the following at December 31:

<TABLE>
<CAPTION>
                                                                 2002        2001
                                                              ----------   --------
<S>                                                           <C>          <C>
     Note payable to finance company, secured by equipment
     and receivables. Due in monthly installments of $4,167
     plus interest at 8.5% through August 2007.               $  497,788   $ 83,334

     Note payable to director, interest bearing 8% paid
     monthly, due December 31, 2004.                             606,050          0

     Notes payable, interest bearing at 6%, due on demand.       225,676    104,900
                                                              ----------   --------

                                                               1,329,514    188,234
                                                              ----------   --------

     Less current installments                                   320,123    154,900
                                                              ----------   --------

                                                              $1,009,391   $ 33,334
                                                              ==========   ========
</TABLE>

(6) Debentures

<TABLE>
<CAPTION>
                                                                 2002        2001
                                                              ----------   --------
<S>                                                           <C>          <C>
     9% convertible debenture payable over four years in
     equal installments of $25,000 per month, beginning
     February 1, 2001, plus interest. Convertible at a rate
     of one share for
</TABLE>

                                      F-14

<PAGE>

<TABLE>
<S>                                                                                     <C>          <C>
     each $2 value of convertible debentures outstanding at
     date of conversion.                                                                $  917,933   $  950,000

     7% convertible debentures payable over three years in equal monthly
     installments. Convertible into common shares of the Company at any time derived
     by dividing the remaining face amount of the debenture by the then current
     market value of trading shares. (Convertible into 774,911 and 533,286 shares,
     based on estimated market value of $1 per share.                                      533,286      774,911

     8% convertible debentures due March 31, 2003. Convertible at a rate of one share
     for each $1 value of convertible debentures outstanding.                              200,000      300,000

     10%  convertible  debenture due April 1, 2002.  Convertible  at a rate of
     one share for each $1 value of convertible debentures outstanding.                          0      145,709
                                                                                        ----------   ----------
                                                                                         1,651,219    2,170,620
     Less current installments                                                             987,164    1,016,546
                                                                                        ----------   ----------
                                                                                        $  664,055   $1,154,074
                                                                                        ==========   ==========
</TABLE>

          At December 31, 2002, the aggregate annual principal payments, with
          respect to the obligations existing at that date as described above,
          are as follows:

          Year ending December 31:
          ------------------------

                2003                 $  987,164
                2004                    452,053
                2005                    116,667
                2006                     95,335
                                     ----------
                                     $1,651,219
                                     ==========

                                      F-15

<PAGE>

(7)  Leases

          The Company is currently leasing its MEDX machines under capital lease
          agreements and its offices and clinics under operating leases which
          expire at various dates.

          At December 31, 2002, future minimum annual rental commitments under
          noncancellable lease obligations are as follows:

                                                         Capital     Operating
     Year-ending December 31:                        Leases      Leases
     ------------------------                      ----------   ---------

               2003                                $  694,650    298,300
               2004                                   752,715    211,900
               2005                                   740,413    204,000
               2006                                   678,903    204,000
               2007                                   458,866     94,000
            Thereafter                                 20,025    564,000
                                                   ----------
     Total minimum lease payments                   3,345,572

     Less amounts representing interest
        (at rates of 9.5% to 9.9%)                    744,290
                                                   ----------
     Present value of net minimum lease payments    2,601,282

     Less current portion                             445,549
                                                   ----------
     Capital lease obligations - long-term         $2,155,733
                                                   ==========

     Rent expense for operating leases, including month to month leases, was
     $275,118 and $24,337 for the years ended December 31, 2001 and 2000,
     respectively.

