<PAGE>

UNITED STATES
Securities and Exchange Commission
Washington, DC 20549

FORM 10-K

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

For the fiscal year ended April 30, 1998

Or

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

For the Transition period from ___________  to _____________

Commission File Number  0-3255

       JAYARK CORPORATION
(Exact name of registrant as specified in its charter)

 DELAWARE                                                13-1864519
(State or jurisdiction of incorporation or organization)(IRS Employer ID No.)

PO Box 741528, Houston, Texas                     77274
(Address of principal executive office)           (Zip Code)

Telephone number, including area code:            (713) 783-9184

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

Securities  registered pursuant to Section 12(g) of the Act: Common  Stock,  par
value $.30 per share

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

      Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (section 229.405 of this chapter) is not contained herein,
and  will not be contained, to the best of registrant's knowledge, in definitive
proxy  or information statements incorporated by reference in Part III  of  this
Form 10-K or any amendment to this Form 10-K.   [ ]

     The  aggregate  market value of the voting stock held by non-affiliates  of
the Registrant is $314,483 as of June 30, 1998.

<PAGE>

The number of shares outstanding of Registrant's Common Stock is 9,221,199 as of
June 30, 1998.

PART I

                              Item 1. Business

     General

Jayark  Corporation ("Jayark" or "the Company") conducts its operations  through
AVES Audiovisual Systems, Inc. ("AVES"), a wholly owned subsidiary.

AVES  distributes  for resale, as well as rents, a broad range  of  audiovisual,
video  and  communications equipment and supplies.  Its customer  base  includes
schools,   industry  and  hotels.  The  warehousing,  sales  and  administrative
operations of AVES are located in Houston, Texas.

The  Company  was  originally incorporated in New York in 1958.   In  1991,  the
Company changed its state of incorporation to Delaware.

     Recent Events
     
     Discontinued Operations
     
As  a  result  of continued losses due to a soft retail market, low  margins,
competitive pressures, and price reductions, the Company had been looking for
methods  to  sell  or otherwise dispose of the operations  of  Rosalco  Inc.,
("Rosalco")  a wholly owned subsidiary of Jayark.  Rosalco had  been  in  the
business  of the distribution of more than 300 different products,  including
occasional furniture, brass beds, custom jewelry cases and accessories,  most
of  which were imported from outside the continental United States.   Rosalco
also   developed  special  designs  for  several  customers.    Rosalco   was
headquartered in Jeffersonville, Indiana.  All efforts to sell  Rosalco  were
unsuccessful, and it was officially closed on October 22, 1997. The assets of
Rosalco  were secured as part of its borrowing agreement.  Shortly after  the
closing,  a receiver was assigned to liquidate the secured assets of  Rosalco
to  satisfy the loan principal.  The financial statements have been  restated
to  reflect  Rosalco's operations for all periods as discontinued operations.
In fiscal 1997, Jayark incurred a $5,795,000 loss on Discontinued Operations,
which  included $3,294,000 loss from operations for the year ended April  30,
1997,  the  establishment of accruals in the amount of $300,000 for  expenses
and  guarantees  related  to the closing, the write off  of  an  intercompany
receivable  and other assets of $476,000, and the write off of the  remaining
net assets of Rosalco of $1,725,000.

     Subsequent Events

In  July 1998, the Company amended its Certificate of Incorporation increasing
its   authorized  Common  Stock  from  10,000,000  to  30,000,000  shares  and
decreasing the par value of its Common Stock from $.30 to $.01 per share.

<PAGE>

In  August 1998, the Company intends to offer to each stockholder, the right  to
purchase,  pro  rata, two shares of Common Stock at a price of $.10  per  share.
The  Company  expects  to file a Registration Statement on  Form  S-1  with  the
Securities  and Exchange Commission as soon as practicable in order to  register
such  rights  to  purchase Common Stock, under the Securities Act  of  1933,  as
amended.  Upon the Registration Statement becoming effective, stockholders  will
receive  notification of the Rights Offering and instructions on how to exercise
the  rights.  The net proceeds of $1,790,000 to the Company from the sale of the
Common Stock will be used to retire $1,790,000 of notes payable and subordinated
notes, including accrued interest with related parties.

In   June  1998  Jayark  Corporation,  through  a  newly  formed,  wholly  owned
subsidiary,  MED  Services  Corp. ("Med"), entered  into  a  Purchase  and  Sale
Agreement with Vivax Medical Corporation ("Vivax"), a company that manufactures,
sells  and  rents  durable  medical equipment to hospitals,  nursing  homes  and
individuals.   Under the terms of the agreement, Med purchased  certain  medical
equipment  from  Vivax for cash of $579,700 and a $144,925 unsecured  promissory
note  due  in  five years.  Med then entered into a Consignment  Agreement  with
Vivax whereby this medical equipment was consigned to Vivax to rent through  its
distribution network.  In consideration of Vivax renting and maintaining the Med
equipment, Vivax is entitled to a range of forty-eight to sixty-seven percent of
the  rental proceeds, based upon the equipment rented.  Vivax has an  option  to
purchase the medical equipment from Med after the twenty-fourth, thirty-six  and
forty-eight month of the consignment period.  Med, under the Purchase  and  Sale
Agreement  has  an  option, through October 31, 1999 to purchase  an  additional
$2,475,000  of  medical  equipment  from Vivax.   Upon  the  expiration  of  the
consignment period, which is five years from the purchase of the equipment,  Med
has the option to sell the equipment back to Vivax.

Med  negotiated a $1,000,000 revolving line of credit with Atlantic Bank of  New
York  and  invested approximately $130,000 of the Company's presently  available
working  capital  to  purchase the medical equipment.  The  $1,000,000  line  of
credit  is due one year from signing and bears interest at prime plus  2%.   The
line  of  credit is secured by the inventories and accounts receivable  of  Med.
There are no financial covenants associated with the line of credit.  As of July
31, 1998 Med has $450,000 outstanding on the line.

If the medical equipment is successfully rented, the rental income and cash flow
could  have  a  material affect on the operating results of Jayark  Corporation.
There  can  be no assurances that the Company will be successful in renting  the
medical equipment.

Description of AVES' Business

     Products

AVES  distributes  and  rents a broad range of audio  video  and  communications
equipment  and  supplies.  Among the items distributed are movie, filmstrip  and
slide projectors; projection screens and lamps; video cameras and systems; laser
videodisk,  video projection, TV monitors and receivers; video  systems;  public
address  systems,  microphones  and headsets; tape  recorders,  record  players,
cassette  recorders, and related accessories and supplies.  Some  of  the  items
sold   (such   as  blank  audio  cassettes,  headsets  and  cassette  recorders,
duplicating  equipment and supplies, laminating film and equipment for  document
protection) are either assembled by AVES itself or purchased from private  label

<PAGE>

and  other  sole source suppliers and distributed under the "AVES"  and  "LAMCO"
names.   AVES also distributes the products of brand name manufacturers such  as
RCAT,  GET,  Mitsubishi, Elmo, Panasonic, Ikegami, Videotek,  Hitachi,  Pioneer,
Leitch,  Quasar, Telex Corporation, Kodak, Dukane, Sharp, Sony, 3M Brand,  Luxor
and  miscellaneous  other brand names.  Brand name and  "house"  brand  products
account  for approximately 97% and 3% of AVES sales, respectively.  The  Company
also  offers  repair  services, audio visual consulting &  design,  engineering,
installation  and servicing of audiovisual systems to businesses, hospitals  and
hotels.

     Raw Materials

The  sources  and  availability of raw materials  are  not  significant  for  an
understanding  of AVES' business since competitive products are obtainable  from
alternative suppliers.  AVES carries an inventory of merchandise for resale  and
for  rental  operations that is adequate to meet the rapid delivery requirements
(frequently same day shipments) of its distribution business.

     Patents

There  are no patents, trademarks, licenses, franchises or concessions that  are
material to AVES business.
     
     Sales

AVES  currently  distributes  and  rents its  products  in  the  United  States,
primarily by means of catalogs, telephone orders and a field sales force.  Sales
of AVES are not seasonal, except that sales to schools typically are higher from
April through July than at other times during the year.

     Customers

In  fiscal  1998,  72%  of AVES revenues were to schools and  other  educational
institutions.  The remaining 28% came from sales to business and industry  (25%)
and  rental of AVES equipment, primarily to hotels, (3%).  Approximately 70%  of
the  AVES  revenues  in  fiscal  1997 were  from  sales  to  schools  and  other
educational  institutions.   The remaining 30% came  from  the  rental  of  AVES
systems  primarily  to  hotels (approximately 3%)  and  sales  to  business  and
industry (approximately 27%).  In fiscal 1996, 70.2% of AVES revenues were  from
sales  to schools and other educational institutions.  The remaining 29.8%  came
from  the  rental of AVES systems primarily to hotels (approximately 3.8%),  and
sales  to  business and industry (approximately 26%).  In fiscal 1995, 69.5%  of
AVES  revenues  were  from sales to schools and other educational  institutions.
The  remaining  30.5% came from the rental of AVES systems primarily  to  hotels
(approximately 6.3%), and sales to business and industry (approximately 24.2%).
     
     Backlog

The  amount of unfilled sales orders of AVES at April 30, 1998, was $904,000  as
compared  to  $758,320 at April 30, 1997, and $443,000 at April 30,  1996.   The
amount of unfilled sales orders is not a material measure of AVES' operations.

<PAGE>

     Competition

The  Company  believes that AVES is one of the most diversified  national  audio
visual purveyors in the United States, given the different types of services and
products  offered by the subsidiary.  AVES' principal means of  competition  are
its  aggressive pricing, technical expertise, quick delivery and the broad range
of product lines available through its distribution channels.

     Employees

At April 30, 1998, AVES had 20 employees.

Item 2. Properties

The  Company's  Corporate office is located in Houston, Texas in a  modern,  two
story,  stone and glass building which includes adjoining parking for up  to  50
cars.   The  Corporate  office  and the business  of  AVES  are  conducted  from
approximately 13,000 square feet; 5,500 of which are used for office, sales  and
demonstration purposes and 7,500 for warehouse purposes.  The current lease term
expires on April 30, 2001.  The current rental is $5,200 per month.

Item 3. Legal Proceedings

The  Company is subject to certain pending legal proceedings, most of which  are
ordinary and routine litigation incidentals to its business.  None of such legal
proceedings, in the opinion of the Company, is
material to its business or financial condition.

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

No  matters were submitted to a vote of the Company's stockholders, through  the
solicitation of proxies or otherwise, during the fourth quarter of the Company's
fiscal year ended April 30, 1998.

PART II

Item 5. Market For Registrant's Common Stock And Related Stockholder Matters

Effective  July  10, 1997, the Company's Common Stock was delisted  due  to  the
Company's   non-compliance  with  the  NASDAQ's  minimum  capital  and   surplus
requirement.  Bid quotations for the Company's Common Stock may be obtained from
the  "pink  sheets" published by the National Quotation Bureau, and  the  Common
Stock is traded in the over-the-counter market.

The  following  table presents the quarterly high and low trade  prices  of  the
Company's  common  stock  for the periods indicated,  in  each  fiscal  year  as
reported  by  NASDAQ.   As  of  April 30, 1998,  there  were  approximately  826
stockholders of record of common stock.

The  Company has not paid any dividends on its common stock during the last five
years and does not plan to do so in the foreseeable future.

<PAGE>
<TABLE>
<CAPTION>
               1998 Common Stock Trade Price     1997 Common Stock Trade Price
              -----------------------------     -----------------------------
<S>           <C>           <C>                 <C>            <C>
              High          Low                 High           Low
              ----          ----                ----           ----
First Qtr     .31           .19                 .56            .19
Second Qtr    .19           .19                 .41            .13
Third Qtr     .19           .19                 .50            .19
Fourth Qtr    .17           .09                 .50            .25
</TABLE>

Item 6. Selected Financial Data

<TABLE>
<CAPTION>
<S>                     <C>        <C>         <C>         <C>         <C>
Year Ended April 30,    1998       1997        1996        1995        1994
                        ----       ----        ----        ----        ----
Results of Operations:
Net Revenues         $13,604,558  12,638,072  11,856,148  11,631,370  9,594,000
Earnings (Losses) from                                                        
Cont Oper                $75,992   ($264,372)  ($284,390)       $814  ($154,000)
Earnings (Losses) from                                                        
Disc Operations               $0 ($5,794,839)($6,900,857    $772,479 $1,206,000

Net Earnings (Losses)    $75,992 ($6,059,211)($7,185,247)   $773,293 $1,052,000
                                           
Primary Earnings                                                              
(loss) per Share from                                                         
Cont Oper               $.01     ($.03)       ($.04)       $.00       ($.02)
Primary Earnings                                                              
(loss) Per Share from                                                         
Disc Operations         $.00     ($.66)       ($.88)       $.11        $.18
Avg Shares Oustanding  9,221,199   8,802,528   7,833,990   6,867,083  6,682,344
At April 30,                                                                
Balance Sheet Information:
Total Assets          $2,634,964  $2,754,072  $8,327,357 $18,084,616 $10,419,000
Long Term Obligations $3,446,021  $3,407,207  $1,972,020  $1,542,628  $1,811,820
Working Capital         $157,067     ($7,003)  ($233,256) $2,066,560  $1,331,000
(Deficit)
Stockholders' Equity ($2,925,566)($3,001,558) $2,585,541  $8,614,426 $11,543,000
(Deficit)
</TABLE>


Item  7. Management's Discussion and Analysis Of Financial Condition And Results
Of Operations

     General Comments

For  the  fiscal year ended April 30, 1998, the Company recognized  consolidated
net  income after tax of $75,992.  AVES recognized net income of $669,355  as  a
result of its operations.  AVES incurred an increase in Revenues and experienced
a slight increase in SG&A spending for fiscal 1998.  Jayark Corporate recognized
a  net  loss  of  $593,363.  Jayark Corporate realized lower SG&A  spending  for
fiscal 1998.

<PAGE>

Comparison of Fiscal Year Ended April 30, 1998 With Fiscal Year Ended April  30,
1997

     Revenues

Consolidated  Revenues of $13,604,000 increased $966,000, or 7.6%,  from  fiscal
1997.   The increase is the result of a $1,130,000 increase in direct sales  due
to  volume  increases.   However,  these  increases  were  primarily  offset  by
decreases in rental sales ($206,000).

     Cost of Revenues

Consolidated Cost of Revenues of $11,446,000 increased $854,000, or  8.1%,  from
the  prior  fiscal year primarily due to increased revenues.   The  total  gross
margin decreased .3% from the prior fiscal year due to a change in product mix.

     Selling, General and Administrative Expense

Consolidated   Selling,  General  and  Administrative  Expenses  of   $1,717,000
decreased  $331,000  or 16.2% as compared to the prior reporting  year.   Jayark
Corporate recognized cost reductions in legal and professional fees of  $119,000
due  to  reduced legal representation in the current year and higher than normal
audit  and accounting fees incurred in Fiscal 1997, an $88,000 decrease in taxes
due  to  a  reduction in Franchise Tax expenses and refunds received from  prior
year  returns, and, decreases in other miscellaneous expense accounts of $86,000
as  a  result  of  the  Company's overall cost reduction plan.   AVES  decreased
spending $38,000, primarily a result of an increase in miscellaneous income.

     Interest Expense

Consolidated Interest Expense of $366,000 increased $26,000 or 7.5%.   Corporate
interest increased due to an increase in borrowing.

     Other Income

Consolidated Other Income of $200 decreased $78,349 or 99.7%.  This decrease  is
a  result  of 1997 gains on the disposal of fixed assets and other miscellaneous
income.

     Pre Tax Income from Continuing Operations

Consolidated Pre Tax Income from Continuing Operations is $76,000 as compared to
a  prior  year's  net  loss of $264,000.  This is a result  of  higher  revenues
combined with lower Selling, General, and Administrative expenses.

<PAGE>

Comparison of Fiscal Year Ended April 30, 1997 With Fiscal Year Ended April  30,
1996

     Revenues

Consolidated  Revenues of $12,638,000 increased $782,000  or  6.6%  from  fiscal
1996.  The increase was the result of a $1,105,000 increase in direct sales  and
a  slight  increase  in rental sales from 1996.  However, these  increases  were
offset primarily by decreases in contract sales ($323,000).  The increased sales
were  primarily a result of the increased emphasis on direct sales  rather  than
contract sales.

     Cost of Revenues

Consolidated Cost of Revenues of $10,592,000 increased $822,000 or 8.4% from the
prior  fiscal  year.   The increase reflected the higher costs  associated  with
direct  sales rather than those incurred on contract sales.  Total gross  margin
decreased  an  aggregate of 1.9% from the prior fiscal year due to decreases  in
margin related to the transition to direct sales, which had a lower margin  with
higher volume.

     Selling, General and Administrative Expense

Consolidated   Selling,  General  and  Administrative  Expenses  of   $2,000,000
decreased  $110,000  or  5.2%  as compared to the prior  reporting  year.   AVES
decreased depreciation expense by $38,000 due to the disposal of assets  at  the
end  of  fiscal 1996.  The Corporate office decreased insurance expenses $50,000
due to savings on premiums and $22,000 in payroll expense.

     Interest Expense

Consolidated  Interest  Expense  of $340,000 increased  $11,000  or  3.3%.   The
increase was due to increased borrowing levels during fiscal 1997.

     Other Income

The  Company incurred consolidated Other Income of $79,000 as a result of  gains
on the disposal of fixed assets and other miscellaneous income.

     Pre tax loss from Continuing Operations

Consolidated Pre tax Loss from Continuing Operations was $264,000 as compared to
a  prior  year's  net loss of $116,000.  This was primarily a  result  of  lower
spending associated with Selling, General, and Administrative expenses and other
miscellaneous income.

     Net Loss on Discontinued Operations

Consolidated  Net  Loss  from  Discontinued  Operations  was  $5,795,000,  which
represented  losses from the discontinued Rosalco operation of  $3,294,000,  the
establishment of  accruals in the amount of $300,000 for expenses and guarantees
related  to the closing, the write off of an intercompany receivable  and  other
assets of $476,000, and the write off of the remaining net assets of Rosalco  of
$1,725,000.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

At  April  30, 1998, consolidated open lines of credit available to the  Company
for  borrowing, were $950,000 as compared to $750,000 at April 30, 1997.  It  is
the  opinion  of the Company's management that operating expenses,  as  well  as
obligations  coming due during the next fiscal year, will be  met  primarily  by
cash flow generated from operations and from available borrowing levels.

     Working Capital

Working  capital  was $157,067 at April 30, 1998, compared to a working  capital
deficit of $7,003 at April 30, 1997.  The increase in working capital is largely
due to cash flows from operations.

Net cash provided by operating activities was $384,540 in 1998 resulting from  a
decrease in accounts receivable and inventory as well as an increase in  accrued
salaries.  This was partially offset by a decrease in the accrued losses related
to the discontinued operations of Rosalco.

Cash  flows used for investing activities during the year ended April  30,  1998
were  $51,636  as  a  result  of capital expenditures  by  the  continuing  AVES
division.

Cash  used by financing activities of $161,186 arose from payment on AVES'  line
of credit.

In  March  1997,  AVES  established a line of credit  with  BSB  Bank  &  Trust,
Binghamton, New York, in the amount of $1,250,000.  The interest rate  is  8.75%
annually  and  the  line  is due and payable on March 1,  2000.   There  are  no
financial  covenants associated with the line of credit.  As of April 30,  1998,
AVES has $300,000 outstanding.

In  July  1998, the Company amended its Certificate of Incorporation  increasing
its  authorized Common Stock from 10,000,000 to 30,000,000 shares and decreasing
the par value of its Common Stock from $.30 to $.01 per share.

In  August 1998, the Company intends to offer to each stockholder, the right  to
purchase,  pro  rata, two shares of Common Stock at a price of $.10  per  share.
The  Company  expects  to file a Registration Statement on  Form  S-1  with  the
Securities  and Exchange Commission as soon as practicable in order to  register
such  rights  to  purchase Common Stock, under the Securities Act  of  1933,  as
amended.  Upon the Registration Statement becoming effective, stockholders  will
receive  notification of the Rights Offering and instructions on how to exercise
the rights.

The  Rights Offering is an integral part of the recapitalization of the Company.
The  immediate  effect  of  the Rights Offering, and the  participation  of  the
Koffman Group, will be to reduce the debt on the Company's balance sheet with  a
view to enhancing the equity value of the Company.  The completion of the Rights
Offering  will not only reduce even further the amount of debt on the  company's
balance  sheet (since debt will either be repaid from cash proceeds, or  retired
as  it is tendered from Common Stock), but will also enable stockholders of  the
Company to participate in any potential enhanced equity value of the Company  by
permitting them to purchase additional shares of Common Stock at $.10 per share.

<PAGE>

In   June  1998  Jayark  Corporation,  through  a  newly  formed,  wholly  owned
subsidiary,  MED  Services  Corp. ("Med"), entered  into  a  Purchase  and  Sale
Agreement with Vivax Medical Corporation ("Vivax"), a company that manufactures,
sells  and  rents  durable  medical equipment to hospitals,  nursing  homes  and
individuals.   Under the terms of the agreement, Med purchased  certain  medical
equipment  from  Vivax for cash of $579,700 and a $144,925 unsecured  promissory
note  due  in  five years.  Med then entered into a Consignment  Agreement  with
Vivax whereby this medical equipment was consigned to Vivax to rent through  its
distribution network.  In consideration of Vivax renting and maintaining the Med
equipment, Vivax is entitled to a range of forty-eight to sixty-seven percent of
the  rental proceeds, based upon the equipment rented.  Vivax has an  option  to
purchase the medical equipment from Med after the twenty-fourth, thirty-six  and
forty-eight month of the consignment period.  Med, under the Purchase  and  Sale
Agreement  has  an  option, through October 31, 1999 to purchase  an  additional
$2,475,000  of  medical  equipment  from Vivax.   Upon  the  expiration  of  the
consignment period, which is five years from the purchase of the equipment,  Med
has the option to sell the equipment back to Vivax.

Med  negotiated a $1,000,000 revolving line of credit with Atlantic Bank of  New
York  and  invested approximately $130,000 of the Company's presently  available
working  capital  to  purchase the medical equipment.  The  $1,000,000  line  of
credit  is due one year from signing and bears interest at prime plus  2%.   The
line  of  credit is secured by the inventories and accounts receivable  of  Med.
The  are no financial covenants associated with the line of credit.  As of  July
31, 1998 Med has $450,000 outstanding on the line of credit.

If the medical equipment is successfully rented, the rental income and cash flow
could  have  a  material affect on the operating results of Jayark  Corporation.
There  can  be no assurances that the Company will be successful in renting  the
medical equipment.

The Company had no material commitments for capital expenditures as of April 30,
1998.

     Impact of Inflation

Management of the Company believes that inflation has not significantly impacted
either  net  sales or net earnings during the year ended April  30,  1998.   The
Company  has  generally  been  able  to pass  along  price  increases  from  its
manufacturers.

     Effect of New Accounting Pronouncements

In  June  1997,  the  FASB  issued  two new disclosure  standards.   Results  of
operations and financial position will be unaffected by implementation of  these
new standards.

SFAS  No.  130,  "Reporting  Comprehensive Income,"  establishes  standards  for
reporting  and  display of comprehensive income, its components and  accumulated
balances.   Comprehensive income is defined to include  all  changes  in  equity
except those resulting from investments by owners and distributions to owners.

<PAGE>

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information,"  which supersedes SFAS No. 14, "Financial Reporting  for  Segments
of  a  Business  Enterprise," establishes standards  for  the  way  that  public
enterprises report information about operating segments in financial statements.
It  also  establishes standards for disclosures regarding products and services,
geographic areas and major customers.

Both  of  these new standards are effective for financial statements for  Fiscal
1999,  and  require comparative information for earlier years  to  be  restated.
Management does not expect these two standards to have a significant  impact  on
future financial statement disclosures.

     Year 2000

Management  is  in  the  process of determining whether  all  of  the  Company's
accounting and operational systems are year 2000 compliant.  Management does not
expect  the costs associated with any required conversions of systems to  ensure
year 2000 compliance to be significant.

Item 8. Financial Statements And Supplementary Data

The Report of Independent Certified Public Accountants, Financial Statements and
Notes  to  Consolidated Financial Statements filed as a part of this report  are
listed in the accompanying Index to Financial Statements and Schedules.

Item  9. Change In and Disagreement With Accountants on Accounting And Financial
Disclosure

None

PART III

Item 10. Directors And Executive Officers Of The Registrant

Set forth below is a list of the directors, executive officers and key employees
of  the  Company  and  their respective ages as of June 30,  1998,  and,  as  to
directors, the expiration date of their current term of office:

<TABLE>
<CAPTION>

 CURRENT DIRECTORS
-------------------------------------------------------------------------------
  <S>              <C>  <C>     <C>                                     <C>
 Name              Age  Term                                            Director
                        Expires Position Presently Held                 Since
 -----             ---- ------- -----------------------                 --------
 David Koffman     39   2000    Chairman,President, Chief               1983
                                Executive Officer and Director
 Frank Rabinovitz  55   2000    Executive Vice President, Chief         1989
                                Operating Officer, Director and
                                President of AVES
 Robert C. Nolt    50   2001    Chief Financial Officer and Director    1998 
 Arthur G. Cohen   69   1999    Director                                1990

</TABLE>

<PAGE>

David  L.  Koffman  was  elected President and Chief Executive  Officer  of  the
Company  in December 1988.  Prior to that time, he served as Director  and  Vice
President of the Company for over seven years.

Frank  Rabinovitz was elected Executive Vice President, Chief Operating  Officer
and  Director of the Company in 1989.  In addition, he is the President  of  the
Company's  audiovisual subsidiary and has served in this capacity for more  than
eight  years,  as  well as in various other executive and management  capacities
since 1980.

Robert  C.  Nolt  is Chief Financial Officer and Director of  the  Company.   In
addition, Mr. Nolt is Chief Financial Officer of Binghamton Industries, Inc.,  a
company  controlled  by  the principal shareholders of the  Company.   Prior  to
joining  the  Company,  Mr. Nolt was Vice President of  Finance  of  RRT-Recycle
America,  Inc.  Mr. Nolt is a Certified Public Accountant with over 25 years  of
experience  in  the  Accounting field and has served in a  number  of  executive
positions.  Before joining RRT in 1993, Mr. Nolt was Chief Financial Officer for
the Vestal, NY based Ozalid Corporation.

Arthur  G.  Cohen has been a real estate developer and investor  for  more  than
seven  years.   Mr. Cohen is a Director of Apparel America, Inc.,  Baldwin,  and
Arlen,  Inc.   Burton  I.  Koffman and Richard E.  Koffman  are  parties  to  an
agreement with Arthur G. Cohen pursuant to which they have agreed to vote  their
shares  in favor of the election of Mr. Cohen to the Board of Directors  of  the
Company.

     Information Concerning Operations of the Board of Directors

The  Executive  Committee of the Board of Directors consists  of  Mr.  David  L.
Koffman  (Chair)  and  Mr.  Frank Rabinovitz.  The  function  of  the  Executive
Committee  is  to exercise the powers of the Board of Directors  to  the  extent
permitted  by  Delaware law.  As a rule, the Executive Committee meets  to  take
action  with respect to matters requiring Board of Directors approval and  which
cannot await a regular meeting of the Board or the calling of a special meeting.
Under  Delaware  law  and the Company's By-laws, both the  Board  and  Executive
Committee can act by unanimous written consent to all members.

The  Stock  Option Committee of the Board of Directors was created to administer
the  Company's  1981  Incentive  Stock Option  Plan,  as  amended,  pursuant  to
resolution adopted November 24, 1981, giving it authority to exercise powers  of
the  Board with respect to the Plan.  The Stock Option Committee consists of Mr.
Frank Rabinovitz and Mr. Robert Nolt.

The  Audit Committee of the Board of Directors was created in 1991 to administer
and coordinate the activities and results of the annual audit of the Company  by
independent  accountants  and to comply with NASDAQ listing  requirements.   The
Audit Committee is comprised of Mr. Frank Rabinovitz and Mr. Robert Nolt.

The  Compensation  Committee of the Board of Directors was created  in  1993  to
administer and review compensation structure, policy and levels of the  Company.
The  Compensation Committee is composed of Mr. Frank Rabinovitz  and  Mr.  David
Koffman.

<PAGE>

Item 11. Executive Compensation

Set  forth  in  the  following  table is certain  information  relating  to  the
approximate remuneration paid by the Company during the last three fiscal  years
to   each  of  the  most  highly  compensated  executive  officers  whose  total
compensation exceeded $100,000.
<TABLE>
<CAPTION>

           SUMMARY COMPENSATION TABLE (1,2,3)
                                                    Annual Compensation
                                                   ---------------------
           <S>                                     <C>   <C>        <C>          
                                                   Year  Salary     Bonus
                                                   ----  -------    -----    
           David L. Koffman                        1998  $162,000    0
           Chairman, President and Chief           1997   162,000    0
           Executive Officer                       1996   162,000    0
                                                                    
           Frank Rabinovitz                        1998  $162,000   $50,000
           Director, Executive Vice President,     1997   162,000    50,000
           Chief Operating Officer, President      1996   162,000    50,000
              Of AVES
</TABLE>


(1)   Does  not  include  the  value  of  non-cash  compensation  to  the  named
  individuals,  which  did  not exceed the lesser of $50,000  or,  10%  of  such
  individuals'  total annual salary and bonus.  The Company provides  a  vehicle
  to  each  of the named executives for use in connection with Company  business
  but   does  not  believe  the  value  of  said  vehicles  and  other  non-cash
  compensation,  if  any,  exceeds  the  lesser  of  $50,000  or  10%   of   the
  individual's total annual salary and bonus.