                                      F-16

<PAGE>

(8)  Acquisitions

          On December 1, 2000 the Company acquired 51% of the outstanding shares
          of Rothbart Pain Management Clinic, Inc. (Rothbart), which is
          incorporated in Ontario, Canada. PainCare purchased 51% of the
          outstanding stock of Rothbart from certain shareholders in exchange
          for $510,000 in a convertible debenture with an interest rate of 7%
          and convertible at the fair market value of outstanding shares at the
          time of conversion. The interest and principal on the convertible
          debenture will be paid over a three-year period in equal monthly
          installments after an initial payment of $100,000 was paid on December
          1, 2000. The 51% shareholders of Rothbart may earn up to $510,000 in
          additional consideration based on the future earnings of Rothbart. The
          remaining 49% of the outstanding shares of Rothbart was acquired from
          Naomi Investments Limited (Naomi) on March 1, 2001 in exchange for
          $490,000 in a convertible debenture with an interest rate of 7% and a
          conversion feature equal to fair market value. The interest and
          principal on the convertible debenture will be paid over a three-year
          period in equal monthly installments. The Naomi shareholders may earn
          up to $490,000 in additional consideration based on the future
          earnings of Rothbart. Rothbart is one of the largest providers of pain
          management services in Canada with over 14 pain management physicians
          practicing in the center. Rothbart Pain Management Clinic, Inc.,
          purchase of 51% of stock of Rothbart by PainCare, dated 12/1/00.
          Utilized purchase method of accounting.

               Purchase price allocation:

               Consideration (convertible debenture)   $510,000
               Net assets of Rothbart                   (59,411)
                                                       --------
               Goodwill                                $450,589
                                                       ========

          Rothbart Pain Management Clinic, Inc., purchase of 49% of stock of
          Rothbart by PainCare, dated 3/1/01. Utilized purchase method of
          accounting.

               Purchase price allocation:

               Consideration (convertible debenture)   $490,000
               Net assets of Rothbart                        --
                                                       --------
               Goodwill                                $490,000
                                                       ========

          On January 1, 2001, the Company closed a merger pursuant to a Merger
          Agreement with its wholly-owned subsidiary, PainCare Acquisition
          Company I, Inc. (PNAC I), and Advanced Orthopaedics of South Florida,
          Inc. (AOSF), a Florida corporation. The Merger Agreement provides for
          the merger of AOSF into PNAC I, a Florida corporation. In exchange for
          all of the capital stock of AOSF, the AOSF shareholders will receive
          1,850,000 shares of common stock of the Company priced at $1.00 per
          share, $75,000 in cash and $1,200,000 in Convertible Debentures with
          an interest rate of 9% and a conversion feature at $2.00 per share.
          The principal and interest on the Convertible Debentures will be paid
          monthly over four years in equal installments. In addition, the former
          owner of AOSF may receive up to $1,050,000 in additional consideration
          based on the future earnings of AOSF. The physician owner of AOSF will
          receive a ten-year employment agreement with an annual salary of
          $300,000 per year for the first five years and $500,000 per year for
          the next five years, plus incentives based on AOSF earnings. AOSF is
          an orthopedic surgery, pain management and orthopedic rehabilitation
          center located in Lake Worth, Florida. The center is run by Merrill
          Reuter, M.D., a board certified orthopedic surgeon who specialized in
          minimally invasive spine surgery.

          Advanced Orthopaedics of South Florida, Inc., acquired on 1/1/01.
          Utilized purchase method of accounting. Included 100% of twelve
          month's results in 2001 financial statements.

               Purchase price allocation:

<TABLE>
<S>                                                                    <C>
               Consideration ($1,200,000 convertible debenture)        $1,200,000
               Consideration ($75,000 in cash)                             75,000
               Consideration (1,850,000 common shares @ $1 per share    1,850,000
               Net assets of AOSF                                        (601,756)
                                                                       ----------

               Goodwill                                                $2,523,244
                                                                       ==========
</TABLE>

          On August 31, 2001, PainCare entered into an Asset Purchase Agreement
          with Perry Haney, M.D. to acquire certain assets used by Dr. Haney in
          his pain management practice in Aurora, Colorado. As consideration for
          the assets, Dr. Haney received 250,000 shares of PainCare common
          stock. In addition, PainCare entered into a Business Management
          Agreement on August 31, 2001 with SpineOne, P.C. (SpineOne), a
          Colorado professional corporation, and Colorado Musculoskeletal
          Center, Inc. (CMCI), a Colorado business corporation (collectively,
          the Practice). Both of these entities are owned by Dr. Haney. For an
          initial period of five years, with automatic renewals of four
          successive five-year periods thereafter, PainCare shall provide the
          Practice with various business, administrative and management
          services. PainCare shall receive a management fee of $125,000 per
          month and pay various center and Practice non-professional expenses.
          The operations of SpineOne and CMCI are not consolidated in the
          accompanying financial statements because the management agreement
          does not provide a controlling financial interest. However, the
          management fee of $500,000 and related expenses of approximately
          $417,000 are included in the accompanying statement of operations.

          SpineOne, P.C. and CMCI, purchase of certain assets, dated 8/31/01.
          Utilized purchase method of accounting. Amortizing assets purchased
          over five years for accounting purposes. Included 100% of four months
          results from the Asset Purchase and Management Agreement in 2001
          financial statements.

               Purchase price allocation:

               Consideration (250,000 common shares @ $1 per share   $ 250,000
               Fair market value of assets purchased                  (250,000)
                                                                     ---------

               Goodwill                                              $      --
                                                                     =========

                                      F-17

<PAGE>

          On December 12, 2002, the Company closed a merger pursuant to a Merger
          Agreement with its wholly-owned subsidiary, PainCare Acquisition
          Company II, Inc. (PNAC II), and Pain and Rehabilitation Network, Inc.
          (PRNI), a Florida corporation. The Merger Agreement provides for the
          merger of PRNI into PNAC II, a Florida corporation. In exchange for
          all of the capital stock of PRNI, the PRNI shareholder will receive
          1,000,000 shares of common stock of the Company priced at $1.00 per
          share and $1,000,000 in cash. In addition, the former owner of PRNI
          may receive up to $2,000,000 in additional consideration based on the
          future earnings of PRNI. The physician owner of PRNI will receive a
          five-year employment agreement with an annual salary of $360,000 per
          year for the next five years, plus incentives based on PRNI earnings.
          PRNI is a pain management center located in Orange Park, Florida. The
          center is run by Andrea Trescot, M.D., a board certified pain
          management physician.

          Pain and Rehabilitation Network, Inc. acquired on 12/12/02. Utilized
          purchase method of accounting. Included one months results in 2002
          financial statements.

                                      F-18

<PAGE>

                Purchase price allocation:

<TABLE>
<S>                                                                    <C>
               Consideration ($1,000,000 in cash)                      $ 1,000,000
               Consideration (1,000,000 common shares @ $1 per share)    1,000,000
               Net assets of PRNI                                       (1,089,736)
                                                                       -----------
               Goodwill                                                $   910,264
                                                                       ===========
</TABLE>

          Following are the summarized unaudited pro forma results of operations
          for the years ended December 31, 2002 and 2001, assuming the
          acquisition of PRNI had taken place at the beginning of the year. The
          unaudited pro forma results are not necessarily indicative of future
          earnings or earnings that would have been reported had the
          acquisitions been completed when assumed.

                   Pro Forma Condensed Statement of Operations
                          Year ended December 31, 2002

<TABLE>
<CAPTION>
                                        PainCare    P&R Network
                                       Historical    Historical    Pro forma
                                       Statements    Statements   Adjustments    Pro forma
                                       ----------   -----------   -----------   -----------
<S>                                    <C>           <C>           <C>          <C>
     Revenues                          $7,497,942    $2,035,960    $      --    $ 9,533,902
     Cost of sales (2)                  2,698,450     1,353,480     (660,000)     3,391,930
                                       ----------    ----------    ---------    -----------
     Gross profit                       4,799,492       682,480           --      6,141,972