(2)   The  Company  has  entered  into Split Dollar  Insurance  Agreements  with
  Messrs.  David  L.  Koffman  and  Frank  Rabinovitz,  pursuant  to  which  the
  Company  has  obtained insurance policies on their lives  in  the  approximate
  amount  of  $1,054,000 and $497,700, respectively.  The  premium  is  paid  by
  the  Company.   Upon  the death of the individual, the  beneficiary  named  by
  the  individual  is entitled to receive the benefits under  the  policy.   The
  approximate  amounts paid by the Company during the fiscal  year  ended  April
  30,  1998  for  this  insurance coverage were $36,540, $25,373,  respectively.
  Such amounts are not included in the above table.

(3)   The  Company  has  accrued  Mr. Koffman's 1998  salary,  however,  he  has
  deferred  payment  until such time as the Company's working  capital  position
  improves.

The  following  table sets forth-certain information relating to  the  value  of
stock options at April 30, 1998:
<TABLE>

<S>                <C>          <C>            <C>          <C>

                      Number of Unexercised     Value of Unexercised In-
                   Options at Fiscal Year End     The-Money Options at
                                                    Fiscal Year End
                   --------------------------   -------------------------
Name               Exercisable  Unexercisable  Exercisable  Unexercisable
-----              -----------  -------------   ----------  --------------
Frank Rabinovitz   100,000      0              $9,000       0

</TABLE>

<PAGE>

  Based  on  the  $0.09 per share closing bid price of the common  stock  on
  the NASDAQ Stock Exchange on April 30, 1998

Effective  November 24, 1981 and approved at the annual stockholders meeting  in
1982, the 1981 Incentive Stock Option Plan (ISOP) was adopted.  An amendment  to
the  ISOP was adopted on December 11, 1989.  This amendment increased the number
of  incentive stock options that can be granted from 150,000 shares  to  600,000
shares.   The  ISOP provides for the granting to key employees and  officers  of
incentive  stock options, as defined under current tax laws.  The stock  options
are exercisable at a price equal to or greater than the market value on the date
of  the grant.  No stock options were granted during the fiscal year ended April
30, 1998.

Effective September 15, 1994 and approved at the annual stockholders meeting  in
1994,  the 1994 NonEmployee Director Stock Option Plan (the "Director Plan"  was
adopted  and 200,000 shares of the Company's common stock reserved for  issuance
under the Director Plan.  The Director Plan provides for the automatic grant  of
nontransferable options to purchase common stock to nonemployee directors of the
Company;  on the date immediately preceding the date of each annual  meeting  of
stockholders  in  which an election of directors is concluded, each  nonemployee
then  in office will receive options exercisable for 5,000 shares (or a pro rata
share  of  the total number of shares still available under the Director  Plan).
No  option  may be granted under the Director Plan after the date  of  the  1998
Annual Meeting of Stockholders.

Options  issued  pursuant to the Director Plan are exercisable  at  an  exercise
price  equal to not less than 100% of the fair market value (as defined  in  the
Director  Plan) of shares of common stock on the day immediately  preceding  the
date  of the grant.  Options are vested and fully exercisable as of the date  of
the  grant.  Unexercised options expire on the earlier of (i) the date  that  is
ten years from the date on which they were granted, (ii) the date which is three
calendar  months from the date of the termination of the optionee's directorship
for any reason other than death or disability (as defined in the Director Plan),
or  (iii)  one  year from the date of the optionee's disability or  death  while
serving as a director.

The Director Plan became effective immediately following the 1994 Annual Meeting
of  Shareholders.   Each nonemployee director in office on the date  immediately
preceding  the  date  of  each  year's  annual  meeting  will  receive   options
exercisable for 5,000 shares of common stock.

During  fiscal  year ended April 30, 1998, no director options were  granted  to
nonemployee directors.

Report  of  the  Compensation Committee of the Board of Directors  on  Executive
Compensation

Except pursuant to its ISOP and the Director Plan, the Company does not have any
formal  annual  incentive program, cash or otherwise, nor does  it  make  annual
grants of stock options.  Cash bonuses and stock options, including bonuses  and
options  paid  to  executive officers, have generally been  awarded  based  upon
individual performance, business unit performance and corporate performance,  in
terms  of  cash  flow,  growth  and net income as  well  as  meeting  budgetary,
strategic and business plan goals.

<PAGE>

The  Company is committed to providing a compensation program that helps attract
and  retain the best people for the business.  The Company endeavors to  achieve
symmetry  of  compensation paid to a particular employee or  executive  and  the
compensation paid to other employees or executives both inside the  Company  and
at comparable companies.

The  remuneration package of the Chief Executive Officer includes  a  percentage
bonus based on the Company's profitable performance.

Compensation Committee
     Frank Rabinovitz
     David L. Koffman

Item 12. Security Ownership Of Certain Beneficial Owners And Management

The  following  table  sets  forth as of April 30, 1998,  the  holdings  of  the
Company's  Common  Stock  by those persons owning of record,  or  known  by  the
Company  to own beneficially, more than 5% of the Common Stock, the holdings  by
each director or nominee, the holdings by certain executive officers and by  all
of the executive officers and directors of the Company as a group.
<TABLE>
<CAPTION>

<S>                                    <C>            <C>     <C>
PRINCIPAL STOCKHOLDERS
                                       Amount and             % of
Name and Address of Beneficial Owner    Nature of     Note   Class
                                       Beneficial     (1)
                                        Ownership
------------------------------------    ---------    ------  ------      
David L. Koffman
300 Plaza Drive, Vestal, NY 13850     1,446,727      2       15.7%
Commerzbank AG                                              
31 Charter Road, Hong Kong            1,000,000              10.8%
Ben Arnold Company                                          
700  Gervais  Street,  Columbia,   SC   795,189               8.6%
29201
Burton I. Koffman                                           
300 Plaza Drive, Vestal, NY 13850       703,500      3,4,5    7.6%
Joel Margolin                                               
6116 Skyline Drive, Houston, TX 77057   517,600               5.6%
Richard E. Koffman                                          
300 Plaza Drive, Vestal, NY 13850       278,500      4,6      3.0%
Frank Rabinovitz                                            
6116 Skyline Drive, Houston, TX 77057    46,000      7         .4%
                                                            
All Directors & Executive Officers as  1,492,727     2,3,4,  16.2%
a Group                                              5,6,7
</TABLE>


1.    All  shares  are  owned directly by the individual named,  except  as  set
  forth  herein.   Includes actual shares beneficially owned  and  Employee  and
  Director  Stock  Options exercisable within 60 days.  Burton  I.  Koffman  and
  Richard  E.  Koffman are brothers.  David L. Koffman is the son of  Burton  I.
  Koffman.

<PAGE>

2.    Excludes  $720,587.79  principal amount of the Company's  12%  Convertible
  Subordinated  Debentures,  due  December  1999,  which  are  convertible  into
  480,392  shares  of  Common  Stock at a price of $1.50  per  share.   Excludes
  4,166,667  shares  of  Common  Stock subject to a  warrant  further  described
  under   Item  13,  Certain  Relationships  and  Certain  Transactions.   David
  Koffman may be said to have a beneficial interest in these warrants.

3.     Excludes  37,000  shares  owned  by  a  charitable  foundation  of  which
  Burton I. Koffman is President and Trustee.

4.    Includes  537,000  shares owned as tenants in common by  brothers  Richard
  E. Koffman and Burton I. Koffman.

5.   Excludes 665,962 shares owned by the spouse of Burton I. Koffman.

6.   Excludes 180,000 shares owned by the spouse of Richard E. Koffman.

7.    Excludes  $49,096.99  principal amount of the  Company's  12%  Convertible
  Subordinated  Debentures,  due  December  1999,  which  are  convertible  into
  32,731 shares of Common Stock at a price of $1.50 per share.

Item 13. Certain Relationships And Related Transactions

During  August 1995, the Company, and Rosalco, Inc, entered into a Reimbursement
Agreement with:
i)  Ben  Arnold Company, a corporation beneficially owned by several members  of
the  Burton  I.  Koffman  and Richard E. Koffman families  (including  David  L.
Koffman,  who  is  the president and a director of the Company,  and  Joseph  B.
Koffman, a nominee for director) and Karen Cohen, the wife of Arthur C. Cohen, a
director  of  the Company, who disclaims any beneficial interest in  Ben  Arnold
Company,  ii) Ruthanne Koffman (the mother of David L. Koffman and the  wife  of
Burton  I. Koffman), iii)Whitehorn Associates, a New York Corporation,  and  iv)
Joel Margolin (the Vice President of LCL) pursuant to which each of Rosalco, Ben
Arnold Company, Ruthanne Koffman, Whitehorn Associates, and Joel Margolin agreed
to  provide  to  the  CIT Group/Commercial Services, Inc. ("CIT"),  the  primary
lender  to  LCL, irrevocable standby letters of credit and cash in the aggregate
amount  of $1,700,000 to serve as additional collateral against which CIT  would
lend  additional  working capital to LCL pursuant to CIT's lending  arrangements
with  LCL.   Each  of Rosalco and Joel Margolin provided $500,000  in  cash  and
letters  of credit, each of Ruthanne Koffman and the Ben Arnold Company provided
$250,000  in  irrevocable  standby letters of credit, and  Whitehorn  Associates
provided a $200,000 irrevocable standby letter of credit.

In  consideration for providing the additional collateral, the parties  were  to
receive  a  total of 282,400 shares of Common Stock of the Company in proportion
to  the  amount of additional collateral initially provided by them, as follows:
Joel  Margolin was issued 117,600 shares; each of Ruthanne Koffman and  the  Ben
Arnold  Company were issued 58,800 shares; and Whitehorn Associates  was  issued
47,200 shares. All the above shares were issued in fiscal 1997.

On  March 12, 1997, in connection with the State Street Bank financing  and  the

<PAGE>

establishing of the BSB Bank & Trust line of credit described under the  working
capital section above, the Company issued stock warrants totaling 4,166,667 to A
-V Texas Holding, LLC, an affiliate of the Company of which David Koffman  is  a
principal  shareholder.  The warrants allows the holder  to  purchase  4,166,667
shares  of the Companies common stock at a par value of $.30.  The effectiveness
of  the warrants is subject to an increase in the available authorized shares of
the Company.  The warrants expire on February 1, 2007.

The  arrangement with CIT for the additional financing secured by the additional
collateral  expired on February 28, 1996.  In terms of the agreement, subsequent
to  that  date,  to the extent that CIT applied additional collateral  to  LCL's
obligations  to  CIT,  LCL would reimburse the parties  for  the  collateral  so
applied  by  CIT,  such  reimbursement to be made  in  the  ordinary  course  of
business.  Alternatively, the parties could at any time after February 28,  1996
receive shares of the Company's Common Stock as reimbursement for the collateral
applied  by  CIT  to  LCL's obligations to CIT.  Each party would  receive  that
number of shares that had a value equal to the amount of such party's collateral
that  was  applied  by CIT; for purposes of the agreement, the Company's  Common
Stock were deemed to have a value of $1.25 per share.

In  July  1996,  CIT notified the parties that CIT was applying  the  additional
collateral  to  LCL's  obligations.   As a result  of  the  application  of  the
collateral by CIT in October 1996, the parties received the following shares  of
the  Company's  Common Stock: Joel Margolin was issued 400,000 shares;  each  of
Ruthanne  Koffman  and the Ben Arnold Company were issued  200,000  shares;  and
Whitehorn Associates was issued 160,000 shares.

In  September 1996, certain related parties advanced an additional  $500,000  to
the  Company  , which was applied to Rosalco's outstanding line of credit.   The
related  party  advances  now totaling $1,000,000  are  payable  on  demand  and
interest is paid monthly at prime plus 2 1/2%.

PART IV

Item 14. Exhibits, Financial Statement Schedules And Reports On Form 8-K

(a) Documents filed as part of this report:
     1. And 2. Financial Statements.
      The   Report  of  Independent  Certified  Public  Accountants,   Financial
      Statements  and  Notes to                          Consolidated  Financial
      Statements  which  are filed as a part of this report are  listed  in  the
      Index to Financial Statements.
        Note - no financial statement schedules were required to be filed.
             3. Exhibits, which are filed as part of this report, are listed  in
the accompanying Exhibit Index.
(b) Reports on Form 8-K - None

<PAGE>

SIGNATURES

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

JAYARK CORPORATION

By:
     
/s/ David L. Koffman     Chairman of the Board and Director     August 7, 1998
DAVID L. KOFFMAN

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

/s/ David L. Koffman     Chairman of the Board, President,      August 7, 1998
DAVID L. KOFFMAN         Chief Executive Officer and Director

/s/ Frank Rabinovitz     Executive Vice President, Chief        August 7, 1998
FRANK RABINOVITZ         Operating Officer and Director

/s/ Robert C. Nolt       Chief Financial Officer and Director   August 7, 1998
ROBERT C. NOLT

/s/ Arthur G. Cohen      Director                               August 7, 1998
ARTHUR G. COHEN

<PAGE>

JAYARK CORPORATION AND SUBSIDIARIES

                 Index                                                Page
_______________________________________________________________________________
Consolidated Financial Statements:

Report of Independent Certified Public Accountants                           20

Balance Sheets - April 30,1998 and 1997                                      21

Statements of Operations - For the years ended April 30, 1998, 1997 and 1996 22

Statements of Stkhldr Eq - For the years ended April 30, 1998, 1997 and 1996 23

Statements of Cash flows - For the years ended April 30, 1998, 1997 and 1996 24

Notes to Consolidated Financial Statements                                25-37

Exhibits                                                                 42-105

<PAGE>

Report of Independent Certified Public Accountants

To the Shareholders and Directors
Jayark Corporation

We   have  audited  the  accompanying  consolidated  balance  sheets  of  Jayark
Corporation  and  Subsidiaries as of April 30, 1998 and  1997  and  the  related
consolidated statements of operations, changes in stockholders' equity, and cash
flows  for  each of the three years in the period ended April 30,  1998.   These
financial  statements are the responsibility of the Company's  management.   Our
responsibility is to express an opinion on these financial statements  based  on
our audits.

We   conducted  our  audits  in  accordance  with  generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about whether the consolidated financial  statements  are
free  of  material misstatement.  An audit includes examining, on a test  basis,
evidence supporting the amounts and disclosures in the financial statements.  An
audit  also  includes assessing the accounting principles used  and  significant
estimates made by management, as well as evaluating the overall presentation  of
the financial statements.  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 Jayark Corporation
and  Subsidiaries  as  of  April 30, 1998 and 1997, and  the  results  of  their
operations and their cash flows for each of the three years in the period  ended
April 30, 1998 in conformity with generally accepted accounting principles.

BDO Seidman, LLP

New York, New York

July 15, 1998, except for Note 15 for which the date is August 7, 1998

<PAGE>

Jayark Corporation And Subsidiaries
Consolidated Balance Sheets
April 30,1998 and 1997

<TABLE>
<CAPTION>

<S>                                                     <C>             <C>
Assets                                                  1998            1997                
------                                                  ----            -----
Current Assets
  Cash and Cash Equivalents                            $238,858      $67,140
  Accounts  Receivable-Trade,Less Allowance           1,723,833     1,838,585
  For Doubtful Accounts of $38,000 in 1998
  and $42,000 in 1997
  Other Accounts Receivable                               2,277         2,277
  Inventories                                           271,564       412,846
  Other Current Assets                                   35,046        20,572
                                                      ---------     ---------  
Total Current Assets                                  2,271,578     2,341,420

Non Current Assets
 Property & Equipment, Less Accumulated                  94,644        122,550
 Depreciation and Amortization
 Excess of Cost Over Net Assets of Businesses           268,742       290,102
 Acquired, Less Accumulated Amortization of $463,695
 in 1998 and $442,335 in 1997
                                                        -------       -------
Total Non Current Assets                                363,386       412,652
                                                             
Total Assets                                         $2,634,964    $2,754,072
                                                     ==========    ===========           

Liabilities                                                           
-----------
Current Liabilities
 Notes Payable & Line of Credit                        $300,000      $500,000
 Current Maturities of Long Term Debt                     5,899         7,394
 Accounts Payable                                       881,266       905,407
 Accrued Salaries and Deferred Compensation             298,734       106,531
 Accrual  Related  to  Loss  on  Discontinued            84,124        305,000
 Operations - Rosalco
 Accrual Related to LCL Investment                      113,068       164,579
 Other Current Liabilities                              431,418       359,512
                                                      ---------     ---------  
Total Current Liabilities                             2,114,511     2,348,423
                                                             
Non Current Liabilities                                                           
 Long Term Debt,Excluding Current Maturities                  0         7,207
 Notes Payable to Related Parties                     2,046,021     2,000,000
 Subordinated Debentures                              1,400,000     1,400,000
                                                      ---------     ---------                  
Total Non Current Liabilities                         3,446,021     3,407,207
                                                             
Total Liabilities                                     $5,560,530    $5,755,630

Commitments

Stockholders' Equity (Deficit)
 Common Stock of $.30 Par Value.                       2,766,359     2,766,359
 Authorized 10,000,000 Shares;
 Issued 9,221,199 Shares in 1998 and 1997                
 Additional Paid-In Capital                            8,066,122     8,066,122
 Deficit                                              (13,758,047)  (13,834,039)
                                                      ------------   -----------          
Total Stockholders' Equity (Deficit)                  $(2,925,566)  $(3,001,558)
                                                      ------------   -----------          
Total Liabilities & Stockholders' Equity (Deficit)     $2,634,964    $2,754,072
                                                      ============   ===========  

See Accompanying Notes to Consolidated Financial Statements

</TABLE>

<PAGE>

Jayark Corporation And Subsidiaries
Consolidated Statements of Operations
For the Years Ended April 30,1998, 1997 and 1996
                                                          
<TABLE>
<CAPTION>
<S>                                     <C>             <C>            <C>
Continuing Operations:                  1998            1997           1996
                                    -----------     -----------    -----------
Net Revenues                        $13,604,558     $12,638,072    $11,856,148
                                                          
Costs & Expenses                                                         
 Cost of Revenues                    11,445,669      10,591,857      9,769,969
 Selling, General and Administrative  1,717,442       2,049,274      2,109,182
 Interest                               365,655         339,862        328,687
 Other Income                              (200)        (78,549)        (5,300)
                                     ----------      -----------    ----------
Total Costs & Expenses               13,528,567      12,902,444     12,202,538
                                                          
Pre-Tax Earnings (Losses) From
Continuing Operations                    75,992        (264,372)      (346,390)
                                                    
Provision for Income Taxes (Benefit From)   -              -          (118,000)
                                     ----------      -----------    -----------
Income (loss) from Continuing Operations 75,992        (264,372)      (228,390)
                                                          
Income (loss) On Abadonment of Investment
net of tax benefit of $365,173 in 1996      -              -        (4,363,263)
Income (loss) from Discontinued Operations
net of Taxes of $0, $350,000, ($100,503)
respectively                                -        (3,294,109)    (2,593,594)
Loss on disposition of subsidiary           -        (2,500,730)
                                     ----------     ------------   -----------
Net Income (Loss)                       $75,992     ($6,059,211)   ($7,185,247)
                                     ==========     ============   ===========             

Basic and Diluted Earnings (Loss) per Common Share:
 Continuing Operations                    $0.01          ($0.03)        ($0.03)
 Discontinued Operations                  $0.00          ($0.66)        ($0.89)
                                         ------          -------        -------
 Net Income (loss)                        $0.01          ($0.69)        ($0.92)
                                         ======          =======        =======                 
Weighted Average Common Shares:
 Basic and Diluted                    9,221,199       8,802,528      7,833,990
                                      =========       =========      =========                    
See Accompanying Notes to Consolidated Financial Statements
</TABLE>

<PAGE>

Jayark Corporation and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
For The Years Ended April 30, 1998, 1997 and 1996
<TABLE>
<CAPTION>
<S>                              <C>        <C>           <C>         <C>
                                 Common     Paid-In                   Total   
                                 Stock      Capital       Deficit     Equity
                                ---------- ----------  -------------  ----------
Balance at April 30, 1995       $2,093,639 $7,110,480    $(589,581)  $8,614,538
Issue of 1,000,000 shares of stock 300,000    856,250         -       1,156,250
Net loss                             -          -       (7,185,247)  (7,185,247)
                                ---------- ----------  -------------  ----------
Balance at April 30, 1996        2,393,639  7,966,730   (7,774,828)   2,585,541
Issue of 1,242,400 shares of stock 372,720     99,392       -           472,112
Net loss                             -          -       (6,059,211)  (6,059,211)
                                ---------- ---------- -------------  -----------
Balance at April 30, 1997        2,766,359  8,066,122  (13,834,039)  (3,001,558)
Net Income                           -          -           75,992       75,992
                                ---------- ---------- -------------  -----------
Balance at April 30, 1998       $2,766,359 $8,066,122 ($13,758,047) ($2,925,566)
                                ========== ========== ============= ============                        

   See accompanying notes to consolidated financial statements.
</TABLE>


<PAGE>

Jayark Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For The Years Ended April 30, 1998, 1997 and 1996

<TABLE>
<CAPTION>

<S>                                     <C>             <C>            <C>         
                                        1998            1997           1996
                                      ---------     -----------    -----------
Cash Flows From Operating Activities:
 Net Income (loss)                      $75,992     ($6,059,211)   ($7,185,247)
                                                                      
Adjustments to Reconcile Earnings (Loss) to Cash From Operating Activities:
 Stock Issued in Connection with             -             -         1,156,250
 Abandoned Investment
 Depreciation and Amortization of        79,542          40,089        273,378
 Property and Equipment
 Amortization of Excess of Cost Over     21,360          21,360         21,360
 Net Assets of Businesses Acquired
 Net Assets of Discontinued                   -       4,268,849           -
 Operations - written off
 (Gain) Loss on Disposition of Assets         -          21,516           -   
Change In Assets and Liabilities Net of Effects From Acquisition of Subs:
 (Increase) Decrease in Deferred Federal      -         350,000           -
 Income Tax Expense/(Benefit)                                 
 (Increase) Decrease in Accounts        114,752        (105,667)       (787,431)
 Receivable Net
 (Increase) Decrease in Federal &             -         695,501        (645,951)
 State Income Taxes Refundable
 (Increase) Decrease in Inventories     141,282          91,709        (121,087)
 (Increase) Decrease in Other           (14,474)        (12,685)         74,440
 Current Assets
 Increase (Decrease) in Accts Payable   (24,141)        320,349         831,184
 Increase (Decrease) in Accrued         192,202         (77,374)        (15,142)
 Salaries and Deferred Compensation
 Increase (Decrease) in Commissions Payable   -            -             85,572
 Increase (Decrease) in Accrual for    (220,876)        305,000           -
 Discontinued Operations - Rosalco
 Increase (Decrease) in Other
 Liabilities                             18,901        (931,198)      1,784,881
                                      ----------    ------------    -----------
   Net Cash Provided By (Used In)
   Operating Activities                 384,540      (1,071,762)     (4,527,793)
                                                                      
Cash Flows from Investing Activities:
 Capital  Expenditures for  Property    (51,636)        (83,556)        (66,042)
 and Equipment
                                      ----------     -----------     -----------
   Net Cash Provided By (Used In)       (51,636)        (83,556)        (66,042)
   Investing Activities
                                                                      
Cash Flows from Financing Activities
 Payments of Long Term Debt              (7,207)        (27,555)        (33,188)
 Proceeds From Issuance of
 Notes Payable                           46,021       2,001,084       4,084,000
 Principal Payments on Notes Payable   (200,000)     (1,101,997)           -
 Purchase (Repayment) of
 Subordinated Debentures                      -            -           (100,000)
 Purchase of Treasury Stock                   -            -               -
                                      ----------     -----------      ----------
  Net Cash Provided By (Used In)
  Financing Activities                 (161,186)        871,532       3,950,812
                                                                       
  Net Increase (Decrease) in Cash       171,718        (283,786)       (643,023)
  and Cash Equivalents
Cash and Cash Equivalents at Beginning
of year                                  67,140         350,926       1,176,700
Cash and Cash Equivalents relative to
dicontinued operations                        -            -           (182,751)
                                      -----------    -----------      ----------
Cash & Cash Equivalents at End of Year $238,858         $67,140        $350,926
                                      ===========    ===========      ==========                                 
Supplemental Disclosures of Cash Flow Information:                   
 Cash Paid For:                                                   
 Interest                               $87,626        $171,862        $965,197
                                      ===========    ===========      ========== 
 Income Taxes                                 -             -           167,000
                                      ===========    ===========      ==========
 Non-Cash Transactions:
 Common Stock Issued in Connection  With      -         472,112       1,156,250
 LCL Investment
                                      ===========    ===========      ==========                                                  

See accompanying notes to consolidated financial statements.

</TABLE>

<PAGE>

Notes to Consolidated Financial Statements

April 30, 1998, 1997 and 1996

(1) Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Jayark Corporation
and  its  wholly owned subsidiaries (the "Company").  All material  intercompany
profits, transactions and balances have been eliminated.

Prior  to  April 30, 1997, a decision was made to discontinue the operations  of
Rosalco,  Inc.  ("Rosalco"), a wholly owned subsidiary of the Company.   Rosalco
was  officially closed on October 22, 1997 and shortly thereafter a receiver was
assigned to liquidate its secured assets.  The accompanying financial statements
have  been  adjusted  retroactively to segregate and report separately  the  net
assets and results of operations of Rosalco as a discontinued operation.

Inventories

Inventories  comprise finished goods and are stated at the lower of cost  (first
in, first out method) or market.

Property and Equipment, Depreciation and Amortization

Property and equipment are recorded at cost.  Depreciation and amortization  are
computed using the straight-line method over the estimated useful lives  of  the
assets,  ranging  from approximately 3 to 20 years.  On sale or retirement,  the
cost  of  assets  sold  or  retired  and  related  accumulated  depreciation  or
amortization is eliminated from the accounts and any resulting gain or  loss  is
included  in  operations.   Maintenance and repairs are  expensed  as  incurred;
expenditures for major renewals and betterments are capitalized and amortized by
charges to operations.

Intangibles

The  accounts of purchased companies are included in the consolidated  financial
statements  from  the dates of acquisition.  The excess of cost  over  the  fair
value of net assets of businesses acquired is being amortized using the straight
-line method over a 40-year period commencing with the dates of acquisition.

Revenue Recognition

Revenues  are  recorded when products are shipped.  Allowances are recorded  for
estimated returns and losses.

Income Taxes

<PAGE>

The  Company  follows  the  asset and liability  method  required  by  Financial
Accounting Standards Board Statement of Financial Accounting Standards  No.  109
in  accounting  for  income  taxes.  Deferred tax  assets  and  liabilities  are
recognized  for the future tax consequences attributable to differences  between
the  financial statement carrying amounts of existing assets and liabilities and
their  respective tax bases.  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.   The
effect  of  deferred  tax assets and liabilities of a change  in  tax  rates  is
recognized in income in the period that includes the enactment date.

Earnings per Share

In  the third quarter of fiscal 1998, the Company adopted Statement of Financial
Accounting  Standards  No.  128,  "Earnings  per  Share",  which  requires   the
presentation  of  both basic and diluted earning per share on the  face  of  the
Statements  of Operations and the restatement of all prior periods earnings  per
share  amounts.  Conversion of the subordinated debentures and assumed  exercise
of options are not included in the calculation of diluted earnings per share for
the  fiscal years ended April 30, 1998, 1997 and 1996 since the effect would  be
antidilutive.  Accordingly, basic and diluted net loss per share do  not  differ
for any period presented.

     The following table summarizes securities that were outstanding as of April
30,  1998, 1997 and 1996 but not included in the calculation of diluted net loss
per share because such shares are antidilutive.

Stock Options                                    242,500
Convertible Subordinated Debentures              933,333
Warrants                                       4,166,667

Changes in Financial Presentation

Certain  reclassifications  have  been made  in  the  1996  and  1997  financial
statements to conform to the presentation used in 1998.

Statements of Cash Flows

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

Use of Estimates

The  preparation  of financial statements in conformity with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets and  liabilities  and  disclosure  of
contingent  assets and liabilities at the date of the financial  statements  and
the  reported  amounts  of revenues and expenses during  the  reporting  period.
Actual results could differ from these estimates.

<PAGE>

Long-Lived Assets
     
Long-lived  assets, such as property, equipment, and goodwill are evaluated  for
impairment  when events or changes in circumstances indicate that  the  carrying
amount  of  the assets may not be recoverable through the estimated undiscounted
future  cash  flows  from  the use of these assets.  When  any  such  impairment
exists,  the  related  assets will be written down to their  fair  value.   This
policy  is  in  accordance with Statement of Financial Accounting Standards  No.
121,  "Accounting  for the Impairment of Long-Lived Assets to be  Disposed  Of",
which  was  adopted on May 1, 1996.  No write-downs have been necessary  through
April 30, 1998, except for assets of the discontinued operation (Note 16).