     Operating expenses:
          General and administrative    3,468,515       576,672           --      4,045,187
          Depreciation expense            206,949            --           --        206,949
                                       ----------    ----------    ---------    -----------
     Operating income                   1,124,028       105,808           --      1,889,836

           Interest expense (3)           358,546         1,315       73,333        433,194
           Other income                   173,992            --           --        173,992
                                       ----------    ----------    ---------    -----------
     Income before taxes                  939,474       104,493     (586,667)     1,630,634
     Provision for income taxes           234,440         7,258           --        241,698
                                       ----------    ----------    ---------    -----------
     Net income                        $  705,034    $   97,235    $(586,667)   $ 1,388,936
                                       ==========    ==========    =========    ===========
     Basic earnings per share                                                   $      0.12
                                                                                ===========
     Basic weighted average shares outstanding                                   11,507,925
                                                                                ===========
     Diluted earnings per share                                                 $      0.10
                                                                                ===========
     Diluted weighted average shares outstanding                                 13,666,987
                                                                                ===========
</TABLE>

     See accompanying footnotes to unaudited pro forma financial statements.

                                      F-19

<PAGE>

                   Pro Forma Condensed Statement of Operations
                          Year ended December 31, 2001

<TABLE>
<CAPTION>
                                         PainCare    P&R Network
                                        Historical    Historical    Pro forma
                                        Statements    Statements   Adjustments    Pro forma
                                        ----------   -----------   -----------   -----------
<S>                                     <C>           <C>           <C>          <C>
     Revenues                           $4,852,153    $2,179,735    $      --    $ 7,031,888
     Cost of sales (2)                   2,113,695     1,334,259     (522,529)     2,925,425
                                        ----------    ----------    ---------    -----------

     Gross profit                        2,738,458       845,476     (522,529)     4,106,463

     Operating expenses:
           General and administrative    2,151,046       695,056           --      2,846,102
           Depreciation expense             61,917        36,762           --         98,679
                                        ----------    ----------    ---------    -----------
     Operating income                      525,495       113,658           --      1,161,682

           Interest expense (3)            179,691         1,004       80,000        260,695
           Other income                         --            --           --             --
                                        ----------    ----------    ---------    -----------
     Income before taxes                   345,804       112,654     (442,529)       900,987

     Provision for income taxes                 --        39,511      154,885        194,396
                                        ----------    ----------    ---------    -----------
     Net income                         $  345,804    $   73,143    $(287,644)   $   706,591
                                        ==========    ==========    =========    ===========
     Basic earnings per share                                                    $      0.08
                                                                                 ===========
     Basic weighted average shares outstanding                                     8,402,190
                                                                                 ===========
     Diluted earnings per share                                                  $      0.07
                                                                                 ===========
     Diluted weighted average shares outstanding                                  10,118,856
                                                                                 ===========
</TABLE>

     See accompanying footnotes to unaudited pro forma financial statements.

     Footnotes to Unaudited Pro Forma Financial Statements

                                      F-20

<PAGE>

     (1) The historical financial results referenced above for the P&R Network
     are for the period from January 1, 2002 through November 30, 2002. Results
     for December 2002 are included in the historical PainCare statements.

     (2) Adjustment for the compensation of Dr. Trescot to a base salary of
     $360,000 per year and the elimination of non-recurring costs subsequent to
     the acquisition.

     (3) Gives effect to annual interest of 8% on the debt financing of
     $1,000,000, which proceeds were paid as consideration in the acquisition.

(9)  Other Income

          In December, 1996, the Clinic negotiated with the property managers of
          their leased office space for reduced base rent in the amount of 50%
          of that which is stated in the lease. This concession was contingent
          upon receiving approval from the property owners that has not yet been
          received. Management began submitting lease payments at the reduced
          rate, beginning in December, 1996. For the year ended December 31,
          2001 and 2000, this resulted in lease payments of $37,000 and $35,850,
          respectively lower than stipulated in the original lease. At December
          31, 2001, the Clinic has a total of $173,992 of unpaid lease payments
          as called for in the original lease. As of December 31, 2001,
          management has recorded all of the unpaid lease payments as accrued
          liabilities for the appropriate period. In September, 2002, Rothbart
          renegotiated their lease and as part of the renegotiation, all prior
          payments, which had been accrued, but not paid, were waived.

(10) Commitments and Contingencies

          The Company has entered into five-year employment agreements with its
          Chief Executive Officer and Chief Financial Officer requiring
          aggregate annual salaries of $375,000 beginning in August 2000.
          Subsequent to year-end the Company's president, Jay Rosen, M.D.
          resigned and Ron Riewold was elected to succeed Mr. Rosen a President.
          For details on Mr. Riewold's contract see footnote 13 below.

(11) Recent Accounting Pronouncements

          In June 2001, the Financial Accounting Standards Board (FASB) approved
          SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142
          requires companies to cease amortizing goodwill and other intangible
          assets with indefinite lives after December 31, 2001. SFAS No. 142
          also establishes a new method of testing goodwill for impairment on an
          annual basis or on an interim basis if an event occurs or
          circumstances change that would reduce the fair value of a reporting
          unit below its carrying value. We have completed our initial
          assessment of goodwill impairment and have determined that there is no
          impairment at this time. Upon adoption of this standard, any resulting
          impairment charges recorded may have a material impact on our results
          of operations.

                                      F-21

<PAGE>

          In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
          Retirement Obligations." The statement provides accounting and
          reporting standards for recognizing the cost associated with
          obligations related to the retirement of tangible long-lived assets.
          Under this statement, legal obligations associated with the retirement
          of long-lived assets are to be recognized at their fair value in the
          period in which they are incurred if a reasonable estimate of fair
          value can be made. The fair value of the asset retirement costs is
          capitalized as part of the carrying amount of the long-lived asset and
          expensed using a systematic and rational method over the asset's
          useful life. Any subsequent changes to the fair value of the liability
          will be expensed. We will be required to adopt this statement no later
          than January 1, 2003. Based on our initial assessment, we do not
          expect the adoption of this statement to have a significant impact on
          our financial condition or results of operations.

          In October 2001, the FASB issued SFAS No. 144, "Accounting for the
          Impairment or Disposal of Long-Lived Assets," which is effective for
          fiscal years beginning after December 15, 2001. This statement
          supersedes FASB Statement No. 121, "Accounting for the Impairment of
          Long-Lived Assets and for Long-Lived Assets to be Disposed Of," and
          replaces the provisions of APB Opinion No. 30, "Reporting the Results
          of Operations - Reporting the Effects of Disposal of Segments of a
          Business, and Extraordinary, Unusual and Infrequently Occurring Events
          and Transactions," for the disposal of segments of a business. SFAS
          No. 144 retains the fundamental provisions of SFAS No. 121 for the
          recognition and measurement of the impairment of long-lived assets to
          be held and used and the measurement of long-lived assets to be
          disposed of by sale. Impairment of goodwill is not included in the
          scope of SFAS No. 144 and will be treated in accordance with SFAS No.
          142. Under SFAS No. 144, long-lived assets are measured at the lower
          of carrying amount or fair value less cost to sell. We are required to
          adopt this statement no later than January 1, 2002. Based on our
          current assessment, we do not expect the adoption of this statement to
          have a significant impact on our financial condition or results of
          operations.

(12) Comprehensive Income

          SFAS No. 130, "Reporting Comprehensive Income," establishes a standard
          for reporting and displaying comprehensive income and its components
          within the financial statements. Comprehensive income includes charges
          and credits to stockholders' equity that are not the result of
          transactions with shareholders. Comprehensive income is composed of
          two subsets - net income and other comprehensive income. Included in
          other comprehensive income for the Clinic are cumulative translation
          adjustments. These adjustments are accumulated within stockholders'
          equity. Cumulative translation adjustments are not adjusted for income
          taxes as they relate to indefinite investments in non-U.S. entities.
          Items affecting comprehensive income (loss) were $425 and $(23,724)
          for the years ended December 31, 2002 and 2001, respectively.