Stock-Based Compensation

The   Company  uses  the  intrinsic  value  method  for  accounting  for   stock
compensation plans, as permitted by Statement of Financial Accounting  Standards
No. 123, "Accounting for Stock-Based Compensation", which was adopted on May  1,
1996.   Accordingly,  compensation cost for stock options  is  measured  as  the
excess, if any, of the quoted market price of the Company's stock at the date of
the grant over the amount the employee must pay to acquire the stock.

                    Effect of new accounting pronouncements

In  June  1997,  the  FASB  issued  two new disclosure  standards.   Results  of
operations and financial position will be unaffected by implementation of  these
new standards.

SFAS  No.  130,  "Reporting  Comprehensive Income,"  establishes  standards  for
reporting  and  display of comprehensive income, its components and  accumulated
balances.   Comprehensive income is defined to include  all  changes  in  equity
except those resulting from investments by owners and distributions to owners.

SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and  Related
Information," which supersedes SFAS No. 14, "Financial Reporting for Segments of
a   Business  Enterprise,"  establishes  standards  for  the  way  that   public
enterprises report information about operating segments in financial statements.
It  also  establishes standards for disclosures regarding products and services,
geographic areas and major customers.

Both  of  these new standards are effective for financial statements for  fiscal
1999,  and  require comparative information for earlier years  to  be  restated.
Management does not expect these two standards to have a significant  impact  on
future financial statement disclosures.

(2)  Business

The Company's continuing operation, AVES Audio Visual Systems, Inc. ("AVES")  is
in  the  business of resale and renting of a broad range of audio visual,  video
and communication equipment and supplies to schools, industry, and hotels.

(3)  Related Party Transactions

<PAGE>

The  Company  has subordinated notes (Note 7) with related parties amounting  to
$795,712,  with  an annual interest rate of 12%.  Interest expense  relating  to
subordinated  notes payable to related parties was $95,485  in  1998,  1997  and
1996, respectively.

The  Company  had  long  term  notes payable to  related  parties  amounting  to
$2,046,021  and  $2,000,000  at  April 30, 1998  and  1997,  respectively.   The
interest  rate  is  Libor plus .95% on $1,000,000 and prime  plus  2.5%  on  the
remaining  $1,000,000.   The maturity date of the notes  has  been  extended  to
December 31, 1999.  Interest expense relating to these notes for the years ended
April 30, 1998 and 1997 was $172,139 and $154,650.

 (4)  Property and Equipment

Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
<S>                                              <C>              <C>

                                                 April 30, 1998   April 30, 1997
                                                 --------------   --------------
Machinery and equipment                           $59,144            $59,144
Furniture and fixtures                             80,329             80,329
Leasehold improvements                             37,290             37,290
Automobiles and trucks                            200,580            200,580
Rental and demonstration equipment                 74,073             22,437
                                                 --------------   --------------
   Total property and equipment                   451,416            399,780
Less accumulated depreciation and amortization    356,772            277,230
                                                 --------------   --------------
   Net property and equipment                     $94,644           $122,550
                                                 ==============   ============== 
</TABLE>

(5)  Lines of Credit

On  April 30, 1996, the Company had $1,100,915 outstanding on its Line of Credit
with  State  Street  Bank.  During the year ended April 30,  1997,  the  Company
renegotiated the terms of the agreement to provide for monthly interest at prime
rate plus 1% to 1 _%.  Subsequently, the line was paid off with proceeds from  a
$1,000,000  note  to related parties and the remaining amount  paid.   In  March
1997,  AVES  negotiated a line of credit with BSB Bank & Trust, Binghamton,  New
York.   The  line of credit permits AVES to borrow up to an aggregate amount  of
$1,250,000. The interest rate is 8.75% annually and the line is due and  payable
on  March  1,  2000.   The  line  of credit is secured  by  the  AVES'  accounts
receivable  and  inventories.  There are no financial covenants associated  with
the  line  of  credit.  At  April  30, 1998 and  1997,  $300,000  and  $500,000,
respectively, was outstanding on the above line of credit.

In connection with the guarantee for the AVES line of credit described above and
the  interim  financing of the Rosalco discontinued operations by  State  Street
Bank, the Company issued stock warrants totaling 4,166,667 to A-V Texas Holding,
LLC,  an  affiliate of the Company.  The warrants allow the holder  to  purchase
4,166,667 shares of the Company's common stock at $.30 per share.  The  warrants
were  deemed to have a minimal fair value and no amount was recorded  for  them.
The warrants expire on February 1, 2007.

(6)  Long Term Debt

<PAGE>

Long term debt is summarized as follows:
<TABLE>
<CAPTION>

<S>                                               <C>         <C>
Description                                       April 30,   April 30,
                                                    1998        1997
-----------------------------------------------   ---------  ----------
Notes  payable to a bank with interest rate  of   $5,899      $14,601
9% per annum and a maturity date of March 1999,
collateralized by vehicles.
                                                  ---------  -----------
Total long term debt                               5,899       14,601
Less: Current maturities of long term debt         5,899        7,394
                                                  ---------  -----------
Long term debt, excluding current maturities          $0       $7,207
                                                  =========  ===========

</TABLE>
 (7)  Subordinated Debentures

On  December  19,  1989,  the  Company  issued  $2,000,000  of  12%  convertible
subordinated  debentures to affiliates of the Company due  December  1995.   The
maturity  date  on  these  debentures has been  extended  until  December  1999.
Interest on the outstanding balance is paid semiannually on April 30 and October
31.   The  debentures may be converted into shares of the Company's stock  at  a
price  of  $1.50 per share at any time prior to maturity.  Prior  to  April  30,
1996,  the  Company had retired $600,000 of debentures. At April  30,  1998  and
1997,  no  additional debentures had been retired.  At April 30, 1998 and  1997,
933,333  shares of the Company's common stock are reserved for this  conversion.
The debentures will automatically convert into shares of the Company's stock  at
the  conversion  price  in effect at such time in the  event  that  the  average
closing  sale  price  of the Company stock for any period of thirty  consecutive
trading days was equal to or exceeded $2.25 per share.

(8)  Income Taxes

Income tax expense (benefit) attributable to income before income taxes consists
of:
<TABLE>
<CAPTION>


<S>                          <C>      <C>        <C>
   Year ended April 30,      Current  Deferred   Total
   --------------------      -------  --------   --------
   1998                         $0          $0         $0
   1997                         $0    $350,000   $350,000
   1996                  ($583,676)         $0  ($583,676)

</TABLE>

The  tax  benefit recorded in 1996 represents the taxes refundable  due  to  the
carryback of that year's loss.

At  April  30,  1998, the Company had, for federal tax reporting  purposes,  net
operating  loss  carryforwards of approximately $10,000,000, expiring  in  years
through 2012.

The  actual  tax  expense  (benefit) differs from  the  "expected"  tax  expense
(computed  by applying the U.S. Corporate rate of 34%) in each of  the  3  years
ended  April  30,  1998  primarily as a result of valuation  allowances  against
potential deferred tax assets.

Deferred tax assets were approximately $4,300,000 as of April 30, 1998 and 1997,
arising primarily as a result of net operating losses.  Valuation allowances  of
$4,300,000  as  of  April  30, 1998 and 1997 offset  the  deferred  tax  assets,
resulting in net deferred tax assets of $0 as of April 30, 1998 and 1997.

<PAGE>

(9)  Leases

The  Company  has several operating leases that expire at various dates  ranging
through  April 2001.  Future minimum lease payments related to operating  leases
are detailed as follows:

<TABLE>
<CAPTION>
<S>                             <C>
Year ending April 30,           Operating leases
---------------------           ----------------
1999                            86,856
2000                            86,856
2001                            86,856
Thereafter                      0
                                ----------------
Total  minimum  lease payments $260,568
                                ================
</TABLE>

Total  rental expense for operating leases was $97,015, $96,671 and $95,959  for
the years ended April 30, 1998, 1997, and 1996, respectively.

(10)  Stock Options

At  April  30, 1998, the Company had two stock options plans which are described
below.   The  Company applies APB Opinion 25 - "Accounting for Stock  Issued  to
Employees", and related Interpretations in accounting for the plans.   In  terms
of  APB  Opinion  25,  when the exercise price of the Company's  employee  stock
options  equals  the market price of the underlying stock on  the  date  of  the
grant, no compensation cost is recognized.

The  Company's Incentive Stock Option Plan ("ISOP"), as amended, allows for  the
granting of 600,000 shares of the Company's common stock.  The ISOP provides for
the  granting  to  key  employees and officers of incentive  stock  options,  as
defined, under current tax laws.  The stock options are exercisable at  a  price
equal to or greater than the market value on the date of the grant.

Option activity under the ISOP is as follows:
<TABLE>
<CAPTION>

Stock Option - ISOP
<S>                             <C>       <C>            <C>
                                          Exercise       Weighted
                                Options   Price Range    Average
                                -------   -----------   ----------
Outstanding April 30, 1995      392,500   $.44 - $1.05    $0.48
Granted                             -               
Exercised                           -
Terminated/Expired             (150,000)                  $0.44
                               ---------  ------------  -----------
Outstanding April 30, 1996      242,500   $.44 - $1.05    $0.50
Granted                             -               
Exercised                           -               
Terminated/Expired                  -               
                               ---------  ------------  -----------
Outstanding April 30, 1997      242,500   $.44 - $1.05    $0.50
Granted                             -              
Exercised                           -              
Terminated/Expired                  -             
                               ---------  ------------  -----------
Outstanding April 30, 1998      242,500   $.44 - $1.05    $0.50
                                                    
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
<S>                             <C>       <C>            <C>

                                          Exercise       Weighted
Exercisable at year end:        Options   Price Range    Average
------------------------------- -------   -----------   ----------                                                    
April 30, 1996                  242,500   $.44 - $1.05    $0.50
                                                    
April 30, 1997                  242,500   $.44 - $1.05    $0.50
                                                    
April 30, 1998                  242,500   $.44 - $1.05    $0.50
-------------------------------------------------------------------                                                    
Available for future grants:                        
                                                    
April 30, 1996                             357,500  
                                                    
April 30, 1997                             357,500  
                                                    
April 30, 1998                             357,500  
-------------------------------------------------------------------                                                    
</TABLE>

The   following  summarizes  information  regarding   stock
options outstanding at April 30, 1998.

<TABLE>
<CAPTION>

<S>                                     <C>       <C>
Range of Exercise prices:
                                                    
Outstanding Options:                    $0.44     $1.05         
                                                    
Number outstanding at April 30, 1998    217,500   25,000        
Weighted  average remaining Conntractual
life (years)                             1.6       1.6
                                                    
Weighted average exercise price         $0.44     $1.05         

</TABLE>

Effective September 17, 1994 and approved at the annual stockholders' meeting in
1994,  the 1994 Non-Employee Director Stock Option Plan (the "Director's  Plan")
was  adopted  and  200,000  shares of the Company's Common  Stock  reserved  for
issuance  under  the  Director's Plan.  The Director's  Plan  provides  for  the
automatic  grant  of  nontransferable  options  to  purchase  common  stock   to
nonemployee directors of the Company, on the date immediately preceding the date
of  each  annual  meeting of stockholders in which an election of  directors  is
concluded.   Each  nonemployee  director then in  office  will  receive  options
exercisable for 5,000 shares (or a pro rata share of the total number of  shares
still available under the Director's Plan).  No option may be granted under  the
Director's Plan after the date of the 1998 annual meeting of stockholders.

<PAGE>

Options  issued pursuant to the Director's Plan are exercisable at  an  exercise
price  equal to not less than 100% of the fair market value (as defined  in  the
Director's Plan) of shares of Common Stock on the day immediately preceding  the
date  of the grant.  Options are vested and fully exercisable as of the date  of
the  grant.  Unexercised options expire on the earlier of (i) the date  that  is
ten years from the date on which they were granted, (ii) the date which is three
calendar  months from the date of the termination of the optionee's directorship
for  any  reason  other than death or disability (as defined in  the  Director's
Plan),  or  (iii) one year from the date of the optionee's disability  or  death
while serving as a director.

Option activity under the Plan is as follows:

<TABLE>
<CAPTION>

Stock Option - ISOP
<S>                              <C>         <C>          <C>       <C>
                                             Exercise     Weighted  Options
                                 Options     Price Range  Average   Exercisable
-------------------------------------------------------------------------------
Outstanding April 30, 1995        35,000        $0.49     $0.49      35,000
Granted                              -                      
Terminated/Expired               (10,000)                      
Outstanding April 30, 1996        25,000        $0.49     $0.49      25,000
Granted                              -                      
Terminated/Expired                   -                      
Outstanding April 30, 1997        25,000        $0.49     $0.49      25,000
Granted                              -                      
Terminated/Expired                   -                      
Outstanding April 30, 1998        25,000        $0.49     $0.49      25,000
-------------------------------------------------------------------------------
</TABLE>

Statement  of  Financial Accounting Standards No. 123 ("SFAS 123"),  "Accounting
for  Stock  -  Based  Compensation", requires the Company to provide  pro  forma
disclosure of net income (loss) and earnings (loss) per as if the optional  fair
value  method had been applied to determine compensation costs for the Company's
Stock option plans.  Since no options were granted in the years ended April  30,
1998, 1997 and 1996, no pro forma disclosures are applicable.

(11)  Loss on Abandonment of Investment

On  June  27,  1995,  LCL  International Traders, Inc. ("LCL"),  a  wholly-owned
subsidiary of Jayark,  completed the acquisition of substantially all the assets
and  business  of  a  group of affiliated companies engaged in  the  import  and
distribution  of seasonal and promotional merchandise (the "Acquisition").   The
sellers,  located in Hong Kong and Central Islip, New York, operated  under  the
trade  names  "Liberty Bell Christmas", "Ivy Mar", "Creative Home Products"  and
"Award  Manufacturing".   LCL  acquired  these  trade  names  as  part  of   the
transaction.

The  purchase  price  for  the Acquisition comprised  the  following:  issue  of
1,000,000  common  shares  of  Jayark to  the  sellers,  cash  paid  by  LCL  of
$3,000,000,  a  note  payable  by  LCL to the sellers  for  $3,000,000  and  the
assumption  of  certain  liabilities  of  the  sellers.   The  Company  advanced
$1,000,000  to  LCL in connection with the cash portion of the  purchase  price.
LCL  obtained  a  credit facility for the balance of the  cash  portion  of  the
purchase price.

<PAGE>

During  August  1995,  Jayark,  LCL and Rosalco  entered  into  a  Reimbursement
Agreement   with  certain  related  third  parties  to  provide   to   The   CIT
Group/Commercial Services, Inc. ("CIT"), the primary lender to LCL,  irrevocable
standby  letters  of credit and cash in the aggregate amount  of  $1,700,000  to
serve  as additional collateral against which CIT would lend additional  working
capital to LCL pursuant to CIT's lending arrangements with LCL.

In consideration for providing the additional collateral, the guarantors were to
receive  shares of common stock of the Company in proportion to  the  amount  of
additional  collateral  initially  provided  by  them.   Excluding  the   shares
attributable to Rosalco, the Company was obligated to issue a total  of  282,400
shares of its common stock to the guarantors.

The  arrangement with CIT for the additional financing secured by the additional
collateral expired on February 28, 1996.  The arrangement indicated that on that
date,  in  the  event that CIT had applied any of the additional  collateral  to
LCL's obligations to CIT, LCL would reimburse the parties for the collateral  so
applied by CIT.  Alternatively, the parties could at any time after February 28,
1996  receive  shares  of the Company's common stock as  reimbursement  for  the
collateral applied by CIT to LCL's obligations to CIT.  Each party would receive
that  number  of  shares that had a value equal to the amount  of  such  party's
collateral  that  is  applied  by CIT.  Excluding  the  shares  attributable  to
Rosalco,  the  Company is obligated to issue a total of 960,000  shares  of  its
common stock to the guarantors.

In  July  1996,  CIT notified the parties that CIT was applying  the  additional
collateral  to  LCL's  obligations.   As a result  of  the  application  of  the
collateral  by  CIT, the parties received the following shares of the  Company's
Common  Stock:  Joel Margolin received 400,000 shares; each of Ruthanne  Koffman
and  the  Ben  Arnold Company received 200,000 shares; and Whitehorn  Associates
received 160,000 shares.

In  fiscal  1997,  the Company issued 1,242,400 shares of its  common  stock  in
connection with the above transactions, which were valued at $472,112.

During  fiscal 1996, the Company abandoned the investment in LCL, which in  turn
filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code.  Due to
the  nature  of  the investment and the short period of operation  of  LCL,  the
operations  of  LCL  were not consolidated with the Company's  operations.   The
Company  provided  for  all  realized and expected losses  on  the  abandonment,
summarized as follows:

<TABLE>
<CAPTION>
          <S>                                                   <C>
          Value of shares issued                                $1,156,250
          Cash paid                                              1,000,000
          Provision for issuance of shares to guarantors
          (using the most recent quoted stock price)               500,000
          Rosalco obligation under the reimbursement agreement     500,000
          Anticipated costs of abandonment                       1,572,186
                                                                ----------                
             Total loss on abandonment                          $4,728,436
                                                                ----------                                                
</TABLE>
(12)  Financial Instruments

<PAGE>

The   carrying  amounts  of  financial  instruments,  including  cash  and  cash
equivalents,   accounts   receivable,  accounts  payable   and   notes   payable
approximated fair value as of April 30, 1998 due to the short maturity of  these
items.   The  fair  value  of  the  convertible  debentures  is  not  reasonably
determinable.

(13)  Fourth Quarter Adjustments

During  the  fourth  quarter  of fiscal 1996, the  Company  made  the  following
significant adjustments to reported earnings:

          Increase in accounts receivable reserves           $550,000
          Increase in inventory reserves                    1,195,534

During  the  fourth quarter of fiscal 1997, the Company recorded the effects  of
the discontinuance of Rosalco.  See note 14.

(14)  Discontinued Operations
As  a  result  of  continued losses due to a soft retail  market,  low  margins,
competitive  pressures, and price reductions, the Company had  been  looking  to
sell or otherwise dispose of the operations of Rosalco.  Rosalco had been in the
business  of  the  distribution of more than 300 different  products,  including
occasional furniture, brass beds, custom jewelry cases and accessories, most  of
which  are  imported from outside the continental United States.   Rosalco  also
developed  special designs for several customers.  Rosalco was headquartered  in
Jeffersonville, Indiana.  All efforts to sell Rosalco were unsuccessful, and the
company was officially closed on Wednesday, October 22, 1997.  The assets of the
company  were  secured as part of the borrowing agreement.   Shortly  after  the
closing, a receiver was assigned to liquidate the secured assets of the  company
to  satisfy the loan principal.  As a result, Jayark incurred a $5,794,000  loss
on  Discontinued operations, which includes $3,294,000 loss from operations  for
the  year  ended April 30, 1997, the establishment of accruals in the amount  of
$300,000 for expenses and guarantees related to the closing, the write off of an
intercompany  receivable and other assets of $476,000,  and  the  remaining  net
asset of Rosalco of $1,725,000.

The  Rosalco  business has been presented as a discontinued operation,  and  the
consolidated balance sheets and statements of operations have been  restated  to
conform with this presentation.   Financial results of the Rosalco operation are
as follows:


<PAGE>

<TABLE>
<CAPTION>
      <S>                          <C>            <C>
                                   Years Ended April 30,
      Operating Data               1997         1996
      ---------------------------------------------------                           
      Net Revenues                $37,505,589  $32,149,279                              
      Costs and Expenses          40,449,698   34,843,376
      Income before Tax           (2,994,109)  (2,694,097)
      Provision for (Benefit From)                                  
      Income Tax                     350,000     (156,503)                                         
      Net Income (Loss)           (3,294,109)  (2,537,594)
      ----------------------------------------------------
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
            <S>                          <C>
            Balance Sheet Data:       
                                         April 30,
                                           1997
                                         ---------       
            Assets

            Current Assets
             Cash                         $107,540
             Accounts Receivable         3,859,808
             Other Receivables             294,713
             Inventory                   4,703,319
             Deferred Tax                     -
             Other Current                 272,702
                                         ---------                                       
            Total Current Assets         9,238,082
                                        
            Non-Current Assets         
             PP&E, Net of Accum. Depr      541,248
             Intercompany                 (414,435)
                                         ---------
            Total Non Current Assets       126,813
                                         ---------
            Total Assets                 9,364,895
                                         =========
                                        
            Liabilities                
             Notes Payable & L.O.C.      5,685,407
             Accounts Payable            1,576,777
             Accrued Liabilities           117,040
             Other Current                 260,291
                                         ---------
            Total Current Liabilities    7,639,515
                                        
            Net Assets                  $1,725,380*

</TABLE>
Note - these net assets were written off at April 30, 1997

(15)  Subsequent Events

In  July  1998, the Company amended its Certificate of Incorporation  increasing
its  authorized Common Stock from 10,000,000 to 30,000,000 shares and decreasing
the par value of its Common Stock from $.30 to $.01 per share.

<PAGE>

In  August 1998, the Company intends to offer to each stockholder, the right  to
purchase,  pro  rata, two shares of Common Stock at a price of $.10  per  share.
The  Company  expects  to file a Registration Statement on  Form  S-1  with  the
Securities  and Exchange Commission as soon as practicable in order to  register
such  rights  to  purchase Common Stock, under the Securities Act  of  1933,  as
amended.  Upon the Registration Statement becoming effective, stockholders  will
receive  notification of the Rights Offering and instructions on how to exercise
the  rights.  The net proceeds of $1,790,000 to the Company from the sale of the
Common Stock will be used to retire $1,790,000 of notes payable and subordinated
notes, including accrued interest with related parties.

In  June  1998,  Jayark  Corporation,  through  a  newly  formed,  wholly  owned
subsidiary,  MED  Services  Corp. ("Med"), entered  into  a  Purchase  and  Sale
Agreement with Vivax Medical Corporation ("Vivax"), a company that manufactures,
sells  and  rents  durable  medical equipment to hospitals,  nursing  homes  and
individuals.   Under the terms of the agreement, Med purchased  certain  medical
equipment  from  Vivax for cash of $579,700 and a $144,925 unsecured  promissory
note  due  in  five years.  Med then entered into a Consignment  Agreement  with
Vivax whereby this medical equipment was consigned to Vivax to rent through  its
distribution network.  In consideration of Vivax renting and maintaining the Med
equipment, Vivax is entitled to a range of forty-eight to sixty-seven percent of
the  rental proceeds, based upon the equipment rented.  Vivax has an  option  to
purchase the medical equipment from Med after the twenty-fourth, thirty-six  and
forty-eight month of the consignment period.  Med, under the Purchase  and  Sale
Agreement  has  an  option, through October 31, 1999 to purchase  an  additional
$2,475,000  of  medical  equipment  from Vivax.   Upon  the  expiration  of  the
consignment period, which is five years from the purchase of the equipment,  Med
has the option to sell the equipment back to Vivax.

Med  negotiated a $1,000,000 revolving line of credit with Atlantic Bank of  New
York  and  invested approximately $130,000 of the Company's presently  available
working  capital  to  purchase the medical equipment.  The  $1,000,000  line  of
credit  is due one year from signing and bears interest at prime plus  2%.   The
line  of  credit is secured by the inventories and accounts receivable  of  Med.
The  are no financial covenants associated with the line of credit.  As of  July
31, 1998 Med has $450,000 outstanding on the line.

If  the equipment is successfully rented, the rental income and cash flow  could
have  a  material affect on the operating results of Jayark Corporation.   There
can  be no assurances that the Company will be successful in renting the medical
equipment.

<PAGE>

Exhibit Index

  3(1) Certificate of Incorporation of the Company.  Incorporated herein  by
reference  to  the  Company's Proxy Statement for its  1991  Annual  Meeting  of
Shareholders, Exhibit B thereto.

  3(2) Bylaws  of  the Company.  Incorporated herein by  reference  to  the
Company's  Proxy  Statement      for its 1991 Annual  Meeting  of  Shareholders,
Exhibit C thereto.

  4(1) Specimen  Certificate  of  Common  Stock,  par  value  $0.30  per  share,
incorporated herein by reference from Registration Statement on Form  S-1,  File
Number 2-18743, Exhibit 4 thereto.

  4(2) 12% Convertible Subordinated Debenture due 1994, incorporated herein
by  reference  to  the Report on Form 8-K filed January 4, 1990,  Exhibit  28(a)
thereto.

  4(3) Registration rights agreement dated as of December 20, 1989, by and 
between the Company and Rosalco, Inc., incorporated herein by reference to
the Report on Form 8-K filed January 4, 1990, Exhibit 28(c) thereto.

  10(1)* 1981 Incentive Stock Option Plan, as amended as of December 15,  1989,
incorporated herein by reference to the Annual Report on Form 10-K for the  year
ended April 30, 1990, Exhibit 10(1)     thereto.

  10(2) Notes  and  Loan  and  Security  Agreements  (Inventory  &  Accounts
Receivable) each dated as of January 20, 1992, between Jayark Corporation,  AVES
Audio  Visual  Systems, Inc., Rosalco, Inc.,Rosalco Woodworking,  Inc.,  Diamond
Press  Company,  and State Street Bank & Trust Company of Boston, Massachusetts,
incorporated  herein by reference from the Annual Report on Form  10-K  for  the
year ended April 30, 1992, Exhibit 10(3) thereto.

  10(3) Letter Agreement dated December 6, 1989, among Arthur Cohen, Burton I.
Koffman, and Richard E. Koffman.  Incorporated herein by reference to the Annual
Report on Form 10-K for the year ended April 30, 1990, Exhibit 10(3) thereto.

  10(4) Indemnity  escrow Agreement dated as of December  20,  1989,  by  and
between  the  Company,     Rosalco, Inc. and certain individuals named  therein,
incorporated  herein  by reference to the Report on Form 8-K  filed  January  4,
1990, Exhibit 28(c) thereto.

  10(5) Factoring Agreements dated as of February 7, 1992, by and between  the
Company, Pilgrim Too     Sportswear, Inc., J.F.D. Distributors, Inc., and others
named  therein,  and  Barclays Commercial Corporation,  incorporated  herein  by
reference to the Annual Report on Form 10-K for the year ending April 30,  1992,
Exhibit 10(10) thereto.

  10(6) Diamond Press Asset Sale and Purchase Agreement dated as of  November
23,  1992 by and     between the Company and Harstan, Inc., incorporated  herein
by  reference  to the Company's Form 8-K, as amended, as of November  23,  1992,
Exhibit 2 thereto.

<PAGE>

  10(7) Asset Sale and Lease Termination Agreement, by and between Pilgrim Too
Manufacturing   Company, Inc., New Images, Inc., Victor Freitag,  Jr.  and  wife
Gilbert R. Freitag, and Robert E.  Skirboll and wife Robin T. Skirboll, dated as
of  April 2, 1993; Asset Purchase Agreement by and between the Company,  Pilgrim
Too Sportswear,  Inc.,  Pilgrim Too Manufacturing  Company,  Inc.     Stage  II
Apparel Corp., Shambuil Ltd., and Pilgrim II Apparel Corp., dated as of April 2,
1993; both incorporated herein by reference to the Company's Form 8-K as  of
April 2, 1993, Exhibits  thereto.

  10(8) Amendment to certain Notes and Loan and Security Agreements each dated
as  of  January  20,   1992, incorporated herein by reference  from  the  Annual
Report on Form 10-K for the year ended  April 30, 1993, Exhibit 10(8) thereto.

  10(9) Amendment to certain Notes and Loan and Security Agreements each dated
as  of  December  31,  1993, incorporated herein by reference  from  the  Annual
Report on Form 10-K for the year ended  April 30, 1994, Exhibit 10(9) thereto.

  10(10) Asset  Purchase Agreement, dated June 5, 1995,  among  LIB-Com  Ltd.,
Liberty Bell Christmas,  Inc., Ivy Mar Co., Inc., Creative Home Products,  Inc.,
and  Liberty  Bell Christmas Realty, Inc. as   the sellers and LCL International
Traders,  Inc.  as  the  buyer, incorporated herein by  reference      from  the
Company's report on Form 8-K dated June 27, 1995, Exhibit 2(a) thereto.

  10(11) Asset  Purchase  Agreement,  dated  June  5,  1995,  between   Award
Manufacturing  Corporation as  the seller, and LCL International Traders,  Inc.,
as  the buyer, incorporated herein by reference    from the Company's report  on
Form 8-K dated June 27, 1995, Exhibit 2(b) thereto.

  10(12) Guarantee  Agreement,  dated June 5,  1995,  by  Award  Manufacturing
Corporation in favor of  LCL International Traders, Inc., incorporated herein by
reference  from the Company's report on  Form 8-K dated June 27,  1995,  Exhibit
2(c) thereto.

  10(13) Guarantee Agreement, dated June 5, 1995, by LIB-Com Ltd., Liberty Bell
Christmas,  Inc.,  Ivy      Mar  Co., Inc., Creative Home  Products,  Inc.,  and
Liberty  Bell  Christmas  Realty, Inc. in favor of   LCL International  Traders,
Inc.,  incorporated herein by reference from the Company's report on   Form  8-K
dated June 27, 1995, Exhibit 2(d) thereto.

  10(14) Promissory Note of LCL International Traders, Inc., due July 29, 1998,
payable  to the order of  Commerzbank AG, Hong Kong Branch, incorporated  herein
by  reference  from  the Company's    report on Form 8-K dated  June  27,  1995,
Exhibit 2(e) thereto.

  10(15) Confirmation  Letter Agreement dated June 22, 1995,  among  Citibank,
N.A., Commerzbank AG, Bayerische Vereinsbank AG, LCL International  Traders,
Inc., and Jayark Corporation,  incorporated  herein  by  reference  from  the
Company's report on Form 8-K dated June 27, 1995, Exhibit 2(f) thereto.

<PAGE>

  10(16) Factoring  Agreement dated June 23, 1995, between  LCL  International
Traders,  Inc.  and  the CIT     Group/Commercial Services,  Inc.,  incorporated
herein  by  reference from the Company's report     on Form 8-K dated  June  27,
1995, Exhibit 99(a) thereto.

  10(17) Inventory  Security  Agreement  dated  June  23,  1995,  between  LCL
International  Traders,  Inc.  and    the CIT Group/Commercial  Services,  Inc.,
incorporated herein by reference from the Company's    report on Form 8-K  dated
June 27, 1995, Exhibit 99(b) thereto.

  10(18) Letter  Agreement  dated  June 23, 1995, between LCL International
Traders, Inc. and the CIT Group/Commercial Services, Inc., incorporated
herein  by  reference from the Company's report on Form 8-K dated  June  27,
1995, Exhibit 99(c) thereto.

  10(19) Letter  Agreement  dated  June 23, 1995,  between  LCL  International
Traders,  Inc.  and  the CIT     Group/Commercial Services, Inc.,  Liberty  Bell
Christmas,  Inc.,  Ivy  Mar  Co.,  Inc.,  and  Creative   Home  Products,  Inc.,
incorporated herein by reference from the Company's report on Form 8-K     dated
June 27, 1995, Exhibit 99(d) thereto.

  10(20) Amendment to certain Notes and Loan and Security Agreements each dated
as  of  December  31,  1994, incorporated herein by reference  from  the  Annual
Report on Form 10-K for the year ended  April 30, 1995, Exhibit 10(20) thereto.

  10(21) Loan  and  Security Agreements dated April 29, 1996 between  Rosalco,
Inc., and State Street   Bank & Trust Company of Boston, Massachusetts.

  10(22) Loan and Security Agreements dated April 29, 1996 between AVES  Audio
Visual   Systems,  Inc.,and  State  Street  Bank  &  Trust  Company  of  Boston,
Massachusetts.

  10(23) First amendment to Loan and Security Agreements dated as of September
19,  1996 between Rosalco, Inc. and State Street Bank & Trust Company of Boston,
Massachusetts.

  10(24) Agreement  of  Extension  of Maturity of  12%  Convertible Subordinated
Debentures dated April 30, 1990.

  10(25) Forbearance  and  Modification Agreement dated March  12,1997, between
Jayark Corporation,Rosalco, Inc., AVES Audio Visual Systems, Inc.,  David
L. Koffman,  and  State  Street  Bank  and  Trust  Company  of  Boston,
Massachusetts.
     
  10(26) Stock Pledge Agreement dated March 12, 1997, between Jayark Corporation
and State Street Bank and Trust Company of Boston, Massachusetts.

  10(27) Subordination Agreement dated March 12, 1997, between Jayark
Corporation, Rosalco, Inc.,AVES Audio Visual Systems, Inc., David L. Koffman,
and State Street Bank and Trust Company of Boston, Massachusetts.

<PAGE>

  10(28) Revolving Note dated March 12, 1997 between Jayark Corporation and A-V
Texas Holding, LLC.

  10(29) Stock Pledge Agreement dated March 12, 1997 between Jayark Corporation
and A-V Texas Holding, LLC.

  10(30) Stock Warrant to purchase 3,666,667 shares of common stock dated March
12, 1997 between Jayark Corporation and A-V Texas Holding, LLC.

  10(31) Commercial Security Agreement dated February 18, 1997, between AVES
Audio Visual Systems, Inc. and BSB Bank and Trust Company.

  10(32) Promissory  Note  dated  February 18,1997, between AVES Audio Visual
Systems, Inc. and BSB Bank and Trust Company.

  10(33) Commercial Guaranty dated February 18, 1997, between AVES Audio Visual
Systems, Inc., David L. Koffman and BSB Bank and Trust Company.

  10(34) Subordinated Promissory Note date March 12, 1997 between Rosalco, Inc.
and Jayark Corporation.

  10(35) Second Forbearance and Modification Agreement dated June 1, 1997,
between State  Street  Bank and Trust Company of Boston, Massachusetts,
Rosalco,Inc., and Jayark Coporation.

  10(36) Stock Warrant to purchase 500,000 shares of common stock dated
March 12,1997 between Jayark Corporation and A-V Texas Holding, LLC.

  10(37) Certificate of Amendment of The Certificate of Incorporation of Jayark
Corporation dated July 10, 1998.

  10(38)  Purchase  and Sale Agreement dated June 1, 1998, between Vivax Medical
Corporation and MED Services Corp.

  10(39) Distribution Agreement dated June 1, 1998, between MED Services Corp.
  and Vivax Medical Corporation.

  10(40)  Revolving  Line  of Credit Grid Promissory Note dated  August 7, 1998,
between MED Services Corp. and Atlantic Bank of New York.

  10(41)  Security Agreement dated August 7, 1998, between MED Services Corp.
and Atlantic Bank of New York.

<PAGE>

[ARTICLE] 5
[CIK] 0000053260
[NAME] 
[MULTIPLIER] 1000
<TABLE>
<S>                             <C>
[PERIOD-TYPE]                   YEAR
[FISCAL-YEAR-END]                          APR-30-1998
[PERIOD-START]                             MAY-01-1997
[PERIOD-END]                               APR-30-1998
[CASH]                                             239
[SECURITIES]                                         0
[RECEIVABLES]                                    1,724
[ALLOWANCES]                                         0
[INVENTORY]                                        272
[CURRENT-ASSETS]                                 2,272
[PP&E]                                             451
[DEPRECIATION]                                     357
[TOTAL-ASSETS]                                   2,635
[CURRENT-LIABILITIES]                            2,115
[BONDS]                                              0
[PREFERRED-MANDATORY]                                0
[PREFERRED]                                          0
[COMMON]                                         2,766
[OTHER-SE]                                     (5,692)
[TOTAL-LIABILITY-AND-EQUITY]                   (2,635)
[SALES]                                         13,605
[TOTAL-REVENUES]                                13,605
[CGS]                                           11,446
[TOTAL-COSTS]                                   11,446
[OTHER-EXPENSES]                                 1,717
[LOSS-PROVISION]                                     0
[INTEREST-EXPENSE]                                 366
[INCOME-PRETAX]                                     76
[INCOME-TAX]                                         0
[INCOME-CONTINUING]                                 76
[DISCONTINUED]                                       0
[EXTRAORDINARY]                                      0
[CHANGES]                                            0
[NET-INCOME]                                        76
[EPS-PRIMARY]                                      .01
[EPS-DILUTED]                                      .01
</TABLE>

<PAGE>

EXHIBIT 10(37)

CERTIFICATE OF AMENDMENT
OF
THE CERTIFICATE OF INCORPORATION
OF
JAYARK CORPORATION

Under Section 242 of the General Corporation Law

It is hereby certified that:

FIRST:        The   name   of   the  corporation  is  JAYARK  CORPORATION   (the
       "Corporation").

SECOND:      The  Certificate  of  Incorporation of the  Corporation  is  hereby
       amended  by  striking out paragraph A of Article IV in its  entirety  and
       the  following  new  paragraph A of Article IV  is  substituted  in  lieu
       thereof:

"A.

          The  total  number  of all shares of all classes of  stock  which  the
       Corporation  shall  have  authority to  issue  is  35,000,000,  of  which
       30,000,000  shares  shall  be common stock,  par  value  $.01  per  share
       ("Common  Stock"),  and 5,000,000 shares shall be  preferred  stock,  par
       value $.01 per share ("Preferred Stock")."

THIRD:       The  foregoing Amendment to the Certificate of Incorporation herein
       certified  has  been duly adopted in accordance with  the  provisions  of
       Sections  242  and 228 of the General Corporation Law  of  the  State  of
       Delaware.

IN WITNESS  WHEREOF, said Jayark Corporation has caused this certificate  to  be
       signed by its President this 10th day of July 1998.


                                                   /s/ David L. Koffman
                                                  Name:  David L. Koffman
                                                  Title:  President

<PAGE>

EXHIBIT 10(38)

                  PURCHASE AND SALE AGREEMENT

      Agreement  made  as of June 1, 1998 between VIVAX MEDICAL  CORPORATION,  a
Delaware  corporation  having its principal place  of  business  at  545  Middle
Street,  Bristol,  Connecticut  ("Seller") and  MED  SERVICES  CORP.,  a  Nevada
corporation  having its principal place of business at 300 Plaza Drive,  Vestal,
New York ("Buyer").

                            RECITALS

      A.   Seller is in the business of manufacturing specialty medical beds and
related  equipment  including, among other things, certain beds  known  as  Nova
Beds,  which are more particularly described in Exhibit "A" attached hereto  and
made a part hereof ("Nova Beds"), and certain beds known as Soma Enclosure Beds,
which are more particularly described in Exhibit "B" attached hereto and made  a
part hereof ("Enclosure Beds").

      B.    Seller  has  agreed to sell to Buyer and the  Buyer  has  agreed  to
purchase from the Seller certain Nova Beds and Enclosure Beds upon the terms and
conditions set forth in this Agreement.

      C.    Seller  has  also  agreed to grant the  Buyer  options  to  purchase
additional Nova Beds and Enclosure Beds upon the terms and conditions set  forth
in this Agreement.

     NOW, THEREFORE, the parties agree as follows:

           1.    Purchase  and  Sale of Nova Beds.  Upon  the  closing  of  this
Agreement, Seller agrees to sell and Buyer agrees to purchase fifty Nova Beds at
$12,995.00 each, for an aggregate purchase price of $649,750.00.

           2.    Purchase and Sale of Enclosure Beds.  Upon the closing of  this
Agreement,  Seller  agrees  to  sell and Buyer agrees  to  purchase  twenty-five
Enclosure Beds at $2,995.00 each, for an aggregate purchase price of $74,875.00.

           3.    Payment  of  Aggregate Purchase Price.  The aggregate  purchase
price of $724,625.00 for the purchases set forth above shall be payable upon the
closing of this Agreement by a payment of $579,700.00 in cash and the balance of
$144,925.00  by  the execution and delivery of a promissory note  ("Grid  Note")
such  amount payable five years from the date of closing and in the form of  the
Grid  Note  ("Grid Note") attached hereto marked Exhibit "C"  and  made  a  part
hereof.

           4.    Option to Purchase Additional Nova Beds.  Seller hereby  grants
Buyer  an  irrevocable option (notwithstanding Buyer's refusal to  exercise  its
option  from  time to time) to purchase, upon their availability as manufactured
before  sold or put into service for rental from time to time, up to one hundred
and  fifty (150) additional Nova Beds at $12,995.00 each.  This option shall  be
in  force  through October 31, 1999.  Seller shall offer each Nova Bed  that  it
manufactures  to Buyer in accordance with this section until such  time  as  the
Buyer has purchased an additional one hundred and fifty Nova Beds or the term of

<PAGE>

this   option  has  expired,  whichever  is  earlier.   Upon  receiving  written
notification  from  the  Seller of the availability of Nova  Beds  for  purchase
subject  to this option, Buyer shall have five business days in which to  notify
Seller in writing of its intent to purchase all or any portion of such Nova Beds
and shall close on said purchase and deliver the required funds to Seller on  or
before 15 business days after aforementioned notice.

           5.    Option  to  Purchase Additional Enclosure Beds.  Seller  hereby
grants  Buyer an irrevocable option (notwithstanding Buyer's refusal to exercise
its  option  from  time  to  time)  to  purchase,  upon  their  availability  as
manufactured,  as  to Enclosure Beds (i) 50% of the Enclosure Beds  before  sold
from  time to time, and (ii) 100% of all Enclosure Beds before put into  service
for  rental  from time to time up to an aggregate (inclusive of  any  such  beds
purchased  pursuant to clause (i) or (ii) above) of one hundred and seventy-five
(175)  additional  Enclosure Beds at $2,995.00 each.  This option  shall  be  in
force  through October 31, 1999.  Seller shall offer such Enclosure Bed that  it
manufactures  to Buyer in accordance with this section until such  time  as  the
Buyer  has purchased an additional one hundred and seventy-five Enclosure  Beds,
or  the  term of this option has expired which ever is earlier.  Upon  receiving
written  notification from the Seller of the availability of Enclosure Beds  for
purchase subject to this option, Buyer shall have five business days in which to
notify  Seller in writing of its intent to purchase all of any portion  of  such
Enclosure  Beds and shall close on said purchase and deliver the required  funds
to Seller on or before 15 business days after aforementioned notice.

           6.   Payment of Purchase Price for Purchases Pursuant to Options.  If
pursuant  to  this Agreement the Buyer purchases Nova Beds which are  designated
"Mediq  Units"  as  that  term is defined in that certain Consignment Agreement
entered  in  to between the parties hereto on even date herewith, the aggregate
purchase price therefor shall be payable seventy-five percent in cash and
twenty-five percent by the addition of such dollar amount to the Grid Note
payable five years from the date of such purchase.  If, pursuant to the
aforesaid option, the Buyer  purchases  Nova  Beds which are not designated as
"Mediq  Beds" and/or purchases Enclosure Beds, the aggregate purchase price
therefor shall be payable eighty percent in cash and twenty percent by the
addition of such dollar amount to  the  Grid  Note  payable five years from the
date of  such  purchase  as  an advance.

           7.    Bills of Sale.  Upon the closing of each sale hereunder, Seller
shall  execute  and deliver to Buyer a bill of sale in the form attached  hereto
marked  Exhibit "D" and made a part hereof.  Each bill of sale shall  set  forth
the  type and serial number of each Nova Bed and/or Enclosure Bed being conveyed
thereby,  together  with the then location and intended  locations  thereof  and
whether such Unit is new or used.

           8.   Lien Searches.  Upon the closing of each purchase hereunder, the
Seller  shall provide Buyer with UCC searches in such jurisdictions and in  such
form  and  substance  as  shall be acceptable to the  Buyer  and  Buyer's  legal
counsel, evidencing that Seller has good title to the Nova Beds and/or Enclosure
Beds  being transferred, free and clear of any conflicting security interest  or
any other lien or incumbrance.

           9.    Opinion of Legal Counsel.  Upon the closing of this  Agreement,
the Seller shall provide the Buyer with the written opinion of legal counsel  to
the  Seller  and the Buyer shall provide the Seller with the written opinion  of
legal counsel to the Buyer.

<PAGE>

           10.  Inspection.  Buyer shall have the right to inspect the Nova Beds
and  Enclosure Beds offered for purchase hereunder at Seller's facility.  Seller
will permit the Buyer to enter the Seller's facility for such inspections at any
time during normal business hours.

          11.  Product Warranty.  Seller agrees to replace, or repair to Buyer's
satisfaction,  and  at Seller's sole cost and expense, any  and  all  Nova  Beds
and/or  Enclosure Beds sold pursuant to this Agreement which  are  found  to  be
defective  in material, workmanship or function during the term of the aforesaid
Consignment Agreement and any extension thereof.  This warranty is not exclusive
and  is  made  in  addition to any and all other warranties applicable  to  this
transaction, whether express or implied, including warranties of merchantability
and fitness for a particular purpose.

           12.  Representations and Warranties of Seller.  Seller represents and
warrants to the Buyer as of the date hereof and on the date of the conveyance of
any Nova Beds or Enclosure Beds contemplated hereunder that:

               (a)  The Seller is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and  is
duly  qualified to do business and is in good standing in every jurisdiction  in
which the nature of its business requires it to be so qualified;

                (b)  Seller has the corporate power and authority to convey  the
Nova  Beds  and/or  Enclosure Beds pursuant to this Agreement,  to  execute  and
deliver  this Agreement and to perform the transactions required hereby  (except
where  a  failure to qualify to do business in a jurisdiction(s) has no material
adverse affect upon Seller or Buyer);

                (c)   The execution, delivery and performance by Seller of  this
Agreement and the transactions contemplated hereby have been duly authorized  by
all  necessary  corporate or other action on the part  of  the  Seller,  do  not
contravene  or  cause  the  Seller to be in default  under  its  certificate  of
incorporation  or  by-laws,  any contractual restriction  to  which  it  or  its
property is subject, or any law, rule, regulation, order, writ, judgment, award,
injunction  or decree applicable to, binding on or affecting the Seller  or  its
property  (except where such default has no material adverse affect upon  Seller
or Buyer);

                (d)  This Agreement has been duly executed and delivered by  the
Seller;

                (e)   No  approvals or consents of, notice to,  filing  with  or
licenses,  permits, or qualifications from, or other actions by any governmental
authority  or  any other party except such as have been obtained or  waived,  is
required  or  necessary for the due execution, delivery and performance  by  the
Seller of this Agreement;

               (f)  This Agreement is the legal, valid and binding obligation of
the  Seller enforceable against the Seller in accordance with the terms  hereof,
subject to any applicable bankruptcy, insolvency, reorganization, moratorium  or
other  similar  laws  now or hereafter in effect relating to  or  affecting  the
enforceability of creditors' rights generally and equitable principles,  whether
applied in a proceeding at law or in equity;

<PAGE>

                (g)   There is no pending, threatened, nor any reasonable  basis
for  any, action, suit or proceeding against or affecting Seller or its property
asserting the invalidity of this Agreement or seeking to prevent the performance
hereof except as listed on Schedule 2 attached hereto;

               (h)  The Seller has full and absolute right to transfer Nova Beds
and/or Enclosure Beds subject to this Agreement;

                (i)   All  Nova  Beds and/or Enclosure Beds  to  be  transferred
hereunder are and shall be transferred free and clear of all security interests,
liabilities, obligations and encumbrances including but not limited to the  lien
of any party holding a security interest in inventory; and

                (j)  These representations and warranties are made to induce the
Buyer to purchase Nova Beds and/or Enclosure Beds as herein provided and to  pay
the consideration therefor specified herein.

                (k)   The  patents  listed on Schedule  1  attached  hereto  and
incorporated herein ("Patents"), are currently owned by Seller.

                (l)   Seller  warrants and represents that all  fees  and  other
charges  due for the Patents have been paid in full as of the execution date  of
this Agreement other than any payments which have no material adverse affect  on
the enforceability or ownership of the Patents.

                (m)   No one or more of the Patents is invalid or unenforceable,
in whole or in part.

                (n)   Seller's the sole and exclusive owner of the Patents,  and
that  to  its knowledge no other person or party has or shall have any claim  of
ownership whatsoever with respect to the Patents.

           13.   Representations and Warranties of Buyer.  Buyer represents  and
warrants  to the Seller as of the date hereof and on the date of the  conveyance
of any Nova Beds or Enclosure Beds contemplated hereunder that:

                (a)  The Buyer is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of incorporation and  is
duly  qualified to do business and is in good standing in every jurisdiction  in
which the nature of its business requires it to be so qualified (except where  a
failure  to qualify to do business in a jurisdiction(s) has no material  adverse
affect upon Seller or Buyer);

                (b)  Buyer has the corporate power and authority to purchase the
Nova  Beds  and/or  Enclosure Beds pursuant to this Agreement,  to  execute  and
deliver this Agreement and to perform the transactions required hereby;

<PAGE>

                (c)   The execution, delivery and performance by Buyer  of  this
Agreement and the transactions contemplated hereby have been duly authorized  by
all  necessary  corporate  or other action on the part  of  the  Buyer,  do  not
contravene  or  cause  the  Buyer  to be in default  under  its  certificate  of
incorporation  or  by-laws, any contractual restrictions  to  which  it  or  its
property is subject, or any law, rule, regulation, order, writ, judgment, award,
injunction  or decree applicable to, binding on or affecting the  Buyer  or  its
property  (except where a failure to qualify to do business in a jurisdiction(s)
has no material adverse affect upon Seller or Buyer);

                (d)  This Agreement has been duly executed and delivered by  the
Buyer;

                (e)   No  approvals or consents of, notice to,  filing  with  or
licenses,  permits,  qualifications from or other  action  by  any  governmental
authority  or  any other party, is required or necessary for the due  execution,
delivery and performance by the Buyer of this Agreement;

               (f)  This Agreement is the legal, valid and binding obligation of
the  Buyer  enforceable against the Buyer in accordance with the  terms  hereof,
subject to any applicable bankruptcy, insolvency, reorganization, moratorium  or
other  similar  laws now or hereinafter in effect relating to or  affecting  the
enforceability of creditors' rights generally and equitable principles,  whether
applied in a proceeding at law or in equity;

               (g)  There is no pending, threatened nor any reasonable basis for
any,  action,  suit, or proceeding against or effecting Buyer  or  its  property
asserting the invalidity of this Agreement or seeking to prevent the performance
hereof; and

                (h)  These representations and warranties are made to induce the
Seller to sell Nova Beds and/or Enclosure Beds as herein provided.

           14.   Rights of Buyer.  Seller shall be in default if Seller  becomes
insolvent  or  files,  or  becomes the subject of an  involuntary  filing  of  a
petition which is not discharged with 60 days of such filing, under any  Chapter
of  the  United  States  Bankruptcy  Code, shall  fail  to  timely  perform  any
obligation hereunder or under the Consignment Agreement or any representation or
warranty  of  Seller  hereunder shall be or with the  passage  of  time  becomes
untrue.   In case of Seller's default and Seller's failure to cure said  default
within  15 days of notice from Buyer, Buyer may offset damages or costs incurred
because of such default against any amounts due and owing under the Grid Note.

           15.   Notices.  All notices and other communications provided for  in
this  Agreement  shall be in writing and mailed, certified or  registered  mail,
express mailed, or delivered as to each party at its address set forth above  or
at such other address as shall be designated by one party in a written notice to
the other party and deemed delivered upon receipt or refusal.  Whenever a notice
or  action is required hereunder within a certain number of "days" it  shall  be
deemed to mean calendar days unless otherwise specified.

           16.   Binding Effect Assignability.  This Agreement shall be  binding
upon  and  inure  to  the  benefit of each party  hereto  and  their  respective
successors  and assigns Seller shall not assign any of its rights or obligations
hereunder  without  the  prior written consent of the Buyer.   Buyer  shall  not

<PAGE>

assign any of its rights or obligations hereunder without Seller's prior written
consent which will not be unreasonably withheld, delayed or conditioned,  except
that  Seller's  consent  shall not be required for  Buyer's  assignment  to  any
affiliate,  subsidiary  or  parent of Buyer.  This Agreement  shall  create  and
constitute  the continuing obligations of the parties hereto in accordance  with
the  terms  hereof  and  shall  remain  in  full  force  and  effect  until  its
termination, except that the rights and remedies pursuant to paragraphs  11  and
14 shall be continuing and shall survive any termination of this Agreement.

          17.  Amendments.  Consents and Waivers.
                Entire Agreement.  No modification, amendment or waiver  of,  or
with  respect  to, any provision of this Agreement nor consent to any  departure
from  any of its terms and conditions, shall be effective unless it shall be  in
writing  and signed by both of the parties hereto.  Any waiver or consent  shall
be  effective  only  in the specific instance and for the specific  purpose  for
which  it was given.  No consent or waiver shall entitle any party to any  other
consent or waiver in similar or different circumstances.  This Agreement and the
exhibits  attached  hereto embodies the entire agreement  of  the  parties  with
respect  to  the  subject matter hereof and supersedes all prior agreements  and
understandings relating to the subject matter hereof.

           18.   Costs  and  Expenses.  In the event that  either  party  hereto
institutes legal action to enforce the provisions of this Agreement or the  Grid
Note, the non-prevailing party shall reimburse the prevailing party therein  for
all costs and expenses incurred in the enforcement of this Agreement or the Grid
Note,  including,  without limitation reasonable attorneys'  fees  and  expenses
incurred in such action.

           19.   Governing Law.  Consent to Jurisdiction.  Waiver             of
Jury  Trial.   This Agreement shall be governed by, and construed in  accordance
with, the law of the State of New York but without regard to the conflict of law
provisions  thereof.  The Buyer and Seller hereby submit to the jurisdiction  of
the  courts  of  the  State of New York, and the United States  District  Courts
located therein, in the County of Broome, and State of New York.  The Buyer  and
Seller  hereby  waive  any  objection based on Forum  Non  Conveniens,  and  any
objection  to  venue  of any action instituted hereunder.   The  parties  hereto
hereby  waive  any  right to have a jury participate in  resolving  any  dispute
arising  out  of,  connected  with, related  to,  or  in  connection  with  this
Agreement.  Instead, any dispute resolved in court will be resolved in  a  bench
trial without jury.

           20.  Descriptive Headings.  The headings of the various paragraphs of
this  Agreement are inserted for convenience of reference only and shall not  be
deemed to affect the meaning or construction of any provisions hereof.

           21.   Further Assurances.  Each party agrees to do such further  acts
and  things  and  to  execute and deliver such additional documents  as  may  be
required or deemed advisable to effectuate the purposes of this Agreement and to
better  assure  and  confirm  to each party its respective  rights,  powers  and
remedies hereunder.

           22.   Broker.  Seller and Buyer warrant and represent to  each  other
that  no broker or agent brought about this transaction and there have not  been
any  dealings  with  any  such  broker or agent  in  the  connection  with  this
Agreement,  except Rinfret & Co., LLC. (hereinafter called the "Broker").   Each
party  hereby agrees to indemnify, defend and hold the other harmless  from  and

<PAGE>

against  any  and  all  claims  for commissions  and  all  costs,  expenses  and
liabilities  in  connection therewith, including without  limitation,  attorneys
fees  and  expenses,  arising out of any conversations or  negotiations  had  by
either  party  with any broker other than Broker.  Seller will  pay  Broker  the
commission  earned by Broker in connection with this transaction pursuant  to  a
separate agreement between Seller and Broker.

          23.  Patents.  Seller shall pay all fees and other charges due for the
Patents as may be necessary to maintain or otherwise extend the Patents in  full
force  as  permitted by law.  Seller shall, at their expense, defend,  indemnify
and  hold  harmless,  from  and  against any and all  liabilities,  allegations,
claims,  causes  or  action, suits, or damages, for infringement  of  any  third
party's  patent,  trademark,  trade  dress, trade  secret,  copyright  or  other
intellectual property rights resulting from Licensee's manufacture,  use,  sale,
or  offer  to  sell products covered by any one or more of the  Patents.   These
obligations  shall  survive  the  expiration  or  earlier  termination  of  this
Agreement.   In  the  event Seller fails to perform its obligations  under  this
Section  Buyer shall have the right to bring and prosecute, any and all  actions
against  any third parties that Buyer believes to infringe any of the  exclusive
rights granted under the Patents.

           24.   Counterparts.  This Agreement may be executed in  one  or  more
counterparts.  All counterparts so executed when read together shall  constitute
an agreement, binding on all parties hereto.

      IN  WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above written.

                         SELLER:

                                   VIVAX MEDICAL CORPORATION

                                        By:  /s/ Stephen M. Fisher_
                              Stephen M. Fisher, President


                         BUYER:

                         MED SERVICES CORP.


                                        By:  /s/ Howard M. Rittberg
                              Howard M. Rittberg, Asst. Secretary


<PAGE>

                           EXHIBIT A

                           Nova Beds


               Serial #                      Serial #*

          1.   197                           147
          2.   142                           148
          3.   144                           149
          4.   115                           153
          5.   116                           156
          6.   117                           157
          7.   138                           158
          8.   139                           163
          9.   140                           169
          10.  146                           170
          11.  176                           171
          12.  182                           173
          13.  183                           175
          14.  185                           177
          15.  186                           178
          16.  187                           179
          17.  188                           180
          18.  190                           181
          19.  191                           111
          20.  193                           112
          21.  194                           114
          22.  195                           119
          23.  1047                          131
          24.  198                           132
          25.  199                           134

             * Rights limited to rental stream only

<PAGE>

                           EXHIBIT B

                         Enclosure Beds


               Serial #                      Serial #*

          1.   100                           STL
          2.   101                           23
          3.   102                           31
          4.   103                           32
          5.   104                           33
          6.   105                           36
          7.   106                           52
          8.   107                           50
          9.   108                           51
          10.  109                           59
          11.  110                           60
          12.  111                           61
          13.  112                           72
          14.  113                           45
          15.  114                           82
          16.  115                           84
          17.  116                           85
          18.  117                           86
          19.  118                           87
          20.  119                           77
          21.  120                           78
          22.  121                           90
          23.  122                           91
          24.  123                           89
          25.  124                           96


             * Rights limited to rental stream only

<PAGE>

                           EXHIBIT C

                         Form Grid Note


<PAGE>
                           EXHIBIT D

                          Bill of Sale

<PAGE>

                           SCHEDULE 1

                            Patents

<PAGE>

                           SCHEDULE 2

                           Litigation

<PAGE>

EXHIBIT 10(39)

                     DISTRIBUTION AGREEMENT


      Agreement  made  as of June 1, 1998 between MED SERVICES CORP.,  a  Nevada
corporation  having its principal place of business at 300 Plaza Drive,  Vestal,
New  York  ("MED") and VIVAX MEDICAL CORPORATION, having its principal place  of
business at 545 Middle Street, Bristol, Connecticut ("Vivax").