(13) Subsequent Events

          In January 2003, contingent consideration was earned with respect to
          the AOSF acquisition in the amount of $350,000, which will be paid in
          the form of a convertible debenture,

                                      F-22

<PAGE>

          interest at 9%, and is convertible into common stock at the rate of $2
          per share.

          In February 2003, Jay Rosen, M.D., resigned as President of the
          Company and Ronald Riewold was elected by the Board as President. He
          previously served as Chief Executive Officer and President of PainCare
          Management Services, Inc., a wholly-owned subsidiary of the Company.
          The Company entered into a five-year employment agreement, which
          includes an annual aggregate salary of $175,000, starting in February
          2003.

          In March 2003, contingent consideration was earned with respect to the
          Rothbart acquisition in the amount of $163,333, which will be paid in
          the form of common stock valued at $1.52 per share.

          These amounts of contingent consideration will result in additional
          goodwill in the first quarter of 2003.

(14) Shareholder Note

          The former shareholder of AOSF has notes due to PainCare which total
          $339,325. This shareholder currently owns approximately 11.2% of the
          outstanding shares of PainCare. The purpose of the notes is to
          purchase rehabilitation equipment for AOSF. The note receivable is
          evidenced by two promissory notes. The first note has a remaining
          balance of $89,325. It originated on May 18, 2001 in the amount of
          $179,325, bears interest at 5% per annum and is due and payable on May
          17, 2004. The second note has a remaining balance of $250,000. It
          originated on September 11, 2001, bears interest at 5% per annum and
          is due and payable on September 11, 2003. PainCare intends to enforce
          the terms and collections of these notes.

(12) Value of Shares

          The acquisition of AOSF on January 1, 2001 established a stock price
          of $1 per share. All issuances of stock for services subsequent to
          that date valued the shares issued for services at $1 per share.
          Shares issued for services in 2001 were valued at $10,000, or 10,000
          shares at $1.00 per share.

                                      F-23

<PAGE>

(16) Restatement

          The accompanying balance sheets, statements of operations, and
          statements of cash flow have been restated to reflect the adjustment
          to fully accrue lease obligations. The information below quantifies
          the impact of accruing the lease obligations.

                                         2001
                                       Original       2001
                                       Statement    Restated
                                      ----------   ----------
          Revenues                    $4,852,153    4,852,153
          Net Income                  $  391,266      345,804
          Earnings Per Share
             Basic                    $     0.05   $     0.05
             Diluted                  $     0.04   $     0.04

(17) Income Taxes

          Total income tax expense for the year ended December 31, 2002, consist
          of:

                                     Current   Deferred    Total
                                     -------   --------   -------
          Federal                    175,000      --      175,000
          State                       30,000      --       30,000
          Foreign                     29,440      --       29,440
                                     -------   --------   -------
                                     234,440      --      234,440
                                     =======   ========   =======

          Income tax expense attributable to income from enhancing operations
          deferred from the amount computed by applying the U.S. Federal Income
          Tax rate of 34% to income from continuing operations before income
          taxes primarily as a result of changes in the valuation allowance on
          deferred tax assets.

          The tax effect of temporary differences that give rise to a
          significant portion of the deferred tax assets as of December 31, 2002
          and 2001 are as follows:

          Deferred Tax Assets            2002         2001
          -------------------        -----------   ----------

          Intangible Assets          $ 1,100,000    1,200,000

                                      F-24

<PAGE>

          Less Valuation Allowance    (1,100,000)  (1,200,000)
                                     -----------   ----------
                                     $        --           --
                                     ===========   ==========

                                      F-25