                            Recitals

      A.   MED is the owner of certain specialty medical beds known as Nova Beds
("Nova  Beds"), which are more particularly described and identified  by  serial
number in Exhibit "A" attached hereto and made a part hereof.

      B.   MED is also the owner of certain specialty medical beds known as Soma
Enclosure  Beds  ("Enclosure Beds"), which are more particularly  described  and
identified  by  serial number in Exhibit "B" attached hereto  and  made  a  part
hereof.

      C.    MED may in the future purchase additional Nova Beds and/or Enclosure
Beds  (each  of  the  Nova Beds and Enclosure Beds, whether presently  owned  or
subsequently  acquired by MED, are hereinafter sometimes referred to  singularly
as a "Unit" and collectively as "Units".)

      D.    Vivax  is  in  the business, among other things,  of  renting  Units
directly to customers that operate health care facilities or customers that rent
medical equipment to health care facilities ("Vivax System").

     E.   Vivax also provides Units to SpectraCair, a division of Mediq/PRN Life
Support  Services, Inc. ("Mediq") pursuant to a certain Rental  Agreement  dated
December  29,  1997 which Units are then rented to customers  of  Mediq  ("Mediq
System").

     F.   MED and Vivax have agreed to enter in to an agreement whereby MED will
provide  the  Units to Vivax and Vivax will either rent such Units  to  its  own
customers  in  the Vivax System ("Vivax Units") or provide some  such  Units  to
Mediq pursuant to the aforesaid Rental Agreement ("Mediq Units"), upon the terms
and conditions set forth in this Agreement.

     NOW THEREFORE, the parties agree as follows:

           1.    Term and Closing Date.  The term of this Agreement with respect
to  each conveyed Unit hereunder shall be sixty months from the respective  date
of the delivery of each such Unit to the Vivax hereunder.


<PAGE>

           2.    Delivery of Units.  On the date MED delivers funds with respect
to  a  particular  Unit  upon a closing under the Purchase  Agreement  ("Closing
Date")  MED shall deliver to Vivax the Units which it presently owns  and  which
are set forth in Exhibits "A" and "B" and shall thereafter deliver to Vivax such
additional  Units  as it shall acquire in accordance with that certain  Purchase
and  Sale  Agreement ("Purchase Agreement") between the parties,  of  even  date
herewith, subject to the terms of this Agreement.  After - acquired Units  shall
be  identified in the same manner and detail as those described in Exhibits  "A"
and  "B" when delivered to the Vivax.  This Agreement will be modified each time
Units are transferred to include such additional Units on Exhibits A and B.

           3.   Title to Units and Rental Proceeds.  MED shall at all times hold
and  retain  title to all of the Units delivered under this Agreement,  together
with  any  and all replacements thereof, and title to MED's share of the  rental
proceeds  for such Units as hereinafter provided shall also vest in  and  remain
the property of MED.

          4.   Labels.  Vivax shall, at its sole expense, affix and at all times
keep  affixed  in  a  readily locatable place on each Unit a  metal  placard  or
similar permanent stamp stating the serial number of the Unit and that such unit
is owned exclusively by Med.

           5.   Distribution and Rental of Nova Beds.  The first fifty Nova Beds
delivered hereunder and described in Exhibit "A" shall be rented by Vivax to its
customers  in  the Vivax System which customers are located in the  counties  of
Broward,  Palm  Beach  and Dade in the State of Florida.  Additional  Nova  Beds
subsequently acquired by MED and held hereunder shall be distributed  to  either
or  both  of the Vivax System or the Mediq System as Vivax shall determine  with
the approval of the MED at the time of the purchase of such Unit and subject  to
Section 8 hereof.  Vivax shall at all times be required to rent Nova Beds in the
Vivax or Mediq Systems at rental rates averaging not less than $85.00 per day or
$2,000.00 per month (if rented on a monthly basis.)  Such minimum average rental
rates may not be reduced without the prior written approval of MED.

          6.   Distribution and Rental of Enclosure Beds.  The first twenty-five
Enclosure  Beds  delivered  hereunder and described  in  Exhibit  "B"  shall  be
distributed to Mediq and rented through the Mediq System.  Additional  Enclosure
Beds  subsequently  acquired by MED shall be distributed  to  the  Vivax  System
and/or  the  Mediq  System as Vivax shall determine with the  approval  of  MED.
Vivax  shall be required to rent Enclosure Beds rented through either the  Vivax
System  or  the Mediq System at rental rates averaging not less then $40.00  per
day  or  $720.00 per month (if rented on a monthly basis).  Such minimum average
rental rates may not be reduced without the prior written approval of MED.

          7.   Division of Rental Proceeds.  With respect to Units (Nova Beds or
Enclosure  Beds) rented in the Vivax System, MED shall be entitled to  fifty-two
percent of the gross rental income received therefor.  With respect to Nova Beds
rented in the Mediq System, MED shall be entitled to thirty-seven percent of the
gross rental income received therefor.  With respect to Enclosure Beds rented in
the  Mediq  System,  MED shall be entitled to thirty-two percent  of  the  gross
rental income received therefor.  Rental proceeds shall be due on the first  day
of  the month following the Closing Date with respect to all of the Units  which
are  subject to this Agreement and are to be rented through the Vivax System  in
the  Counties of Broward, Palm Beach and Dade in the State of Florida or in  any
other fashion or location.

<PAGE>

           8.    Priority of Unit Rentals.  Vivax agrees that in the event Units
that are not owned by MED are utilized in either or both of the Vivax System  or
the  Mediq  System, all Units owned by MED shall be rented before any Units  not
owned  by MED are offered for rental, subject to said Units being available  for
rental  at the distribution site which services the geographical area  in  which
rentals are required.  Notwithstanding the above, the parties hereto agree  that
in  addition to the reports required under Section 9 hereof, Vivax shall provide
MED,  on  a continuing basis at the end of every six (6) month period commencing
with the date hereof, a report setting forth utilization and rental revenues  in
all  areas  in which Units are rented.  On or before fifteen (15) business  days
following  the receipt of the aforementioned report by MED if the Units  located
at  any distribution site(s) were utilized for rental during said six (6)  month
period  at  a rate which is materially below the utilization rate for  Units  at
another distribution site, MED may request that Vivax, at Vivax's option and  at
Vivax's sole cost and expense either (i) relocate all or a portion of said Units
to another distribution site with higher utilization rates or (ii) convey to MED
a  Unit located in the distribution site requested by MED in exchange for a Unit
designated by MED being conveyed to Vivax.

           9.    Records and Reports.  Vivax shall keep and maintain  books  and
records  in  form and content reasonably acceptable to MED, for the  purpose  of
documenting the assignment of Units to the Vivax System and/or the Mediq System,
for  monitoring  rentals  of Units within each system and  for  determining  the
amounts  charged  and  collected for all such rentals.  Vivax  shall  provide  a
written report to MED and Custodian, as hereinafter defined, on a monthly  basis
showing  the status of all Units by serial numbers, the location of  all  Units,
current  rentals of Units and accounts receivable attributable to the rental  of
Units ("Reports").

           10.   Custodial  Account.  Customers in the Vivax  System  and  Mediq
System, with respect to Units assigned to the Mediq System, shall be directed to
make  payments of the amounts due for rentals to Vivax and sent to Atlantic Bank
of  New  York  ("Custodian") at 960 Avenue of the Americas, New York,  New  York
10001  for deposit into a Custodial Account maintained by the Custodian pursuant
to  a Custody Agreement to be entered into among MED, Vivax and Custodian in the
form  attached  hereto  as Exhibit "C" ("Custodial Agreement").   The  Custodian
shall be sent the Report on a monthly basis and Custodian and/or MED shall  have
an  ongoing  right  to  audit the rental records of Vivax  and,  to  the  extent
available to or subject to the control of Vivax, the customers of Vivax  in  the
Vivax  System,  Mediq, and customers of Mediq in the Mediq System  to  determine
records of and verify the amounts to which MED and Vivax are entitled hereunder.
The  Custodian shall collect, deposit and disburse the rental proceeds collected
in  accordance with the applicable provisions of this Agreement and the  Custody
Agreement.  Title to all rental proceeds attributable to MED or Vivax  hereunder
shall  at all times remain in such party, and such proceeds in the hands of  the
Custodian, or if remitted to or collected by either Vivax or MED in error, shall
be trust monies held for the benefit of the other party as provided herein.  Any
proceeds  otherwise received by the Vivax or MED in error which are  subject  to
this  provision  shall be immediately remitted in kind to  the  Custodian.   MED
shall pay all fees of the Custodian.

<PAGE>

           11.   Replacements and Repairs. Maintenance.  Vivax is  obligated  to
replace and repair Units in accordance with the warranty provision contained  in
the  Purchase  Agreement  entered in to by the parties  on  even  date  herewith
("Purchase  Agreement").  Vivax hereby agrees to perform such warranty  services
within  ten calendar days from the time a Unit comes out of rental service.   In
addition  to  the  foregoing,  if a new model  of  Nova  Bed  or  Enclosure  Bed
incorporating material changes or manufactured in order to comply  with  changed
industry  standards  is  manufactured by Vivax, Vivax  shall  give  MED  written
notification of such change and MED may, at its option, require Vivax to replace
existing  Units with such new models as they become available, at  Vivax's  sole
cost  and expense but in any events Units will be replaced with new models where
required  by market demand to ensure compliance with Section 8 hereof.   At  the
time of any such replacement, Vivax shall supply MED with a bill of sale for any
such  Unit which shall include a description of the Unit, its serial number  and
location.  Units shall be maintained and serviced by Vivax at its sole  expense,
and on a timely basis to insure maximum availability of Units for rental.

           12.   Products Liability Insurance.  Vivax shall procure and maintain
products  liability insurance in form, amount, coverage and basis  and  with  an
insurer  reasonably  acceptable to MED.  Vivax will  deliver  to  MED  upon  the
execution  of this Agreement and from time to time upon request form MED  copies
of all policies or certificates of insurance with respect to such policies.  Any
such  policy  shall  name MED as an additional insured.   Such  insurance  shall
provide  that the same can not be cancelled without ten (10) days prior  written
notice to MED.

           13.   Risk and Insurance.  All risks of fire, theft or damage to  the
Units  shall be assumed by Vivax.  Vivax shall keep, or cause to be kept by  its
customers,  such Units fully insured, at the expense of Vivax or its  customers,
for  the benefit of and in the name of MED, covering such risks, in such amounts
and  with  such  issuers  as  shall be reasonably  satisfactory  to  MED.   Such
insurance shall provide that the same can not be cancelled without ten (10) days
prior written notice to MED and Atlantic Bank of New York.

           14.  Option to Purchase.  MED hereby grants Vivax options to purchase
Units  subject  to  this Agreement on the following terms  and  conditions.   An
option  to  purchase a particular Unit shall be exercisable only at twenty-four,
thirty-six  and  forty-eight month intervals from the date  of  acquisition  and
consignment of the particular Unit hereunder.  Any exercise of a given option on
a  particular Unit shall be made in writing no later than the fifth business day
after the twenty-fourth, thirty-sixth or forth-eighth month, as the case may be,
from  the date of acquisition of a particular Unit.  Prices for Nova Beds  shall
be as follows:

     Option                  Price Per Unit

Twenty-fourth month             $9,282.00
Thirty-sixth month               7,426.00
Forty-eighth month               5,569.00


Option prices for Enclosure Beds shall be as follows:


<PAGE>

     Option                  Price Per Unit

Twenty-fourth month             $2,139.00
Thirty-sixth month               1,711.00
Forty-eighth month               1,284.00


Payments for Units purchased hereunder shall be made, at the election of MED, in
cash  or  in Vivax restricted common stock.  (In lieu of cash payments, MED  may
elect  to have the amount of payment serve as an offset to and reduction of  the
amounts then due under the Grid Note as defined in the Purchase Agreement.)   In
the  event MED elects to receive payment in the form of Vivax common stock, such
stock  shall be valued at the lesser of $2.50 per share or the then market value
as  quoted  on  the  OTC Bulletin Board or such other system or  exchange  where
trading  of such common stick is reported or listed (the "Public Market Price").
Such stock shall be transferred to MED pursuant to the terms and conditions of a
Subscription  Agreement in the form of Exhibit "D" attached hereto  and  made  a
part hereof.

          15.  Disposition of Units at End of Term.

                A.    Commencing on the date occurring twenty four  (24)  months
from the date of this Agreement MED at any time thereafter shall have the option
to  sell all or any portion of the Units acquired by MED hereunder to Vivax  for
the  depreciated  value of such Units as calculated in Section  14  above.   The
payments  due  to MED from Vivax hereunder shall be made in the  form  of  Vivax
common  stock at a price $5.00 per share irrespective of the then Public  Market
Price.   Such  stock  shall  be transferred to MED pursuant  to  the  terms  and
conditions  of  a  Subscription Agreement in the form of  Exhibit  "D"  attached
hereto and made a part hereof.

                B.    At  the  conclusion  of sixty  months  from  the  date  of
acquisition of a particular Unit subject to this Agreement, MED shall  sell  and
Vivax  shall  purchase such Unit at a price of $3,713.00  for  a  Nova  Bed  and
$856.00 for an Enclosure Bed.  Such purchase shall be closed within thirty  days
from the expiration of the sixty-month term.  (Payments may, at the election  of
MED,  take  the form of an offset to and reduction of the amounts, if any,  then
due  for  such Units under the Grid Note.)  At the time of the sale of the  last
Unit  subject  to this Agreement pursuant to this paragraph, MED shall  pay  the
remaining balance of principal and accrued interest, if any, on the Grid Note.

          16.  Extension of Term.  In the event that Vivax fails to purchase any
Unit  or  Units pursuant to paragraph 15 hereof, this Agreement shall remain  in
full  force  and effect with respect to such Unit or Units for a  period  of  12
months thereafter upon the same terms and conditions, except, the purchase price
for such Units under Paragraph 15 shall be $1.00 for each Nova Bed and $1.00 for
each Enclosure Bed exercisable only at the end of such 12 month period.

           17.   Inspection.  MED and the Custody Agent shall have the right  to
inspect  the  Units, and any books and records relating thereto.  MED  shall  be
permitted  to enter distribution facilities or any other location where  records
are maintained for such inspections at any time during normal business hours  to

<PAGE>

the extent the same are within Vivax's control.


          18.  Financing Statements.

                A.   Vivax shall sign and deliver to MED such Uniform Commercial
Code Financing and Continuation Statements, in form satisfactory to MED, as  MED
may  from time to time reasonably request.  In addition MED is hereby authorized
to  sign  and  file  such  financing  and continuation  statements  without  the
signature  of  the  Vivax.   MED may, at its sole expense,  execute,  file  such
statements  in  such filing offices as MED shall deem necessary or  appropriate.
Such filings shall be precautionary only.  Title to the Units and MED's share of
the  rental proceeds thereof, shall remain in MED as provided herein,  and  this
Agreement shall not be in any event as an agreement for security purposes.

                B.    Vivax  shall  promptly file UCC  financing  statements  or
continuation  statements (i) naming as debtor, any distributor or  consignee  in
possession  of  the Units, including but not limited to, SpectraCair  and  Vivax
Medical Services, Inc. and (ii) in each and every state and county in which  the
Units shall be located.

           19.   Indemnity.  Vivax shall indemnify, defend and hold MED harmless
from  and  against  any and all losses, damages, liabilities, expenses,  claims,
suits,  actions,  or causes of action, including without limitation,  reasonable
attorneys'  fees, arising from any damage to persons or property resulting  from
the  distribution, rental and/or use, and maintenance, repair and saving, of the
Units,  including, without limitation, any products liability  claim  made  with
respect to any of the Units.

           20.   Opinion of Legal Counsel.  Upon the execution of this Agreement
Vivax  shall  provide  MED  and Custody Agent with a written  opinion  of  legal
counsel  to the Vivax in form reasonably acceptable to Custody Agent  and  MED's
legal counsel.

           21.   Representations  and Warranties of  MED.   MED  represents  and
warrants to the Vivax that:

           (a)  The MED is a corporation duly organized, validly existing and in
good  standing under the laws of its jurisdiction of incorporation and  is  duly
qualified to do business and is in good standing in every jurisdiction in  which
the  nature  of  its  business requires it to be so qualified  (except  where  a
failure  to qualify to do business in a jurisdiction(s) has no material  adverse
impact on MED or Vivax);

           (b)   MED has the corporate power and authority to consign the  Units
pursuant to this Agreement, to execute and deliver this Agreement and to perform
the transactions required hereby;

           (c)  The execution, delivery and performance by MED of this Agreement
and  the  transactions  contemplated hereby have been  duly  authorized  by  all
necessary corporate or other action on the part of the MED, do not contravene or
cause  the  MED to be in default under its certificate of incorporation  or  by-
laws, any contractual restriction to which it or its property is subject, or any
law,  rule,  regulation,  order, writ, judgment,  award,  injunction  or  decree

<PAGE>

applicable  to,  binding on or affecting the MED or its property  (except  where
such default has no material adverse impact on MED or Vivax);

          (d)  This Agreement has been duly executed and delivered by the MED;

          (e)  No approvals or consents of, notice to, filings with or licenses,
permits  or qualifications from, or other actions by any governmental  authority
or any other party, is required or necessary for the due execution, delivery and
performance by the MED of this Agreement;

           (f)  This Agreement is the legal, valid and binding obligation of the
MED enforceable against the MED in accordance with the terms hereof, subject  to
any  applicable  bankruptcy,  insolvency, reorganization,  moratorium  or  other
similar  laws  now  or  hereafter  in  effect  relating  to  or  affecting   the
enforceability of creditors' rights generally and equitable principles,  whether
applied in a proceeding at law or in equity;

           (g)   There is no pending, threatened, nor any reasonable  basis  for
any,  action,  suit  or  proceeding against or affecting  MED  or  its  property
asserting the invalidity of this Agreement or seeking to prevent the performance
hereof;

          (h)  These representations and warranties are made to induce the Vivax
to enter in to this Agreement.

           22.   Representations and Warranties of Vivax.  Vivax represents  and
warrants to MED that:

           (a)  The Vivax is a corporation duly organized, validly existing  and
in good standing under the laws of its jurisdiction of incorporation and is duly
qualified to do business and is in good standing in every jurisdiction in  which
the  nature  of  its  business requires it to be so qualified  (except  where  a
failure  to qualify to do business in a jurisdiction(s) has no material  adverse
impact on MED or Vivax);

          (b)  Vivax has the corporate power and authority to accept consignment
of  the  Units pursuant to this Agreement, to execute and deliver this Agreement
and to perform the transactions required hereby;

           (c)   The  execution,  delivery  and performance  by  Vivax  of  this
Agreement and the transactions contemplated hereby have been duly authorized  by
all  necessary  corporate  or other action on the part  of  the  Vivax,  do  not
contravene  or  cause  the  Vivax  to be in default  under  its  certificate  of
incorporation  or  by-laws,  any contractual restriction  to  which  it  or  its
property is subject, or any law, rule, regulation, order, writ, judgment, award,
injunction  or decree applicable to, binding on or affecting the  Vivax  or  its
property  (except where a failure to qualify to do business in a jurisdiction(s)
has no material adverse impact on MED or Vivax);

          (d)  This Agreement has been duly executed and delivered by the Vivax;

<PAGE>

          (e)  No approvals or consents of, notice to, filings with or licenses,
permits  or qualifications from, or other actions by any governmental  authority
or  any other party except such as have been obtained or waived, is required  or
necessary for the due execution, delivery and performance by the Vivax  of  this
Agreement;

           (f)  This Agreement is the legal, valid and binding obligation of the
Vivax enforceable against the Vivax in accordance with the terms hereof, subject
to  any  applicable bankruptcy, insolvency, reorganization, moratorium or  other
similar  laws  now  or  hereafter  in  effect  relating  to  or  affecting   the
enforceability of creditors' rights generally and equitable principles,  whether
applied in a proceeding at law or in equity;

           (g)   There is no pending, threatened, nor any reasonable  basis  for
any,  action,  suit  or proceeding against or affecting Vivax  or  its  property
asserting the invalidity of this Agreement or seeking to prevent the performance
hereof except as set forth in Schedule 1 attached hereto;

          (h)  These representations and warranties are made to induce the Vivax
to enter in to this Agreement.

           23.   Rights  of MED.  Vivax shall be in default if Vivax  files,  or
becomes  the  subject  of  an involuntary filing of  a  petition  which  is  not
discharged within 60 days of such filing, under any Chapter of the United States
Bankruptcy Code, shall fail to timely perform any obligation hereunder or  under
the  Purchase  Agreement or any representation or warranty  of  Vivax  hereunder
shall be untrue.  In case of Vivax's default, after written notice from MED  and
the  failure  of  Vivax to cure within thirty days of such  notice  or  if  said
default  cannot be cured within a thirty day period Vivax's failure to  commence
to  cure within thirty days and to complete said cure within a reasonable period
of  time,  MED  may cancel this Agreement, repossess Units in the possession  of
Vivax, customers of Vivax, Mediq, or of customers of Mediq offset any damages or
costs  incurred because of such default against any amounts due and owing  under
the  Grid Note and MED's obligations to Vivax under this Agreement shall  become
null, void and of no effect.

           24.   Notices.  All notices and other communications provided for  in
this  Agreement  shall be in writing and mailed certified  mail  return  receipt
requested,  express  mailed, or delivered as to each party at  its  address  set
forth  above or at such other address as shall be designated by one party  in  a
written  notice to the other party and deemed delivered upon receipt or refusal.
Whenever  a  notice or action is required hereunder within a certain  number  of
"days" it shall be deemed to mean calendar days unless otherwise specified.

           25.  Binding Effect.  Assignability.  This Agreement shall be binding
upon  and  inure  to  the  benefit of each party  hereto  and  their  respective
successors and assigns, except that the Vivax shall not assign any of its rights
hereunder  without the prior written consent of the MED.  MED shall  not  assign
any  of  its  rights  or  obligations hereunder without  Vivax's  prior  written
consent, which will not be unreasonably withheld, delayed or conditioned, except
that  Vivax's  Consent  shall  not  be required  for  MED's  assignment  to  any
affiliate,  subsidiary  or  parent  of MED.  This  Agreement  shall  create  and
constitute  the continuing obligations of the parties hereto in accordance  with
the  terms  hereof  and  shall  remain  in  full  force  and  effect  until  its
termination, except that the rights and remedies pursuant to paragraphs 10,  12,

<PAGE>

13,  19, 22 and 27 shall be continuing and shall survive any termination of this
Agreement.

           26.   Amendments.   Consents  and  Waivers.   Entire  Agreement.   No
modification, amendment or waiver of, or with respect to, any provision of  this
Agreement  nor  consent to any departure from any of its terms  and  conditions,
shall  be  effective unless it shall be in writing and signed  by  both  of  the
parties  hereto.  Any waiver or consent shall be effective only in the  specific
instance  and  for the specific purpose for which it was given.  No  consent  or
waiver  shall  entitle any party to any other consent or waiver  in  similar  or
different  circumstances.  This Agreement embodies the entire agreement  of  the
parties  with  respect  to the subject matter hereof and  supersedes  all  prior
agreements and understandings relating to the subject matter hereof.

           27.   Costs  and  Expenses.  In the event that  either  party  hereto
institutes  legal action to enforce the provisions of this Agreement,  the  non-
prevailing party shall reimburse the prevailing party therein for all costs  and
expenses  incurred  in  the  enforcement of this Agreement,  including,  without
limitation reasonable attorneys' fees and expenses incurred in such action.

           28.   Governing Law.  Consent to Jurisdiction.  Waiver             of
Jury  Trial.   This Agreement shall be governed by, and construed in  accordance
with, the law of the State of New York but without regard to the conflict of law
provisions thereof.  The Vivax hereby submits to the jurisdiction of the  courts
of  the  State of New York, and the United States District Courts, in the County
of  Broome, and State of New York.  The Vivax hereby waives any objection  based
on  Forum  Non  Conveniens, and any objection to venue of any action  instituted
hereunder.  The parties hereto hereby waive any right to have a jury participate
in resolving any dispute arising out of,
connected with, related to, or in connection with this Agreement.  Instead,  any
dispute resolved in court will be resolved in a bench trial without jury.

           29.  Descriptive Headings.  The headings of the various paragraphs of
this  Agreement are inserted for convenience of reference only and shall not  be
deemed to affect the meaning or construction of any provisions hereof.

           30.   Further Assurances.  Each party agrees to do such further  acts
and  things  and  to  execute and deliver such additional documents  as  may  be
required or deemed advisable to effectuate the purposes of this Agreement and to
better  assure  and  confirm  to each party its respective  rights,  powers  and
remedies hereunder.

          31.  No Partnership or Joint Venture.  Nothing in this Agreement shall
be  construed to make the parties hereto partners or joint venturers  or  render
any of said parties liable for the debts or obligations of the other.

           32.   Right  to  Pledge.  Notwithstanding anything  to  the  contrary
contained herein, MED shall have the right to grant a security interest  in  all
or  any  portion of the Units.  Vivax agrees, at MED's request, to execute  such
agreements,  in  the form requested by such holder, as may be  required  by  the
holder  of a security interest in the Units, expressly recognizing the  priority
of such security interest over any right Vivax may have to the Units, except the
rights set forth in Paragraphs 7 and 14 herein.

<PAGE>

          33.  Full Force and Effect.   Within ten (10) days of MED's receipt of
written  request by MED, from time to time, Vivax shall deliver to MED or  MED's
lender,  a  duly  executed  and acknowledged instrument,  certifying  that  this
Agreement  and the Purchase and Sale Agreement are in full force and effect  and
that no default exists under either aforementioned agreement.

           34.   Counterparts.  This Agreement may be executed in  one  or  more
counterparts.  All counterparts so executed when read together shall  constitute
one agreement, binding on all parties hereto.

      IN  WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above written.


                         MED SERVICES CORP.

                              By:  /s/ Howard M. Rittberg
                              Howard M. Rittberg, Asst. Secretary

                         VIVAX MEDICAL CORPORATION

                              By:  /s/ Stephen M. Fisher______
                              Stephen M. Fisher, President

<PAGE>

                           Exhibit A

                           Nova Beds


<PAGE>
                           Exhibit B

                         Enclosure Beds

<PAGE>

                           Exhibit C

                       Custody Agreement


<PAGE>
                           Exhibit D

                     Subscription Agreement

<PAGE>

EXHIBIT 10(40)

REVOLVING LINE OF CREDIT GRID PROMISSORY NOTE

New York, New York                                     $1,000,000
                                                   August 7, 1998

                     A.  TERMS OF PAYMENT

     1.    FOR  VALUE  RECEIVED, on August 7, 1998 (the  "Maturity  Date"),  Med
Services  Corp.,  a corporation formed under the laws of the  State  of  Nevada,
("Borrower")  promises to pay to the order of ATLANTIC BANK  OF  NEW  YORK  (the
"Bank") at its offices at 960 Avenue of the Americas, New York, New York, or  at
such  other place as the Bank may designate in writing, the lesser of:  (a)  the
principal  sum  of  One Million and 00/100 Dollars ($1,000,000)  (the  "Line  of
Credit"), or (b) the aggregate unpaid principal sum of all loans ("Loans")  made
by  the Bank,  which Loans may be made in the Bank's sole discretion, under this
Revolving  Line of Credit Grid Promissory Note (the "Note") from time  to  time.
Within  the limits of the Line of Credit and subject to the terms and conditions
of  this  Note, including, but not limited to, mandatory prepayment pursuant  to
Section  13A hereof, Borrower may borrow, prepay and reborrow funds  under  this
Note.

     2.    Interest.   (a)   Borrower will pay interest on the unpaid  principal
amount  of all Loans from time to time outstanding, computed on the basis  of  a
360-day year (the charging of interest on the basis of a 360-day year results in
the payment of more interest than would be required if interest were charged  on
the  basis of the actual number of days in the year), at a rate per annum  which
shall  be  equal  to  two percent (2.0%) per annum above the  rate  of  interest
designated  by  the  Bank, and in effect from time to time,  as  its  "Benchmark
Rate,"1   adjusted   as  and  when  said  Benchmark  Rate  changes.    (Borrower
acknowledges  that the Benchmark Rate may not necessarily represent  the  lowest
rate of interest charged by the Bank to its customers.)

          (b)   Borrower will pay interest, at the rate described above, monthly
on the first day of each month in each year, commencing immediately, at maturity
(whether by acceleration or otherwise) and upon the making of any prepayment, as
hereinafter  provided.  In addition, Borrower will pay interest on  any  overdue
installment of principal for the period for which it is overdue, on demand, at a
rate  equal  to  3% per annum above the rate of interest hereinabove  indicated.
All payments, including insufficient payments, shall be credited, regardless  of
their  designation  by  Borrower, first to outstanding  late  charges,  then  to
interest and the remainder, if any, to principal.

            (c)  All  payment obligations arising under this Note and any  other
documents executed pursuant hereto, are subject to the express condition that at
no  time shall Borrower be obligated or required to pay interest at a rate which
could  subject  the Bank to either civil or criminal liability as  a  result  of
being  in  excess  of  the maximum rate which Borrower is permitted  by  law  to
contract  or  agree  to pay.  If by the terms of this Note, or  other  documents

<PAGE>

executed pursuant hereto, Borrower is at any time required or obligated  to  pay
interest  at  a  rate  in excess of such maximum rate, the  applicable  rate  of
interest  shall  be deemed to be immediately reduced to such maximum  rate,  and
interest thus payable shall be computed at such maximum rate, and the portion of
all prior interest payments in excess of such maximum rate shall be applied and
shall be deemed to have been payments in reduction of principal.

     3.    Maximum Borrowing.  Notwithstanding anything to the contrary in  this
Note, the principal amount of all Loans hereunder shall not exceed sixty percent
(60%)  of the purchase price to be paid by Borrower with respect to each of  the
Beds  (hereinafter  defined) purchased from Vivax Medical Corporation  ("Vivax")
pursuant to the Vivax Purchase Agreement (hereinafter defined).  The proceeds of
each  of  the  Loans,  after  satisfaction of  the  Existing  Note  (hereinafter
defined),  shall be used exclusively for the purchase by Borrower of  Beds  from
Vivax pursuant to the Vivax Purchase Agreement.

      4.    No  Obligation to Extend Credit.  Notwithstanding any terms in  this
Note  to  the contrary, the enumeration in this Note of specific obligations  of
Borrower  to the Bank and/or conditions to the availability of funds under  this
Note  shall  not be construed to qualify, define, or otherwise limit the  Bank's
right, power, or ability, at any time, under applicable law, to decline to  make
Loans  to  Borrower  under this Note.  Borrower agrees that  its  breach  of  or
default  under  any such enumerated obligations or conditions is  not  the  only
basis upon which the Bank may refuse to extend credit under this Note.

     5.    Use Of Grid.  (a)  The Bank is hereby authorized by Borrower to enter
and record on the schedule attached hereto (or any similar record maintained  by
the  Bank)  the amount of each Loan made under this Note, and each  payment  and
prepayment of principal thereon without any further authorization on the part of
Borrower  or  any endorser of this Note.  The entry of a Loan on  said  schedule
shall  be  prima  facie  and presumptive evidence of the entered  item  and  its
conditions.   The Bank's failure to make an entry, however, shall not  limit  or
otherwise affect the obligations of Borrower or any endorser of this  Note.   At
its  option, Borrower may make prepayments of principal hereof, in whole  or  in
part, at any time, without penalty or premium, provided that on the date of each
such  prepayment Borrower shall pay all then accrued and unpaid interest on  the
principal amount hereof.

          (b)    Subject  to  extension in writing, all  Loans  not  theretofore
accelerated shall mature on the original Maturity Date of August  6, 1999.

     6.    Security Interest In Property.  All Property (as hereinafter defined)
held by the Bank shall be subject to a security interest in favor of the Bank as
security  for any and all Liabilities (as hereinafter defined) and  as  security
for  such Liabilities, Borrower hereby grants to the Bank a continuing perfected
interest on and security interest in, and hereby pledges and assigns to the Bank
all  of  Borrower's  right title and interest, whether now  owned  or  hereafter
acquired, howsoever arising, in and to the Property.  The term "Property"  shall
mean  the balance of every deposit account of Borrower with the Bank or  any  of
the  Bank's nominees or agents and all other obligations of the Bank or  any  of
its  nominees or agents to Borrower, whether now existing or hereafter  arising,
and  all  other personal property of Borrower (including without limitation  all
money, accounts, general intangibles, goods, instruments, documents, and chattel
paper)  which, or evidence of which, are now or at any time in the future  shall
come into the possession or under the control of or be in transit to the Bank or
any  of its nominees or agents for any purpose, whether or not accepted for  the
purposes for which it was delivered and any and all proceeds, howsoever arising,

<PAGE>

of  the  property  described  herein.  The term  "Liabilities"  shall  mean  the
indebtedness evidenced by this Note and all other indebtedness, liabilities  and
obligations of any kind of Borrower (or any partnership or other group of  which
Borrower  is  a member) to (a) the Bank, (b) any group of which the  Bank  is  a
member,  or  (c)  any other person or entity if the Bank has a participation  or
other interest in such indebtedness, liabilities or obligations, whether (i) for
the  Bank's  own  account  or  as agent for others, (ii)  acquired  directly  or
indirectly  by  the Bank from Borrower or others, (iii) absolute or  contingent,
joint  or several, secured or unsecured, liquidated or unliquidated, due or  not
due,  contractual  or  tortious,  now existing or  hereafter  arising,  or  (iv)
incurred by Borrower as principal, surety, endorser, guarantor or otherwise, and
including  without  limitation,  all expenses,  including  attorneys'  fees  and
disbursements,  incurred by the Bank in connection with any  such  indebtedness,
liabilities,  or obligations with respect to any of the Property (including  any
sale or other disposition of any Property).

     7.    Account  Debits, Etc.  Borrower and any endorser of this Note  hereby
authorize  (but shall not require) the Bank to debit any account  maintained  by
Borrower  or  any  such  endorser with the Bank (including,  without  limitation
Account  No.  01224174)  at any date on which any payments,  including,  without
limitation, any payment of principal, interest or fees are due under this  Note,
in  an  amount equal to any unpaid portion of such payment.  If any  payment  of
principal, interest or fees becomes due on a day on which the Bank is closed (as
required or permitted by law or otherwise), such payment shall be made not later
than  the next succeeding business day, and such extension shall be included  in
computing interest in connection with such payment.  All payments by Borrower or
any  endorser  of this Note on account of principal, interest or fees  hereunder
shall  be  made in lawful money of the United States of America, in  immediately
available funds.

     8.    Use  Of  Proceeds.  Borrower shall use the proceeds of the  loans  to
immediately  pay the Bank all obligations owed by Borrower to the Bank  under  a
certain  promissory note dated June 17, 1998 in the principal  sum  of  $450,000
(the  "Existing  Note").   Borrower will not, directly or  indirectly,  use  any
proceeds of Loans hereunder for the purpose of purchasing or carrying any margin
stock  within  the  meaning of Regulation U of the Board  of  Governors  of  the
Federal  Reserve  System or to extend credit to any person for  the  purpose  of
purchasing or carrying any such margin stock, or for any purpose which violates,
or is inconsistent with, Regulation X of such Board of Governors.
     
               B.  REPRESENTATIONS AND WARRANTIES

     9.   Borrower represents and warrants to the Bank that:

          (a)  Borrower is a corporation duly incorporated and validly existing,
under the laws of the jurisdiction of its incorporation, has the corporate power
and  authority to own its assets and to transact the business in which it is now
engaged  or  proposes to be engaged, is duly qualified as a foreign  corporation
and  is in good standing under the laws of each other jurisdiction in which such
qualification is required.

            (b)   Borrower has full power and authority to execute  and  deliver
this Note, to borrow funds hereunder, and to incur  the obligations provided for
in this Note, all of which have been duly authorized by all proper and necessary
corporate  action.   No consent or approval of any person or entity,  including,

<PAGE>

without  limitation,  any  of  Borrower's  stockholders  or  creditors,  or  any
governmental or administrative authority, instrumentality, or agency is required
as a condition to the validity of this Note.

          (c)   This Note is the legal, valid and binding obligation of Borrower
enforceable against Borrower in accordance with its terms.

          (d)   No  certificate,  information, exhibit, or report  furnished  by
Borrower  to  the  Bank  in  connection with this  Note  contains  any  material
misstatement of fact or omits to state a material fact or any fact necessary  to
make the statement contained therein not materially misleading.

          (e)   Borrower  is  not  in  default in any material  respect  in  the
performance, observance or fulfillment of any of the obligations, covenants,  or
conditions  contained in any material agreement or instrument  material  to  its
business to which it is a party or by which it or its property may be bound.

          (f) There is no pending or threatened action or proceeding against  or
affecting  Borrower before any court, governmental agency, or  arbitrator  which
may,  in  any one case or in the aggregate, materially and adversely affect  the
financial  condition, operations, prospects, property, or business of  Borrower,
or the ability of Borrower to perform its obligations under this Note.

          (g) One hundred percent (100%) of the issued and outstanding shares of
Borrower is owned by Jayark Corporation, Inc. ("Jayark").

          (h) No Subsidiary (hereinafter defined) of Borrower exists on the date
hereof and Borrower shall not in any way create a Subsidiary without the written
consent of the Bank.

          (i)  No debts, guarantees, liens or contractual agreements of any kind
between  or among Borrower, Jayark, Vivax, Vivax Medical Services, Inc.  ("Vivax
Services") or Mediq (hereinafter defined) exist with respect to Beds except for:
(a) this Note, (b) the Security Agreement dated the date hereof between Borrower
and  the Bank (the "Security Agreement"), (c) the Vivax Purchase Agreement;  (d)
the  Vivax  Distribution Agreement (hereinafter defined); (e) the Vivax  Custody
Agreement  (hereinafter  defined);  (f) the Consignment/Rental  Agreement  dated
December 29, 1997 by and between Vivax and SpectraCair, a division of Mediq; and
(g)  the  letter agreement dated June 17, 1998 between Jayark and Vivax pursuant
to which Vivax has engaged Jayark as a private placement agent.

                   C.  AFFIRMATIVE COVENANTS

     10.   (a)  So long as this Note remains unpaid in whole or in part, or  the
Line  of  Credit shall remain in effect, Borrower shall furnish to the Bank,  or
cause to be furnished to the Bank, at Borrower's expense:
               
                 (i)   (A)  annual  audited financial statements  for  Borrower,
Jayark,  Vivax,  and  Vivax  Services prepared by independent  certified  public
accountants   selected   by  Borrower,  Jayark,  Vivax,   and   Vivax   Services
respectively, and satisfactory to the Bank, (B) if  not included in such audited
statements,  consolidated or consolidating disclosure statements for  such  year
prepared  by management, all within 120 days after the end of each fiscal  year,

<PAGE>

all of which financial statements shall be prepared in accordance with generally
accepted  accounting principles in the United States as in effect from  time  to
time  ("GAAP"), applied consistently with prior practices, and shall  include  a
balance  sheet,  a  statement of operations, a statement of  cash  flows  and  a
statement of changes in shareholders' equity; and (C) a certificate, at the time
of  delivery  of  the  annual  financial statements,  by  the  certified  public
accountants that the Borrower is not in default of any obligations;

               (ii)  within  45  days  after the end  of  each  fiscal  quarter,
quarterly  financial statements for Borrower, Jayark, Vivax and Vivax  Services,
prepared  by  management,  which  financial  statements  shall  be  prepared  in
accordance  with  GAAP,  applied consistently with  prior  practices  and  shall
include  a balance sheet, statement of operation, a statement of cash  flows,  a
statement of change in shareholders' equity, and a certificate stating that each
such entity is not in default of any obligations.  All such financial statements
of the Borrower and Jayark shall be signed by David Koffman;

               (iii)    an aging of the accounts payable and accounts receivable
of  Borrower  (in a format satisfactory to the Bank), within 10 days  after  the
close of each calendar month and at any other time when the same is provided  to
any  other person, such aging to include receivables including, but not  limited
to, all amounts due from Vivax under a certain Distribution Agreement dated June
1, 1998 between Borrower and Vivax (the "Vivax Distribution Agreement"), and any
allowance for doubtful accounts;

               (iv)   within  10  days of the close of each  calendar  month,  a
schedule   (each  a  "Collateral  Status  Schedule"),  in  form  and   substance
satisfactory   to   the  Bank  and  including,  without   limitation:   (A)   an
identification  of  each  item of the Collateral (as  defined  in  the  Security
Agreement)  owned  by Borrower and distributed by Vivax pursuant  to  the  Vivax
Distribution Agreement, including, without limitation, the physical location  of
each  item  of such Collateral, any lease or sublease concerning same,  and  for
each such lease or sublease the name and address of the lessee or sublessee, and
the period covered by such lease or sublease, and (B) the payment terms for each
such  lease or sublease and lease and sublease billings to date, and (C) amounts
due  Vivax  and Borrower with respect to each lease with respect  to  the  Beds.
Each  such  monthly  Collateral Status Schedule shall be  certified  by  a  duly
authorized officer of Borrower and Vivax as being true, correct and complete;

               (vii)  promptly after the filing thereof each year, copies of all
federal and state income tax returns of Borrower and Jayark;

               (viii) promptly after the entry thereof, a report of any judgment
against Borrower; and

               (ix)      promptly  after  a  request by  the  Bank,  such  other
financial   statements  and  information  concerning  the  business  operations,
properties  and conditions, financial or otherwise, of Borrower, Jayark,  Vivax,
and Vivax Services, as the Bank may reasonably request from time to time.

            (b)   Borrower and Vivax shall each at all times maintain  insurance
with  responsible  and  reputable insurance companies or  associations  in  such
amounts  and covering such risks as is usually carried by companies  engaged  in
similar  businesses and owning similar properties in the same general  areas  in

<PAGE>

which  Borrower operates, which insurance shall comply with Section  11  of  the
Security Agreement.

          (c)   Borrower  shall at any reasonable time and from  time  to  time,
permit the Bank or any of its agents or representatives to examine and copy  its
records  and  books of accounts, visit its properties and discuss  its  affairs,
finances  and  accounts  with  any  of its officers,  directors  or  independent
accountants.

          (d)   Borrower shall preserve and maintain its corporate existence and
good  standing  in  the jurisdiction of incorporation of such  corporation,  and
qualify  and remain qualified, as a foreign corporation in each jurisdiction  in
which such qualification is required.

          (e)   Borrower shall comply in all material respects with all material
contracts  to  which  it  is  a  party  and with  all  applicable  laws,  rules,
regulations, and orders, such compliance to include, without limitation,  paying
before  the  same  become  delinquent all taxes, assessments,  and  governmental
charges imposed upon it and its property.

          (f)   Borrower shall promptly notify the Bank of any of the following:
(i) any proceeding being instituted or threatened to be instituted by or against
Borrower  or, to the extent Borrower has actual knowledge, against Vivax,  Vivax
Services, Mediq, or any lessee or sublessee of the Beds, in any federal,  state,
local  or  foreign  court  or before any commission  or  other  regulatory  body
(federal,  state, local or foreign), (ii) any order, judgment  or  decree  being
entered  against  Borrower  or,  to the extent Borrower  has  actual  knowledge,
against  Vivax, Vivax Services, Mediq, or any lessee or sublessee of  the  Beds,
or  any  of  their  property or assets, (iii) any actual or prospective  change,
development  or event which has had or could reasonably be expected  to  have  a
material adverse effect, on the affairs or condition (financial or otherwise) of
Borrower  or,  to  the  extent Borrower has actual knowledge,  of  Vivax,  Vivax
Services,  Mediq, or any lessee or sublessee of the Beds, or (iv) the occurrence
of a default or Event of Default hereunder.

          (g)  Borrower shall take all such further actions and execute all such
further  documents  and  instruments as the Bank  may  at  any  time  reasonably
determine,  in  its  sole discretion, to be necessary or  desirable  to  further
inform  the  Bank  or  to  further  or  better  carry  out  and  consummate  the
transactions contemplated by this Note and the other documents, instruments  and
agreements executed or delivered in connection herewith.  If the Bank  requests,
Borrower  shall cause any Subsidiary created hereafter to become  a  co-borrower
hereunder or a guarantor of this Note, and to pledge any collateral required  by
the Bank to secure such Subsidiary's obligations, all pursuant to a guaranty  in
form  acceptable to the Bank and other documentation substantially the  same  as
this  Note,  the Security Agreement and the other documents made  in  connection
herewith and reasonably acceptable to the Bank.

           (h)  All  proceeds of the Loans, after satisfaction of the  Existing
Note,  shall  be  used  exclusively  for the  purchase  of  "Nova  Beds"  and/or
"Enclosure  Beds" from Vivax, pursuant to a certain Purchase and Sale  Agreement
dated as of June 1, 1998 (the "Vivax Purchase Agreement") [the terms "Nova Beds"
and  "Enclosure Beds" are defined in the Vivax Purchase Agreement, and shall  be
collectively referred to as the "Beds"].

 <PAGE>

          (i)   Borrower shall maintain all of its savings and checking accounts
at the Bank.

          (j)   Borrower shall, at its sole expense, cause labels or a permanent
stamp  to be permanently affixed to each of the Beds, which label or stamp shall
clearly indicate that such Bed is "Exclusively Owned By Med Services Corp."  and
indicating Borrower's business address.

          (k)   Borrower  shall not permit Vivax, Vivax Services, Mediq  or  any
other person or entity to enter into any lease or agreement with respect to  the
Beds,  unless:  (i)  with respect to Beds distributed by Vivax,  such  lease  or
agreement  is substantially in the form of Exhibit 1 to the Security  Agreement,
or,  with  respect  to  Beds distributed by Mediq, such lease  or  agreement  is
substantially  in  the  form of Exhibit 2 to the Security  Agreement;  and  (ii)
Borrower and Vivax each files a Uniform Commercial Code financing statement with
respect to such Beds in every state and county where the Beds are located.

          (l)   Borrower  shall  not permit Vivax or Mediq  to  have  rented  an
aggregate  of  greater than 5% of the Beds at any one time directly  to  natural
persons.

     11.   In addition to the above affirmative covenants, so long as this  Note
remains  unpaid  or the Line of Credit shall remain in effect,  Borrower  agrees
that  it shall  at Borrower's sole expense, permit the Bank to, at any time  and
from  time  to  time,   retain and employ the services  of  a  certified  public
accountant selected by the Bank, to conduct a field audit of Borrower's accounts
receivable or rights under the Vivax Distribution Agreement, if deemed necessary
by the Bank.

                     D.  CONDITIONS PRECEDENT

     12.  In connection with the making of  any Loan to Borrower, the Bank shall
have received on or before the date of the making of any such Loan any opinions,
assurances,  searches,  continuations and/or like items, and  any  subordination
agreements and other agreements as the Bank shall request.  Among other  things,
in  connection with the first Loan hereunder, the Bank shall have  received  the
following,  in  form  and  substance satisfactory to the  Bank  and  the  Bank's
counsel:

          (i)   certified (as of the date of this Note) copies of all  corporate
action  taken  by  Borrower, including resolutions of its  Board  of  Directors,
authorizing  the execution, delivery, and performance under this Note  and  each
other document to be delivered pursuant thereto;

          (ii)      a certificate of incorporation of Borrower, a certificate of
good standing of Borrower, and a certificate (dated as of the date of this Note)
of  the  Secretary of Borrower certifying the names and true signatures  of  the
officers  of  Borrower  authorized to sign the  documents  to  be  delivered  in
connection herewith;

          (iii)      a  Security Agreement granting the Bank a security interest
in  all  of  Borrower's assets duly signed by an authorized officer of Borrower,
together with financing statements (UCC-1s) relating thereto;

 <PAGE>

            (iv)      an  endorsement for each of Borrower's insurance  policies
naming the Bank as loss payee and an additional insured with respect to the Beds
purchased by Borrower and any other tangible personable property of Borrower;

          (v)        a  subordination agreement with respect to any indebtedness
or obligations of Borrower to Vivax;

          (vi) a copy of an invoice for the Beds purchased pursuant to the Vivax
Purchase  Agreement, and the amount borrowed hereunder shall  not  exceed  sixty
percent  (60%) of such purchase price, and Jayark shall have paid in to Borrower
as  equity  an  amount  equal to twenty percent (20%) of  such  purchase  price,
inclusive of all shipping and installation charges with respect to the Beds.

          (vii)       copies  of  the  Vivax  Purchase  Agreement,   the   Vivax
Distribution Agreement and all other agreements between: (a) Vivax and Mediq/PRN
Life  Support  Services, Inc. ("Mediq"); (b) Vivax and Borrower; and  (c)  Vivax
and/or Mediq and any other person or entity concerning any of the "Nova Beds" or
"Enclosure Beds".

          (viii)     a  letter from each of the secured creditors of  Vivax  and
Vivax Services releasing such creditors' liens on and security interests in  the
Beds;

          (ix)  evidence that a notice has been sent to all creditors  of  Mediq
having  a  security interest in inventory and/or equipment notifying  them  that
Mediq shall receive possession of Beds on consignment from Vivax;

          (x)   a  Custody  Agreement among the Bank, Vivax, and Borrower,  (the
"Vivax  Custody Agreement") pursuant to which, among other things: (a) the  Bank
shall  be irrevocably appointed the custodian with respect to all rental  income
from  Borrower's  Beds, (b) Vivax shall grant to the Bank a first  lien  on  all
monies  received  by  the  Bank to secure Vivax's obligations  under  the  Vivax
Custody Agreement and the right, upon an Event of Default, to apply such  monies
against  any of the claims of the Bank pursuant to the Vivax Custody  Agreement,
as  determined by the Bank,  (c) the Bank may make distributions to Borrower and
Vivax,  and (d) the Bank shall be entitled to a custodian's fee (in addition  to
all other fees and amounts due the Bank hereunder);

          (xi)  satisfaction  in  full of the Borrower's obligations  under  the
Existing Note; and

          (xii)     the Vivax Distribution Agreement shall have been executed by
all  parties  and shall provide, among other things, that Vivax shall  rent  all
Beds owned by Borrower prior to renting any Beds owned by any other entity.

                     E.  NEGATIVE COVENANTS

     13.  So long as this Note remains unpaid or the Line of Credit shall remain
in effect, Borrower shall not:

 <PAGE>

            (a)   incur, create, assume or suffer to exist any indebtedness  for
borrowed  money  or  any  goods  or  services provided  on  credit,  other  than
indebtedness evidenced by this Note, and indebtedness to Vivax pursuant  to  the
Vivax  Purchase Agreement in the minimum amount of  twenty percent (20%) of  the
purchase  price of the Beds and which is subordinate to the claims of the  Bank,
without prior notice to and consent of the Bank;

          (b)   guaranty, endorse or otherwise become liable for the payment  or
performance  of  the obligations of any other person or entity, except  for  the
endorsement  of  negotiable  instruments in the  ordinary  course  of  business,
without prior notice to and consent of the Bank;

          (c)   create,  incur, assume or suffer to exist any lien, encumbrance,
security  interest,  charge or mortgage (collectively "Liens")  on  any  of  its
property  now owned or hereafter acquired except (i) Liens granted to the  Bank;
(ii)  Liens  arising by operation of law for amounts that are not  yet  due  and
payable  or  which are being diligently contested in good faith by Borrower,  so
long  as  adequate reserves are maintained by Borrower for their payment,  (iii)
deposits  or pledges to secure obligations under workmen's compensation,  social
security or similar laws, or under unemployment insurance, and (iv) deposits  or
pledges to secure bids, tenders, contracts (other than contracts for the payment
of  money),  leases, statutory obligations, surety and appeal  bonds  and  other
obligations  of like nature arising in the ordinary course of business,  without
prior notice to and consent of the Bank;
          (d)   sell, lease, assign, transfer or otherwise dispose of any of its
assets or properties other than pursuant to the Vivax Distribution Agreement;

          (e)    (i)  acquire the capital stock or assets of any other business,
(ii) purchase any of its own outstanding stock, or (iii) lend or advance credit,
property or money to any person;

          (f)  make  any  distribution of any kind to any  officers,  directors,
shareholders  of  Borrower  or  to Jayark or any other  affiliate  of  Borrower;
provided  however,  if  no  Event  of Default has  occurred  Borrower:  (i)  may
distribute  up  to  $5,000 to Jayark on the last day of each calendar  month  to
reimburse  Jayark for overhead expenses related to Borrower; (ii) may,  pursuant
to  a  letter agreement between Borrower and Peter Rinfret dated June 12,  1998,
pay  Peter Rinfret a fee equal to two (2%) percent of the "gross rental  income"
as  described  in and on the terms and conditions of such letter agreement;  and
(iii)  may make other distributions to Jayark, but only to the extent  that  the
cash  balance of Borrower at an account maintained with the Bank, measured  both
before  and  after  giving effect to such contemplated distribution  to  Jayark,
exceeds $315,000.

     F.  PAYMENT IN THE EVENT BEDS ARE REPURCHASED BY VIVAX

     13A.  In  the event Vivax repurchases Beds from Borrower, pursuant  to  the
Vivax  Distribution Agreement, Borrower shall pay the Bank  such  amount  as  is
equal to the gross purchase price per unit as set forth in paragraphs 14 and  15
of  the  Vivax Distribution Agreement by Vivax for all such Beds, which  payment
shall  be applied to the Liabilities in such order of priority as Borrower shall
determine in its sole discretion.

                     G.  EVENTS OF DEFAULT

 <PAGE>

     14.   If  any  of  the following events (each an "Event of Default")  shall
occur and be continuing:

          (a)   Borrower shall fail to make any payment of principal or interest
on this Note, or any fee provided for herein, when due;

          (b)   Borrower shall default in the performance or observance  of  any
covenant  or  agreement contained herein, except that with respect to  paragraph
10(a)  of  Section C hereof the Borrower shall have a grace period  of  10  days
after  notice of a default thereunder in which to cure  such default  before  an
Event of Default will be deemed to have occurred;

          (c)   any  representation or warranty made by or on behalf of Borrower
in  this  Note or in any other certificate, agreement, instrument, or  statement
delivered  to  the Bank by or on behalf of Borrower shall at any time  prove  to
have been incorrect when made in any material respect;

          (d)   an  event  of default or default shall occur and  be  continuing
under any other agreement, document or instrument executed and delivered to  the
Bank  by  Borrower or any endorser, guarantor or hypothecator  relating  to  any
Liabilities;

          (e)  Borrower shall default in the payment of principal or interest on
any  indebtedness  for borrowed money (including any such  indebtedness  in  the
nature  of  a  lease) or shall default in the performance or observance  of  the
terms  of any instrument pursuant to which such indebtedness was created  or  is
secured,  the  effect of which default is to cause or permit any holder  of  any
such  indebtedness to cause the same to become due prior to its stated  maturity
(and whether or not such default is waived by the holder thereof);

          (f)   Borrower  or  any of Borrower's officers, employees,  or  assets
shall be indicted for, or become a defendant in any civil or criminal proceeding
relating to racketeering activity or any other offense, a potential penalty  for
which  is  forfeiture of all or any part of Borrower's assets to any federal  or
state government or agency or any instrumentality thereof;

          (g)   any  change in the condition or affairs (financial or otherwise)
of  Borrower shall occur which, in the opinion of the Bank, increases  its  risk
with respect to any Liabilities or impairs any security therefor;

          (h)   any judgment against Borrower, Vivax, Vivax Services,  Mediq  or
any  lessee of Beds, or any attachment, levy or execution against any  of  their
properties  for  any  amount  shall remain unpaid, or  shall  not  be  released,
discharged, dismissed, stayed or fully bonded for a period of thirty  (30)  days
or more after its entry, issue or levy, as the case may be;

          (i)  Borrower, Vivax, Vivax Services, Mediq or any lessee or sublessee
of  the  Beds  (which lessee or sublessee is in possession of five (5)  or  more
Beds),  shall become insolvent  (however evidenced) or be unable,  or  admit  in
writing its inability, to pay its debts as they mature;

 <PAGE>

            (j)   Borrower,  Vivax,  Vivax Services,  Mediq  or  any  lessee  or
sublessee of the Beds (which lessee or sublessee is in possession of five (5) or
more Beds), shall make an assignment for the benefit of creditors, or a trustee,
receiver  or liquidator shall be appointed for Borrower, Vivax, Vivax  Services,
or Mediq or for any of their property;

          (k)   the  commencement of any proceedings by Borrower,  Vivax,  Vivax
Services,  Mediq  or  any  lessee or sublessee of  the  Beds  (which  lessee  or
sublessee  is  in  possession of five (5) or more Beds), under  any  bankruptcy,
reorganization,   arrangement  of  debt,  insolvency,  readjustment   of   debt,
receivership, liquidation or dissolution law or statute, or the commencement  of
any  such  proceedings without the consent of Borrower, Vivax,  Vivax  Services,
Mediq  or  any  lessee  or sublessee of the Beds, where such  proceedings  shall
continue undischarged for a period of twenty (20) days;

          (l)   David  Koffman  shall  cease to  be  active  in  the  day-to-day
management of Borrower;

          (m)  without  the  Bank's prior written consent (which  shall  not  be
unreasonably withheld in the event of a transfer to a Koffman family  member  or
to an entity which the Bank in good faith determines to be controlled by Koffman
family  members), Jayark shall cease to own one hundred percent  (100%)  of  the
issued and outstanding shares of Borrower;

          (n)   a  daily  average of at least twenty percent (20%) of  the  Beds
purchased  by  Borrower under the Vivax Purchase Agreement shall not  have  been
rented out to end users of such Beds, during any fiscal quarter of Borrower,  at
rates at least as high as specified in the Vivax Distribution Agreement; or

          (o)  any  material  breach shall occur with respect  to  any  contract
between  (i)  Vivax  and  Borrower, including, but not  limited  to,  the  Vivax
Distribution  Agreement, the Vivax Custody Agreement,  and  the  Vivax  Purchase
Agreement;  (ii) Vivax and Mediq concerning the Beds; (iii) Mediq and  Borrower;
or (iv) Vivax or Mediq and any lessee or sublessee of the Beds.

then,  and  in any such event, the Bank may declare the entire unpaid  principal
amount  of this Note and all interest and fees accrued and unpaid hereon  to  be
immediately  due  and  payable (except with respect  to  any  Event  of  Default
described above in paragraphs  (i), (j), or (k) above, in which case the  entire
unpaid  principal  amount of this Note and all interest  and  fees  accrued  and
unpaid hereon shall be automatically due and payable, without any further action
on  the  Bank's part), whereupon the same shall become and be forthwith due  and
payable,  without  presentment, demand, protest or notice of any  kind,  all  of
which are hereby expressly waived by Borrower.  The balance of every account  of
Borrower  with, and each claim of Borrower against, the Bank existing from  time
to time shall be subject to a lien and subject to be set off against any and all
Liabilities, including, but not limited to, those under Section 6 hereof.

H.  MISCELLANEOUS

     15.   Definitions.   (a) For purposes of this Note, the  term  "Subsidiary"
shall  mean  and include any corporation or other entity, if any, of which  more
than 50% of the outstanding shares of capital stock having ordinary voting power
to  elect a majority of the Board of Directors of such corporation (irrespective

<PAGE>

of  whether  or not at the time capital stock of any other class or  classes  of
such  corporation  shall or might have voting power upon the occurrence  of  any
contingency), or the equivalent for a partnership, limited liability company, or
other  entity, is at the time, directly or indirectly, owned by Borrower  or  by
one or more other Subsidiaries.

          (b) Terms such as "herein" or "hereof" or "hereunder" as  used in this
Note are deemed to be references to this Note as a whole and not necessarily  to
any particular portion of this Note.

     16.  Governing Law.  This Note shall be shall be governed by, and construed
in  accordance  with, the laws of the State of New York, without regard  to  its
rules on conflicts of laws.

     17.  Notices, Etc.  All notices and other communications provided for under
this  Note  shall  be  in writing (including telegraphic, telex,  and  facsimile
transmissions)  and mailed or transmitted or delivered, if to Borrower,  at  300
Plaza Drive, Vestal, New York 13850, Attn: David Koffman, and if to the Bank, at
its  address at Atlantic Bank of New York, 960 Avenue of the Americas, New York,
New York  10001, Attention:  Corporate Lending Department, or, as to each party,
at  such other address as shall be designated by such party in a written  notice
to  the  other party complying as to delivery with the terms of this  paragraph.
Except  as  otherwise provided in this Note, all such notices and communications
shall  be  effective when deposited in the mails or delivered to  the  telegraph
company,  or  sent, answer back received, respectively, addressed as  aforesaid,
except  that  notices to the Bank shall not be effective until received  by  the
Bank.

     18.   No Waiver.  No failure or delay on the part of the Bank in exercising
any  right,  power, or remedy hereunder shall operate as a waiver  thereof;  nor
shall  any  single  or  partial exercise of any such  right,  power,  or  remedy
preclude  any  other or further exercise thereof or the exercise  of  any  other
right, power, or remedy hereunder.  The rights and remedies provided herein  are
cumulative,  and are not exclusive of any other rights, powers,  privileges,  or
remedies, now or hereafter existing, at law or in equity or otherwise.

     19.   Costs And Expenses.  Borrower shall reimburse the Bank for all  costs
and  expenses incurred by the Bank (including without limitation the  reasonable
fees  and  disbursements  of  counsel  to  the  Bank)  in  connection  with  the
negotiation,  preparation, execution, delivery or enforcement of this  Note,  or
any  document,  instrument or agreement relating thereto, and the administration
of the Line of Credit and the Loans made hereunder.  Borrower shall also pay any
and  all  taxes (other than taxes on or measured by net income of the holder  of
this Note) incurred or payable in connection with the execution and delivery  of
this Note.

     20.  Amendments.  No amendment, modification, or waiver of any provision of
this  Note nor consent to any departure by Borrower therefrom shall be effective
unless the same shall be in writing and signed by the Bank, and then such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given.

     21.   Successors And Assigns.  This Note shall be binding upon Borrower and
its  successors and assigns and the terms hereof shall inure to the  benefit  of
the Bank and its successors and assigns, including subsequent holders hereof.

<PAGE>

     22.   Severability.  The provisions of this Note are severable, and if  any
provision  shall be held invalid or unenforceable in whole or  in  part  in  any
jurisdiction, then such invalidity or unenforceability shall not in  any  manner
affect  such provision in any other jurisdiction or any other provision of  this
Note in any jurisdiction.

     23.   Entire  Agreement.   This Note sets forth  the  entire  agreement  of
Borrower  and the Bank with respect to this Note and may be modified only  by  a
written instrument executed by Borrower and the Bank.

     24.   Note  Not Effective Until Approved By Bank.  This Note shall  not  be
effective until the Bank confirms its approval of this Note below.

     25.   Headings.  The headings herein are for convenience only and shall not
limit or define the meaning of the provisions of this Note.

     26.   Jurisdiction; Service Of Process.  Borrower agrees that in any action
or  proceeding brought on or in connection with this Note (i) the Supreme  Court
of  the  State  of New York for the County of New York, or (in a case  involving
diversity  of  citizenship) the United States District  Court  of  the  Southern
District  of New York, shall have jurisdiction of any such action or proceeding,
(ii) service of any summons and complaint or other process in any such action or
proceeding may be made by the Bank upon Borrower by registered or certified mail
directed  to Borrower at its address referenced in paragraph 17 above,  Borrower
hereby waiving personal service thereof, and (iii) within thirty (30) days after
such  mailing  Borrower  shall  answer to any summons  and  complaint  or  other
process, and should Borrower fail to answer within said thirty (30) day  period,
it  shall  be deemed in default and judgment may be entered by the Bank  against
Borrower for the amount as demanded in any summons or complaint or other process
so served.

     27.   Facility Fee.  Borrower agrees to pay the Bank a facility fee of: (i)
$5,000  on the date hereof (the "Initial Fee"); and (ii) an additional fee  (the
"Percentage Fee") on the Maturity Date equal to one percent (1%) of the  average
daily  balance of the amounts borrowed under this Note less $5,000  (but  in  no
event  shall Borrower be entitled to any credit or return of any monies  in  the
event  the   Percentage Fee is a negative number), in addition to all  interest,
commissions,  charges, costs and expenses of every kind set forth herein  or  in
any other instrument or document which have been or may hereafter be executed by
Borrower  and  delivered to the Bank.  The payment of the Initial  Fee  and  the
Percentage Fee is unconditional and non-refundable, in whole or in part, for any
reason whatsoever.

     28.  WAIVER OF THE RIGHT TO TRIAL BY JURY.  BORROWER AND, BY ITS ACCEPTANCE
HEREOF,  THE  BANK, HEREBY IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY  IN  ANY
ACTION, PROCEEDING, CLAIM, OR COUNTERCLAIM, WHETHER IN CONTRACT OR TORT, AT  LAW
OR  IN  EQUITY,  IN  ANY  MANNER CONNECTED WITH THIS NOTE  OR  ANY  TRANSACTIONS
HEREUNDER.  NO OFFICER OF THE BANK HAS AUTHORITY TO WAIVE, CONDITION, OR  MODIFY
THIS PROVISION.

<PAGE>

     29.   Waiver  of Presentment, etc.  Borrower hereby waives presentment  for
payment, demand, protest and notice of protest and of non-payment.

          
                              MED SERVICES CORP.

                              By:  /s/ David L. Koffman
                                      DAVID L. KOFFMAN
                                      Title: President
                                      Date:  August 7, 1998



                              ACCEPTED BY
                              ATLANTIC BANK OF NEW YORK:


                              By:    /s/ Paula Park 
                              Name:  Paula Park
                              Title: Vice President
                              Date: August 7, 1998


<PAGE>
                               SCHEDULE TO NOTE

Borrower:  Med Services Corp.         Date of Note: August 7, 1998
                                                        
           AMOUNT OF      AMOUNT OF     UNPAID PRINCIPAL     NAME OF PERSON
 DATE    LOAN OR L/C   PRINCIPAL REPAID  BALANCE OF NOTE     MAKING NOTATION

<PAGE>

EXHIBIT 10(41)

                      SECURITY AGREEMENT

     SECURITY AGREEMENT dated as of August 7, 1998 between MED SERVICES CORP., a
Nevada  corporation, (the "Grantor") and ATLANTIC BANK OF NEW YORK, a  New  York
banking corporation (the "Bank").

                      W I T N E S S E T H:

     WHEREAS,  the  Grantor has entered into the Revolving Line of  Credit  Grid
Promissory Note dated as of the date hereof (as the same may from time  to  time
be  amended, extended, supplemented, restated or otherwise modified or replaced,
the "Note"; capitalized terms used herein, and not otherwise defined herein, are
used with the meanings ascribed to them in the Note) between the Grantor and the
Bank,  pursuant to which the Grantor has agreed to grant, assign and  pledge  to
the Bank, for the benefit of the Bank, a first priority security interest in and
to  all  of  its respective rights, properties and assets referred to herein  to
secure all of the Obligations (as hereinafter defined); and

     WHEREAS, as a condition precedent to making any of the Loans to the Grantor
pursuant  to  the  Note, the Bank has required the Grantor  to  grant,  and  the
Grantor  has agreed to grant, to the Bank a continuing first and prior  security
interest  in  and to all property, rights and interests in all property  of  the
Grantor to secure all obligations and liabilities of any kind whatsoever of  the
Grantor;

     NOW, THEREFORE, the Grantor, intending to be bound hereby, in consideration
of  the premises hereof, in order to induce the Bank to enter into the Note with
the Grantor and to make Loans as aforesaid, and in consideration of any Loans so
made, and for other good and valuable consideration, the receipt and sufficiency
of  which  are hereby acknowledged, hereby agrees with, and for the benefit  of,
the Bank as follows:

     1.    Grant  of Security Interest.  The Grantor, to secure the Obligations,
hereby  assigns,  pledges and grants to the Bank, a continuing first  and  prior
security interest in and to all of the Grantor's rights, title and interests  in
and to all of the following, whether now owned or existing or hereafter acquired
or  arising  and  regardless  of  where  located  and  all  products,  proceeds,
substitutions, accessions and replacements thereof (all of the same being herein
referred to as the "Collateral"):

            (A)  ACCOUNTS:  All  present and future  accounts,  receivables  and
contract rights, including, but not limited to, the Grantor's rights to  receive
any  payments  under  a certain Distribution Agreement (the "Vivax  Distribution
Agreement")  dated  as of June 1, 1998, between the Borrower and  Vivax  Medical
Corporation  ("Vivax"), or any payments under any and all leases  providing  for
the use of real or personal property ("Leases") and/or employment agreements and
"non-compete"  agreements  to  which the Grantor  is  a  party,  chattel  paper,
instruments, documents, general intangibles and other rights to payment  of  any
kind now or hereafter existing arising out of or in connection with the sale  or
lease  of  goods,  merchandise  or  inventory  or  the  rendering  of  services,
including,  without limitation, those which are not evidenced by instruments  or
chattel  paper  and  whether or not they have been earned  by  performance;  all
proceeds of any letters of credit or insurance policies on which the Grantor  is

<PAGE>

now  (or  may hereafter be) named as beneficiary; all claims against  any  third
parties  for advances or other financial accommodations or any other obligations
whatsoever owing to such Grantor; all rights now or hereafter existing in and to
all  security  agreements,  leases,  documents  of  title  and  other  contracts
securing,  evidencing  or  otherwise relating to  any  such  accounts,  contract
rights, chattel paper, instruments, documents, general intangibles, other rights
of  payment  or  proceeds or to any such claims against third parties,  together
with all rights in any returned or repossessed goods, merchandise and inventory;
and  all  right,  title, security and guaranties with respect  to  each  of  the
foregoing, including, without limitation, any right of stoppage in transit  (any
and  all  such accounts, contract rights, chattel paper, instruments, documents,
rights of payment, proceeds, claims and rights being hereinafter referred to  as
the  "Accounts", and any and all such Leases, other leases, security agreements,
guaranties and other contracts being hereinafter referred to collectively as the
"Account Contracts");

          (B)   INVENTORY:  All goods, merchandise and other  personal  property
furnished or to be furnished under any contract of service or intended for  sale
or  lease, including, without limitation, all Nova Beds and Enclosure  Beds  (as
such  terms are defined in the Purchase and Sale Agreement dated as of  June  1,
1998  between  the  Grantor  and Vivax (the "Vivax Purchase  Agreement");  whole
goods, spare parts, components, supplies, materials and consigned goods; all raw
materials, work-in-process, finished goods or materials or supplies of any kind,
nature  or  description, used or consumed in the Grantor's businesses  or  which
might be used in connection with the manufacture, assembling, packing, shipping,
advertising,  selling  or  finishing of such  goods,  merchandise  and  personal
property;  all  returned or repossessed goods; and all  documents  of  title  or
documents  evidencing the same; in each instance whether now owned or  hereafter
acquired by the Grantor and wherever located, whether in the possession  of  the
Grantor  or  of a bailee or other person for sale, storage, transit, processing,
use or otherwise (all of the foregoing, collectively, being the "Inventory");

          (C)   EQUIPMENT:  All  machinery, equipment and  fixtures,  including,
without  limitation,  all  manufacturing, assembling,  packaging,  distribution,
selling,  data  processing  and office equipment,  all  furniture,  furnishings,
appliances,  trade fixtures, tools, tooling, molds, dies, vehicles, vessels  and
all  other  goods  of  every type and description (other  than  Inventory),  all
computer  and other electronic data processing hardware, whether owned, licensed
or  leased by the Grantor, including without limitation, all integrated computer
systems,  central  processing units, memory units, display  terminals,  printers
features,  computer  elements, card readers, tape drivers, hard  and  soft  disk
drives,  cables,  electrical  supply  hardware,  generators,  power  equalizers,
accessories  and all peripheral devices and other related computer hardware  and
all parts thereof and all accessions
thereto,  and  all  substitutions therefor and  replacements  thereof,  in  each
instance  whether  now owned or hereafter acquired by the Grantor  and  wherever
located (all of the foregoing, collectively, being the "Equipment");

<PAGE>

          (D)   GENERAL  INTANGIBLES: All rights, interests, choses  in  action,
causes  of  actions, claims and all other intangible property of the Grantor  of
every  kind and nature (other than Accounts) in each instance whether now  owned
or  hereafter  acquired  by  the  Grantor, including,  without  limitation,  all
corporate   and  other  business  records;  all  loans,  royalties,  and   other
obligations  receivable including, without limitation,  pursuant  to  the  Vivax
Distribution  Agreement, all trademarks, non-compete agreements, service  marks,
trademark  applications,  patents, patent applications,  tradenames,  fictitious
names,  inventions, designs, trade secrets, computer programs,  computer  source
codes, software and software programs, whether owned, licensed or leased by  the
Grantor,  designed  for  use  on  any  of  the  Equipment  (including,   without
limitation, all operating system software, utilities and application programs in
whatever  form (source code and object code in magnetic tape, disk or hard  copy
format  or  any  other  listings whatsoever), all firmware associated  with  any
computer hardware or software, whether owned, licensed or leased by the Grantor,
printouts  and  other  computer materials (including,  without  limitation,  all
documentation  for all computer hardware, software or firmware of  the  Grantor,
whether  owned,  licensed  or  leased  by the  Grantor,  including  but  without
limitation,  flow  charts,  logic  diagrams, manuals,  specifications,  training
materials,  charts  and pseudo codes), goodwill (including, without  limitation,
goodwill symbolized by the trademarks, tradenames and service marks of or  owned
by  the  Grantor),  registrations, copyrights, copyright applications,  permits,
licenses,   franchises,  customer  lists,  credit  files,  correspondence,   and
advertising  materials; all existing or hereafter created or acquired  materials
and  know-how  in relation to the research and development of the Inventory  and
any future product lines; all customer and supplier contracts, firm sale orders,
rights  under license and franchise agreements, and other contracts and contract
rights  (including,  but not limited to, all Leases, and  the  Grantor's  rights
under any and all employment agreements and "non-compete" agreements to which it
is a party); all interests in any corporations, partnerships,  limited liability
companies and joint ventures; all tax refunds and tax refund claims; all  right,
title  and interest under licenses and concessions and other agreements relating
to  real  or  personal  property; all payments due or made  to  the  Grantor  in
connection   with  any  requisition,  confiscation,  condemnation,  seizure   or
forfeiture of any property by any person or governmental authority; all  deposit
accounts (general or special) with any bank or other financial institution;  all
credits  with  and  other claims against third parties (including  carriers  and
shippers); all rights to indemnification; all reversionary interests in  pension
and  profit sharing plans and reversionary, beneficial and residual interest  in
trusts; all proceeds of insurance of which the Grantor is a beneficiary; and all
letters of credit, guaranties, liens, security interests and other security held
by  or granted to the Grantor; and all other intangible property, whether or not
similar  to  the foregoing; in each instance, whether now or hereafter  existing
and however and wherever arising and all renewals thereof (all of the foregoing,
collectively, being the "General Intangibles");

          (E)   CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper, all
instruments,  all  bills of lading, warehouse receipts and  other  documents  of
title and documents, in each instance whether now owned or hereafter acquired by
the Grantor; and

            (F) OTHER PROPERTY: All other property or interests in property  now
owned  or  hereafter acquired by the Grantor which now may be owned or hereafter
may  come  into  the possession, custody or control of the Bank,  or  any  other
agents  or  affiliates  of the Bank in any way or for any purpose  (whether  for
safekeeping,  deposit, custody, pledge, transmission, collection or  otherwise);
and  all  rights and interests of the Grantor, now existing or hereafter arising
and  however and wherever arising, in respect of any and all (i) notes,  drafts,

<PAGE>

letters of credit, stocks, bonds, and debt and equity securities, whether or not
certificated,  and  any  "Commodity Account", "Commodity Contract",  "Investment
Property", "Security Entitlement" and "Securities Account" (as those  terms  are
defined  in  the  New York Uniform Commercial Code, as amended  the  "UCC")  and
warrants,  options,  puts  and calls and other rights to  acquire  or  otherwise
relating  to the same; (ii) money; (iii) proceeds of loans, advances  and  other
financial  accommodations, including, without limitation,  loans,  advances  and
other  financial  accommodations,  including,  without  limitation,  Loans  made
pursuant to the Note; and (iv) insurance proceeds and books and records relating
to  any of the Collateral covered by this Security Agreement; together, in  each
instance, with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof.

     2.   Security for Obligations. This Security Agreement secures the full and
prompt  payment and performance when due of (a) all obligations and  liabilities
of the Grantor to the Bank now or hereafter existing under the Note, whether for
principal,  interest,  fees, indemnification, expenses  or  otherwise,  (b)  all
obligations and liabilities of the Grantor now or hereafter existing under  this
Security  Agreement, (c) all obligations and liabilities of the Grantor  to  the
Bank now or hereafter existing under any of the other documents with respect  to
the  Note  (the "Loan Documents") to which the Grantor is a party, and  (d)  all
other  obligations, liabilities, covenants and duties owing to the Bank from  or
by  the  Grantor  of  any  kind or nature, present or  future,  whether  or  not
evidenced by any note, guaranty or other instrument, including, but not  limited
to,  those  arising  under the Note or any of the other Loan Documents,  whether
direct  or  indirect  (including  those acquired  by  assignment),  absolute  or
contingent, due or to become due, now existing or hereafter arising and  however
acquired (all such obligations and liabilities of the Grantor described  in  the
foregoing  clauses  (a),  (b), (c) and (d) above being hereinafter  collectively
referred to as the "Obligations").  The Grantor and the Bank, hereby agree  that
they  intend the security interests hereby granted to attach upon the  execution
of this Security Agreement.

     3.     Grantor   Remains   Liable.   Anything  herein   to   the   contrary
notwithstanding,  (a) the Grantor shall remain liable under  any  contracts  and
agreements included in the Collateral to the extent set forth therein to perform
all  of  its  duties and obligations thereunder to the same extent  as  if  this
Security Agreement had not been executed, (b) the exercise by the Bank of any of
the  rights  hereunder shall not release the Grantor from any of its  duties  or
obligations  under any contracts and agreements included in the Collateral,  and
(c)  the  Bank  shall have no obligation or liability under  any  contracts  and
agreements included in the Collateral by reason of this Security Agreement,  nor
shall  the Bank be obligated to perform any of the obligations or duties of  the
Grantor  thereunder or to take any action to collect or enforce  any  claim  for
payment assigned hereunder.

     4.    Further Assurances. (a) The Grantor hereby agrees that from  time  to
time,  at  the  expense  of the Grantor, the Grantor will promptly  execute  and
deliver all further instruments and documents, and take all further action, that
may  be  necessary  or appropriate, or that the Bank may request,  in  order  to
create, evidence, perfect or preserve any security interest granted or purported
to  be  granted hereby or to enable the Bank to exercise and enforce its  rights
and  remedies  hereunder with respect to any Collateral.  Without  limiting  the
generality of the foregoing, the Grantor will: (i) at the written request of the
Bank  upon  the  occurrence  and  continuation of  an  Event  of  Default,  mark
conspicuously  each  chattel paper included in the  Accounts  and  each  Account
Contract,  (ii)  at  the  written request of the Bank upon  the  occurrence  and
continuation  of  an Event of Default, mark conspicuously each  of  its  records
pertaining  to the Collateral, with a legend, in form and substance satisfactory
to  the  Bank,  indicating that such chattel paper, Account  Contract  or  other

<PAGE>

Collateral  is  subject to the security interest granted hereby;  (iii)  at  the
written request of the Bank upon the occurrence and continuation of an Event  of
Default,  if  any  Account  shall be evidenced by a  promissory  note  or  other
instrument  or  chattel  paper,  deliver and  pledge  to  the  Bank  such  note,
instrument  or  chattel  paper duly endorsed and accompanied  by  duly  executed
instruments of transfer or assignment, all in form and substance satisfactory to
the  Bank;  and (iv) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices (including, without
limitation,  any  filings  with the United States Copyright  Office  and/or  the
United  States Patent and Trademark Office or in any similar or other office  or
agency  of  the  United States or any State thereof or in any other  appropriate
jurisdiction),  as may be necessary or desirable, or as the  Bank  may  in  good
faith  request,  in  order to create, evidence, perfect or better  preserve  the
security interests granted or purported to be granted hereby.

               (b)   The Grantor hereby authorizes the Bank to file one or  more
financing  or  continuation  statements,  and  amendments  thereto,  (including,
without  limitation, any filings with the United States Copyright Office  and/or
the  United States Patent and Trademark Office or in any similar office or other
agency  of  the  United States or any State thereof or in any other  appropriate
jurisdiction)  relative  to  all  or any part  of  the  Collateral  without  the
signature  of  the  Grantor, where permitted by law.  The Grantor hereby  agrees
that  a carbon, photographic, photostatic or other reproduction of this Security
Agreement  or  of  a financing statement is sufficient as a financing  statement
where permitted by law.

               (c)   The  Grantor  will furnish to the Bank from  time  to  time
statements  and schedules further identifying and describing the Collateral  and
the  locations where the Collateral is moved to in accordance with Section 10(a)
hereof,  and permitting the Bank to determine the places where it needs to  file
any financing statement, and such other reports in connection with any or all of
the  Collateral, in form and substance satisfactory to the Bank, as the Bank may
reasonably  request, all in reasonable detail; and the Grantor will  permit  the
Bank, by any of its officers, employees and/or designated agents, at any time or
times  during  the  Grantor's usual business hours, to  inspect  and/or  conduct
audits with respect to the Collateral, at Grantor's expense.

                (d) If the Bank so requires, the Grantor  will join in and cause
any  person  with whom the Grantor maintains any Commodity Account or Securities
Account, to join in "control agreements" with respect to such Commodity  Account
and/or  Securities  Account, which agreements shall be  in  form  and  substance
reasonably acceptable to the Bank.

     5.     Representations  and  Warranties:  General.   The   Grantor   hereby
acknowledges and agrees that all the representations and warranties made by  the
Grantor  in  the Note and any other Loan Documents to which it is  a  party  are
incorporated  herein  and made a part hereof as if fully set  forth  herein  and
shall  ipso  facto  be  deemed to have been made by  the  Grantor  to  the  Bank
hereunder.  Without limiting the generality of the foregoing, the Grantor hereby
represents and warrants as follows:

          (a)  The principal place of business and chief executive office of the
Grantor  is  located  at the address identified as such on Schedule  A  attached
hereto and all records concerning the Accounts, Leases and all originals of  all
chattel paper which evidence the Accounts are located at the addresses specified
in said Schedule A and made a part hereof.

<PAGE>

          (b)   All  of  the Inventory and Equipment are located at  the  places
specified  in  Schedule  B attached hereto and made a part  hereof,  except  for
Inventory  and  Equipment in transit between such locations  and  Inventory  and
Equipment  located  at  vendors or distributors of the Grantor  identified  with
particularity  on  said  Schedule B as being Inventory.   To  the  best  of  the
Grantor's knowledge, the state and county in which each person in possession  of
any  of  the Inventory or Equipment (each such person being a "Bailee") conducts
business  is set forth in said Schedule B.  With respect to Beds distributed  by
Vivax,  any lease or agreement for such Beds shall be substantially in the  form
of  Exhibit  1 hereto. With respect to Beds distributed by Mediq, any  lease  or
agreement for such Beds shall be substantially in the form of Exhibit 2 hereto.
          (c)   The Grantor has good, indefeasible and merchantable title to the
Collateral.   The  Grantor  owns the Collateral free  and  clear  of  any  lien,
security  interest, charge or encumbrance, except for the security interests  in
favor  of the Bank created by this Security Agreement, and the temporary  rights
of third parties to rent the Beds pursuant to leases with respect to the Beds to
be entered into by Vivax and Mediq.

          (d)   This Security Agreement, together with actions heretofore  taken
and the proper filing of the UCC financing statements executed by the Grantor in
favor  of  the  Bank  on the date hereof, creates a valid  and  perfected  first
priority  security interest in the Intellectual Property (to the extent  such  a
security  interest can be perfected by compliance with the UCC)  and  the  other
Collateral of the Grantor located in or arising from the United States, securing
the payment of the Obligations of the Grantor, and all filings and other actions
necessary to create, evidence, perfect and preserve such security interest (save
for  the  timely filing of such UCC-1 financing statements and all  continuation
statements or other statements required by applicable law) have been duly taken.

          (e)   The  correct  name  of  the Grantor  is  as  set  forth  in  the
introduction  hereto  and the Grantor has no other company names  or  fictitious
names  and has not, during the immediately preceding five (5) years, been  known
under or used any other company or fictitious names.

     6.     Representations  and  Warranties:  Accounts.   The  Grantor   hereby
represents and warrants with respect to its Accounts that:

          (a)   they  are  not evidenced by a judgment and represent  bona  fide
transactions contemplated in accordance with the terms and provisions  contained
therein or in any Account Contracts related thereto;

          (b)   none arises out of any transaction with an account debtor  that,
by  the  terms of any agreement with respect to the same, forbids or  makes  the
assignment of such Account to a third party void or unenforceable; and

          (c)   they  have  not  been transferred, assigned or  pledged  to  any
person, other than the Bank.

     7.     Representations  and  Warranties;  Inventory.   The  Grantor  hereby
represents and warrants with respect to its Inventory that all Inventory,  taken
as a whole, consists in all material respects of items of a quality and quantity
usable  or  saleable in the ordinary course of the Grantor's  business  and,  if

<PAGE>

saleable, is, to the best of the Grantor's knowledge and expertise, saleable  at
values equal to or greater than the book value amounts thereof of the Grantor.

     8.    Covenants:  General.  Without limiting the agreements  and  covenants
contained  in the Note or in any other Loan Document to which the Grantor  is  a
party, the Grantor hereby covenants and agrees with the Bank that:

          (a)   It shall preserve and maintain the security interest created  by
this  Security Agreement and will protect and defend its title to the Collateral
so that the security interests so granted shall be and remain a continuing first
and  prior  perfected security interest in the Collateral, except in  Collateral
that  the  Grantor is allowed to dispose of in accordance with  the  Note.   The
Grantor  will  not  create, assume or suffer to exist any security  interest  or
other lien or encumbrance in the Collateral.

          (b)   The Grantor shall maintain books and records pertaining  to  the
Collateral in such detail, form and scope as the Bank may in good faith require.

     9.    Covenants  Regarding Accounts.  The Grantor  shall  comply  with  the
following covenants regarding Accounts and Account Contracts:

            (a)  The  Grantor shall keep its chief place of business  and  chief
executive  office  and  the  office where it keeps its  records  concerning  the
Accounts,  and the offices where it keeps all originals of all Account Contracts
(including,  without  limitation, all chattel paper which  evidence  Leases  and
Accounts),  at the location therefor specified in Section 5(a) hereof  or,  upon
thirty  (30)  days' prior written notice to the Bank, at other  locations  in  a
jurisdiction  where  all actions required by Section 4 hereof  shall  have  been
taken  with  respect to the Accounts.  The Grantor will hold and  preserve  such
records, Account Contracts and chattel paper and will permit representatives  of
the  Bank or at any time during normal business hours upon reasonable notice  to
inspect  and  make  abstracts from such records, Account Contracts  and  chattel
paper.

          (b)   Except  as otherwise provided in this Section 9(b), the  Grantor
shall continue to collect, at its own expense, all amounts due or to become  due
to  the Grantor under the Accounts and Account Contracts; provided however, that
all  amounts due to Vivax and the Grantor under the Vivax Distribution Agreement
(including,  but not limited to, amounts due from Mediq) shall be  paid  to  the
Bank,  as  a custody agent, and applied and distributed in accordance  with  the
Custody  Agreement dated August 7, 1998 among Vivax, the Grantor  and  the  Bank
(the  "Vivax  Custody  Agreement").  In connection with  such  collections,  the
Grantor may take (and, at the Bank's direction, shall take) such action  as  the
Grantor or the Bank may deem necessary or advisable to enforce collection of the
Accounts and Account Contracts; provided, however, that upon the occurrence  and
continuation of an Event of Default the Bank shall have the right at  any  time,
upon written notice to the Grantor of its intent to do so, to notify the account
debtors  or obligors under any Accounts or Account Contracts, including but  not
limited  to  Vivax  or  Mediq, of the assignment of  such  Accounts  or  Account
Contracts  to  the Bank and to direct such account debtors or obligors  to  make
payment  of all amounts due or to become due to the Grantor thereunder  directly
to  the  Bank and, upon such notification and at the expense of the Grantor,  to
enforce  collection of any such Accounts, or Account Contracts,  and,  upon  the
occurrence  and  continuation  of  an Event of  Default  to  adjust,  settle  or

<PAGE>

compromise  the amount or payment thereof, in the same manner and  to  the  same
extent  as  the  Grantor might have done.  After receipt by the Grantor  of  the
notice  from the Bank referred to in the proviso to the preceding sentence,  (i)
all  amounts  and proceeds (including instruments) received by  the  Grantor  in
respect of the Accounts or Account Contracts shall be received in trust for  the
benefit  of  the Bank, shall be segregated from other funds of the  Grantor  and
shall  be forthwith paid over to the Bank in the same form as so received  (with
any  necessary  endorsement) and (ii) the Grantor shall not  adjust,  settle  or
compromise the amount or payment of any Account or Account Contract, or  release
wholly  or partly any account debtor or obligor thereof, or allow any credit  or
discount  thereon.   All amounts and proceeds of Accounts or Account  Contracts,
and other Collateral received by the Bank, shall be held as cash collateral and,
so  long  as no Event of Default shall have occurred and be continuing shall  be
either  (A) released to the Grantor or (B) applied to Obligations then  due  and
payable  by the Grantor to the Bank. If an Event of Default shall have  occurred
and  be  continuing, all such amounts and proceeds shall be applied as  provided
under Section 16(b) hereof.

             (c)   Anything   to   the  contrary  in  this  Security   Agreement
notwithstanding, the Bank shall have the right in connection with the monitoring
of  the  Collateral, to verify, at any time and from time to time, the  Accounts
agings  and listings delivered to the Bank by the Grantor, by such means as  the
Bank in its sole discretion deems appropriate, including, without limitation, by
direct request of confirmations from the account debtors under the Accounts.  In
addition, the Grantor will permit any authorized representative, including,  but
not  limited  to  a certified public accountant, designated by  the  Bank,  upon
reasonable  advance notice, to visit, inspect and audit Grantor's  property  and
condition,  including  its  books of account and  accounts  receivable,  and  to
discuss  its affairs, finances and accounts with its officers/managers, at  such
reasonable  times and as often as may be reasonably requested by  the  Bank,  at
Grantor's sole expense.

     10.        Covenants  Regarding Equipment and Inventory. The Grantor  shall
comply with the following covenants regarding Equipment and Inventory:

          (a)   The Grantor shall keep the Equipment and Inventory at the places
specified  in  Section 5(b); provided, however, that, upon  at  least  five  (5)
business  days written notice to the Bank, the Grantor may keep or allow  to  be
kept  the  Equipment  and Inventory at other locations  pursuant  to  the  Vivax
Distribution Agreement, but only if the Grantor shall have complied with Section
4(c) hereof.

          (b)  The  Grantor  shall  cause the Equipment  to  be  maintained  and
preserved in the same condition, repair and working order as when new, excepting
ordinary  wear and tear and damage due to casualty, and in accordance  with  any
manufacturer's  manual, and shall forthwith, and in the  case  of  any  loss  or
damage  to  any of the Equipment as quickly as practicable after the  occurrence
thereof  and unless otherwise required under the Note, make or cause to be  made
all  repairs, replacements and other improvements in connection therewith  which
are  necessary or desirable to such end.  The Grantor shall promptly furnish  to
the  Bank  a  statement respecting any material loss or damage  to  any  of  the
Equipment or Inventory with an aggregate fair market value exceeding $25,000  as
a result of a single occurrence.

          (c)   Upon the occurrence and continuation of an Event of Default,  if
any  Inventory  is  in the possession or control of any Bailee  or  any  of  the
Grantor's agents, the Grantor shall, at the Bank's written request, notify  such

<PAGE>

Bailee or such agents of the Bank's security interest in such Inventory.  At the
Bank's request, upon the occurrence and continuation of an Event of Default, the
Grantor  shall  direct all Bailees or agents of the Grantor  to  hold  all  such
Inventory for the Bank's account and subject to the Bank's instructions.

          (d)  The Grantor shall not permit any of the Equipment or Inventory to
become  a fixture to any real estate that is not subject to a mortgage, deed  of
trust  or assignment of lessee's interest in lease made by the Grantor in  favor
of  the Bank.  The Grantor shall, on demand therefor by the Bank, deliver to the
Bank  any  and  all  evidence of ownership of any of the  Equipment  (including,
without limitation, certificates of title and applications for title).

     11.  Insurance. (a) The Grantor will maintain or cause to be maintained, at
its  own  expense, insurance as required under the Note.  Each  policy  for  (i)
liability  insurance shall provide for all losses to be paid on  behalf  of  the
Bank  and  the  Grantor as their respective interests may appear  and  with  all
reimbursements  being  paid  directly to the  person  who  shall  have  incurred
liability covered by such insurance, and (ii) property damage/casualty insurance
which shall (A) not later than the date hereof, name the Bank as the first  loss
payee  and  additional insured party thereunder (without any  representation  or
warranty  by  or obligation upon the Bank), (B) provide that there shall  be  no
recourse against the Bank for payment of premiums or other amounts with  respect
thereto, and (C) provide that at least thirty (30) days' prior written notice of
amendment, modification, cancellation, termination or of lapse shall be given to
the  Bank  by  the  insurer.   For all property damage/casualty  insurance,  the
Grantor will have the insurer(s) agree that any loss thereunder shall be payable
to  the Bank notwithstanding any action, inaction or breach of representation or
warranty  by  the Grantor.  Not later than five (5) business days prior  to  the
renewal,  replacement  or material modification of any policy  or  program,  the
Grantor  shall deliver or cause to be delivered to the Bank a detailed  schedule
setting  forth for each such policy or program: (i) the amount of  such  policy,
(ii)  the  risks and amounts (with deductibles) insured against by such  policy,
(iii) the name of the insurer and each insured party under such policy, (iv) the
policy number of such policy and (v) a comparison of such policy with the policy
so renewed, replaced or modified.  The Grantor will if so requested by the Bank,
deliver to the Bank the original policy, of such insurance and, as often as  the
Bank  may  reasonably  request, a report of a reputable  insurance  broker  with
respect  to  such insurance.  Further, the Grantor will at the  request  of  the
Bank,  duly  execute  and deliver instruments of assignment  of  such  insurance
policies  to  comply  with the requirements of this Section  11  and  cause  the
respective insurers to acknowledge notice of such assignment.

          (b)   Grantor  shall  at all times require Vivax to  maintain  similar
insurance  as maintained by Grantor, with respect to all Collateral  subject  to
the  Vivax  Distribution Agreement, which insurance will name  Grantor  as  loss
payee and an additional insured party.

          (c)  The Grantor will use all and any insurance proceeds from property
damage/casualty  insurance or a condemnation awards it receives  to  restore  or
replace  such property as soon as practicable; provided, however,  that  in  the
event that (i) Event of Default has occurred and is continuing, or (ii) no Event
of Default has occurred and is continuing and the individual or aggregate amount
of  any  and all such insurance proceeds or condemnation awards exceeds $25,000,

<PAGE>

then  the  Grantor will not restore or replace such property without  the  prior
written consent of the Bank, and absent such consent, such insurance proceeds or
condemnation  awards  shall forthwith be paid to the Bank  and  applied  to  the
permanent  reduction  of the Obligations then outstanding,  without  penalty  or
premium, in such order as the Bank shall determine.

          (d)   Within  two  business days after receipt by the Grantor  of  any
insurance  proceeds  or a condemnation award in excess of $25,000,  the  Grantor
will  provide to the Bank written notice (or telephone notice promptly confirmed
in  writing) thereof and a description of the property damaged, lost  or  taken.
Such  notice shall specify whether the property damaged, lost or taken  will  be
restored or replaced or the proceeds applied to the permanent reduction  of  the
Obligations  then outstanding and if to restore or replace such  property,  such
notice  shall  also include a description of the plans, if any,  to  restore  or
replace such property.

     12.   Transfers  and Other Liens.  The Grantor shall not, unless  otherwise
permitted (and then only to the extent permitted) under the terms of the Note or
unless  the  Bank shall have provided its prior written consent  thereto,  which
consent shall be in the Bank's sole discretion:

          (a)   sell,  assign  (by operation of law or otherwise)  or  otherwise
dispose of any of the Collateral; or

          (b)   create or suffer to exist any Liens, security interest or  other
charge or encumbrance upon or with respect to any of the Collateral.

     13.   Bank Appointed Attorney-in-Fact.  Upon the occurrence and during  the
continuation of an Event of Default, the Grantor hereby irrevocably appoints the
Bank  (and any officer or agent of the Bank with full power of substitution  and
revocation)  as the Grantor's attorney-in-fact (coupled with an interest),  with
full authority in the place and stead of the Grantor and in the name of the
Grantor  or otherwise, from time to time in the Bank's discretion, to  take  any
action  and  to  execute  any instrument which the Bank may  deem  necessary  or
advisable  to  accomplish  the purposes of this Security  Agreement,  including,
without limitation:

          (a)   to  obtain and adjust insurance required to be paid to the  Bank
pursuant to Section 11 hereof,

          (b)   to ask, demand, collect, sue for, recover, compound, receive and
give  acquittance  and receipts for moneys due and to become  due  under  or  in
respect of any of the Collateral;

          (c)  to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clauses (a) and (b) above;

          (d)   to  file  any  claims  or  take  any  action  or  institute  any
proceedings which the Bank may deem necessary or desirable for the collection of
any  of  the  Collateral or otherwise to enforce the rights  of  the  Bank  with
respect to any of the Collateral; and

          (e)  to discharge any lien or encumbrance on or against the Collateral
or bond the same.

<PAGE>

     14.   Bank  May  Perform Agreements.  If the Grantor fails to  perform  any
agreement contained herein, the Bank may, after three days notice to the Grantor
(unless  the  Bank  in  good faith deems it necessary  to  take  more  immediate
action),  itself  perform,  or cause performance of, such  agreements,  and  the
reasonable  out-of-pocket expenses of the Bank incurred in connection  therewith
shall  be payable by the Grantor under Section 18(b) hereof (including,  without
limitation,  the  reasonable  fees  and  disbursements  of  counsel);  provided,
however, that any such action by the Bank shall not be deemed to be a waiver  of
any  Event  of  Default, which may have resulted from the Grantor's  failure  to
perform any such agreement.
     
     15.   Bank's Duties. The powers conferred on the Bank hereunder are  solely
to  protect its interest in the Collateral and shall not impose any duty upon it
to  exercise any such powers or any liability upon the Bank upon the exercise of
any  such  powers.   Except  for  the safe custody  of  any  Collateral  in  its
possession and the accounting for moneys actually received by it hereunder,  the
Bank  shall  have  no  duty as to any Collateral or as  to  the  taking  of  any
necessary  steps  to preserve rights against prior parties or any  other  rights
pertaining  to  any  Collateral.  The Bank shall be  deemed  to  have  exercised
reasonable  care  in  the  custody and preservation of  the  Collateral  in  its
possession if the Collateral is accorded treatment substantially equal  to  that
which the Bank accords its own property.

     16A.  Event of Default.  If any of the following events (each an "Event  of
Default" hereunder) shall occur and be continuing:

          (a) any Event of Default (as defined in the Note) shall occur; or
          
          (b) Grantor shall fail to satisfy any of its obligations or breach any
of its representations, warranties or covenants hereunder.

     16B.  Remedies  Upon Default.  If any Event of Default shall have  occurred
and be continuing:

          (a)  The Bank may exercise in respect of any Collateral in addition to
other rights and remedies provided for herein or otherwise available to it,  all
the rights and remedies of a secured party under applicable law and also may  do
any or all of the following, to the extent permitted under applicable law:

               (i)   In  the name of the Bank, or in the name of the Grantor  or
otherwise, demand, sue for, collect or receive any money or property at any time
payable  or  receivable on account of or in exchange for, or make any compromise
or  settlement deemed desirable with respect to, any of the Collateral, but  the
Bank shall be under no obligation so to do, and the Bank, may extend the time of
payment, arrange for payment in installments, or otherwise modify the terms  of,
or  release, any of the Collateral without thereby incurring responsibility  to,
or discharging or otherwise affecting any liability of, the Grantor.

               (ii) Enter upon the premises, or wherever any Collateral may  be,
and  take  possession  thereof, and maintain such possession  on  the  Grantor's
premises,  or  demand  and  receive such possession  from  any  person  who  has
possession thereof, or remove the Collateral or any part thereof, to such  other

<PAGE>

places as the Bank may desire, without any obligation to pay the Grantor for any
use and occupancy of such premises.

                 (iii)     Require the Grantor to, and the Grantor hereby agrees
that it will at its expense and upon request of the Bank forthwith, assemble all
or  part of the Collateral as directed by the Bank and make it available to  the
Bank  at a place to be designated by the Bank which is reasonably convenient  to
both parties.

               (iv) Without notice except as specified below and with or without
taking  the possession thereof, sell, lease, assign, grant an option or  options
to purchase or otherwise dispose of the Collateral or any part thereof in one or
more parcels at public or private sale, at any location chosen by the Bank,  for
cash,  on  credit or for future delivery, and at such price or prices  and  upon
such  other  terms  as the Bank may deem commercially reasonable.   The  Grantor
hereby  agrees that, to the extent notice of sale shall be required by  law,  at
least five (5) business days' notice to the Grantor of the time and place of any
public  sale  or  the  time after which any private sale is  to  be  made  shall
constitute  reasonable notification, but notice given in  any  other  reasonable
manner or at any other reasonable time shall constitute reasonable notification.
The  Bank  shall not be obligated to make any sale of Collateral  regardless  of
notice  of  sale having been given.  The Bank may adjourn any public or  private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was  so  adjourned.   The  Grantor hereby agrees that the  Bank  shall  have  no
obligation  to  preserve rights in the Collateral against prior  parties  or  to
marshal  any  Collateral  for the benefit of any person.   The  Bank  is  hereby
granted  a license or other right to use, without charge, the Grantor's  labels,
patents,  copyrights,  rights of use of any name, trade  secrets,  trade  names,
trademarks  and  advertising  matter,  or any  other  Intellectual  Property  or
property  of  a similar nature, as it pertains to the Collateral, in  completing
production of, advertising for, sale of, and the selling of any Collateral,  and
the Grantor's rights under all licenses and franchise agreements shall inure  to
the Bank's benefit in such connection.

               (v)   The Bank may, if the Loans shall have matured or shall have
been  accelerated by the Bank in addition to any other rights it may have  under
this  Security  Agreement  or  otherwise, appoint by  instrument  in  writing  a
receiver  or receiver and manager (both of which are herein called a "Receiver")
of  all or any part of the Collateral or may institute proceedings in any  court
of  competent  jurisdiction for the appointment of such a  Receiver.   Any  such
Receiver  is hereby given and shall have the same powers and rights as the  Bank
has  under this Security Agreement, at law or in equity.  In exercising any such
powers, any such Receiver shall act as, and for all purposes shall be deemed  to
be,  the agent of the Grantor and the Bank shall not be responsible for any  act
or omission of any such Receiver absent the wilful misconduct of the Bank or the
Receiver.   The Bank may appoint one or more Receivers hereunder and may  remove
any  such  Receiver or Receivers and appoint another or other in  his  or  their
stead  from  time  to  time.  Any Receiver so appointed may  be  an  officer  or
employee  of  the Bank.  The Grantor agrees that any Receiver appointed  by  the
Bank  need  not be appointed by, nor is his appointment required to be  ratified
by, nor his actions in any way supervised by, a court.

               (vi)  Apply,  without notice, any cash or cash items constituting
Collateral  in  the  possession of the Bank (constructive or  otherwise),  in  a
manner  consistent with this Security Agreement and the Note, to payment of  any
of the Obligations.

<PAGE>


The Grantor hereby waives, to the extent permitted by applicable law, all rights
of  the  Grantor  to  prior notice and hearing under any applicable  statute  or
constitution  (in the case of such notice only, to the extent that such  statute
or constitution gives rights as to notice that are greater than are provided for
herein  or  provides for any notice period when none is otherwise  provided  for
herein).

          (b)  All cash proceeds received by the Bank in respect of any sale of,
collection  from,  or other realization upon all or any part of  the  Collateral
may,  in  the  discretion of the Bank, be held by the Bank  as  Collateral  for,
and/or  then  or  at any time thereafter applied (after payment of  any  amounts
payable  to the Bank pursuant to Section 18 hereof) in whole or in part  by  the
Bank  against all or any part of the Obligations in such order as the Bank shall
elect.  Any surplus of such cash or cash proceeds held by the Bank and remaining
after  payment in full of all the Obligations shall be paid over to the  Grantor
or to whomsoever may be lawfully entitled to receive such surplus.

     17.  Absolute Obligations.  The Obligations will be paid unconditionally by
the  Grantor,  including, without limitation, without regard  to  any  right  of
setoff  or cross-claim under any applicable law.  Any indebtedness owing by  the
Bank  to  the  Grantor  may  be  setoff and applied  by  the  Bank  against  the
Obligations as set forth in the Note.

     18.   Indemnity  and Expenses. (a) The Grantor agrees to  defend,  protect,
indemnify and hold harmless the Bank and each past, current, or future  officer,
director, employee, shareholder, affiliate and agent of the Bank (each  a  "Bank
Party")  from and against any and all liabilities, obligations, losses, damages,
penalties,  actions, judgment, suits, claims, costs, expenses and  disbursements
of  any kind or nature whatsoever (including, without limitation, the reasonable
fees  and  disbursements of counsel for each Bank Party incurred  in  connection
with  any  action or proceeding between: (i) the Grantor or Vivax  or  Mediq/PRN
Life  Support Services, Inc. and any Bank Party or (ii) between any  Bank  Party
and   any   third  party  or  otherwise,  with  respect  to  any  investigative,
administrative  or  judicial proceeding, whether or not such indemnified  person
shall  be  designated  a party thereto), imposed on, incurred  by,  or  asserted
against  such Bank Party (whether direct, indirect, economic, special, punitive,
treble  or  consequential  and whether based on any  Federal,  state,  local  or
foreign  laws  or  other statutory regulations, including,  without  limitation,
environmental laws, securities and commercial laws and regulations, under common
law  or  equitable principles) in any manner relating to or arising out of  this
Security  Agreement, the Note or any of the other Loan Documents,  or  any  act,
event or transaction related or attendant thereto or contemplated hereby, or any
action  or  inaction  by  any Bank Party hereunder or in  connection  therewith,
including,  in  each  such  case, any allegation of any  such  matters,  whether
meritorious or not (collectively, the "Indemnified Matters"); provided, however,
that  the  Grantor  shall have no obligation to any Bank  Party  hereunder  with
respect  to  Indemnified Matters resulting from the gross negligence or  willful
misconduct of such Bank Party.  The covenants of the Grantor contained  in  this
Section  18(a) shall survive the payment in full of all amounts due and  payable
under  this Security Agreement, the Note or any of the other Loan Documents  and
the  full  satisfaction of all other Obligations, and are in  addition  to,  and
cumulative with respect to, all other indemnities contained in the Note  or  any
of the other Loan Documents.


<PAGE>

            (b) The Grantor will, upon demand pay to the Bank the amount of  any
and  all expenses, including the reasonable fees and disbursements of the Bank's
counsel  and  of  any  experts and agents (including,  without  limitation,  any
affiliates  of  the Bank), which the Bank may incur in good faith in  connection
with  (i) the administration of this Security Agreement, (ii) the administration
of  the  Vivax  Custody  Agreement;  (iii) the  custody,  preservation,  use  or
operation of, or the sale of, collection from, or other realization upon, any of
the  Collateral, including, without limitation, any funds received by  the  Bank
pursuant  to the Vivax Custody Agreement and any and all amounts paid by  or  on
behalf  of  the  Bank in respect of returned and uncollected checks  and  drafts
pursuant  to  Section 9(b) hereof, (iv) all out-of-pocket costs and expenses  in
connection with the audits, inspections and investigations conducted by the Bank
pursuant to Section 9(c) hereof, (v) the exercise or enforcement of any  of  the
rights  of the Bank hereunder, including, without limitation, any and all audits
with respect to the Collateral conducted by or on behalf of the Bank pursuant to
Section  4(c) hereof, or (vi) the failure by the Grantor to perform  or  observe
any  of the provisions hereof; provided, however that the Grantor shall not have
any  obligation  to  the Bank to pay such costs or expenses  if  such  costs  or
expenses  were incurred primarily due to the Bank's gross negligence or  willful
misconduct.

     19.   Security Interests Absolute.  All rights of the Bank and the security
interests  hereunder,  and all obligations of the Grantor  hereunder,  shall  be
absolute and unconditional, irrespective of:

          (a)   any lack of validity or enforceability of the Note or any  other
Loan Document or other agreement or instrument relating thereto;

          (b)   any  action or inaction by any third party, including,  but  not
limited to Vivax, Mediq or any lessee or sublessee of the Beds;

          (c)   any change in the time, manner or place of payment of, or in any
other  term of, all or any of the Obligations or any other amendment  or  waiver
of, or any consent to any departure from, the Note or any Loan Document;

          (d)   any  exchange, release or non-perfection of any portion  of  the
Collateral or any other collateral held by the Bank or any release or  amendment
or  waiver of, or consent to any departure from, any guaranty for all or any  of
the Obligations; and

          (e)  any other circumstance which might otherwise constitute a defense
available  to,  or a discharge of, the Grantor in respect of the Obligations  or
otherwise with respect to this Security Agreement.

     20.   Survival  of  Representations and  Warranties.   The  Grantor  hereby
covenants,  warrants  and  represents to the Bank that all  representations  and
warranties  of  the Grantor contained in this Security Agreement  are  true  and
correct at the time of the Grantor's execution of this Security Agreement, shall
survive the execution, delivery and acceptance hereof by the parties hereto, and
the  closing  under the Note, and shall continue in effect until no  Obligations
shall  remain  outstanding  or  until the earlier termination  of  the  security
interest granted hereby.


<PAGE>

     21.   Waiver  by the Bank.  The Bank's failure, at any time  or  times,  to
require  strict  performance by the Grantor of any provision  of  this  Security
Agreement  shall not waive, affect or diminish any right of the Bank  thereafter
to demand strict compliance and performance therewith.  Any suspension or waiver
by  the Bank of an Event of Default shall not suspend, waive or affect any other
Event of Default, whether the same is prior or subsequent thereto and whether of
the  same  or  of  a  different  type.  None of  the  undertakings,  agreements,
warranties,  covenants  and  representations of the Grantor  contained  in  this
Security  Agreement  and  no  Event of Default shall  be  deemed  to  have  been
suspended  or  waived by the Bank, unless such suspension or  waiver  is  by  an
instrument  in  writing signed by an officer of the Bank  and  directed  to  the
Grantor specifying such suspension or waiver.
     
     22.   Severability.  Wherever  possible, each provision  of  this  Security
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law,  but  if  any  provision of this Security  Agreement  shall  be
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective   to   the  extent  of  such  prohibition  or  invalidity,   without
invalidating the remainder of such provision or the remaining provisions of this
Security Agreement.

     23.   Provisions Reasonable.  The Grantor hereby expressly acknowledges and
agrees that the provisions of this Security Agreement and, in particular,  those
respecting remedies and powers of the Bank against the Grantor, its business and
the  Collateral  upon the occurrence of any Event of Default,  are  commercially
reasonable and not manifestly unreasonable.

     24.   Amendments.  No amendment or waiver of any provision of this Security
Agreement  nor  consent to any departure by the Grantor herefrom  shall  in  any
event  be  effective unless the same shall be in writing and signed by the  Bank
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.

     25.   Addresses  for Notices.  Each notice to, and each  demand  upon,  the
Grantor by the Bank relating to this Security Agreement and each notice to,  and
each  demand  upon, the Bank by the Grantor relating to this Security  Agreement
and  any notice to the Bank of the bankruptcy, insolvency or consummation of any
other similar proceeding of the Grantor, Vivax or Mediq shall specifically refer
to  this Security Agreement, and shall be in writing (including facsimiles)  and
shall  be conclusively deemed to have been given when addressed, sent, delivered
or received (as applicable) and so deemed under Section 17 of the Note.

     26.   Continuing  Security Interest; Assignments.  This Security  Agreement
shall  create  a continuing security interest in the Collateral granted  by  the
Grantor and shall (i) remain in full force and effect until the Obligations  are
indefeasibly paid in full, (ii) be binding upon the Grantor, its successors  and
assigns,  and  (iii) inure, together with the rights and remedies  of  the  Bank
hereunder,  to  the  benefit  of the Bank and its  successors,  transferees  and
assigns.    The   Grantor's  successors  and  assigns  shall  include,   without
limitation,  a  receiver, trustee or debtor-in-possession thereof  or  therefor.
When  the  Obligations have been indefeasibly paid in full  and  are  no  longer
outstanding,  the  security interests granted hereby  shall  terminate  and  all
rights  to  the Collateral granted by the Grantor shall revert to  the  Grantor.
Upon any such termination, the Bank will, at the Grantor's expense, execute  and
deliver to the Grantor such documents as the Grantor shall reasonably request to
evidence such termination.


<PAGE>

     27.   Governing Law; Terms.  This Security Agreement shall be  governed  by
and construed in accordance with the substantive, internal laws of the State  of
New  York,  without  regard  to  its principles of  conflicts  of  law.   Unless
otherwise defined herein or in the Agreement, terms used in Articles 8 and 9  of
the  Uniform Commercial Code in the State of New York are used herein as therein
defined.

     28.   Consent to Jurisdiction and Service of Process: WAIVER OF JURY TRIAL.
The  Grantor and the Bank agree that Sections 26 and 28 of the Note shall  apply
with  respect  to  any  litigation  based on  or  arising  under  this  Security
Agreement, and such Sections are incorporated by reference herein.

     29.   Modification  of  Agreement.  Other than as set  forth  herein,  this
Security  Agreement may not be modified, discharged or waived, in  whole  or  in
part,  except by a writing signed by each of the parties hereto.  No  statement,
promise  or representation as to the enforceability, validity or intent  of  the
Bank to enforce this Security Agreement or any of its terms has been made by the
Bank  or any person acting or purporting to act on their behalf, and the Grantor
expressly acknowledges that it has not relied on any such statement, promise  or
representation in entering into or executing this Security Agreement.
     
     30.   Limitation of Liability.  No claim may be made by the Grantor or  any
other  person  against any Bank Party for any special, indirect,  consequential,
punitive or treble damages in respect of any claim for breach of contract or any
other  theory  of  liability  arising out of  or  related  to  the  transactions
contemplated  by this Security Agreement, the Note, any other Loan Documents  or
any  act,  omission or event occurring in connection herewith or therewith;  and
the Grantor hereby waives, releases and agrees not to sue upon any claim for any
and all special, indirect, consequential, punitive or treble damages, whether or
not accrued and whether or not known or suspected to exist in its favor.

     31.   Headings;  Construction.   The  Section  headings  in  this  Security
Agreement  are  for  convenience only and shall not be  used  in  construing  or
interpreting  any  provision  of  this  Security  Agreement.   Unless  otherwise
specified, terms such as "hereunder", "herein" or "hereof" shall be construed as
referring  to this Security Agreement as a whole and not merely to  the  clause,
sentence, paragraph or section in which they appear.  The word "person" shall be
construed to mean any natural person or entity of any kind whatsoever.

     IN  WITNESS WHEREOF, the parties hereto have caused this Security Agreement
to  be duly executed and delivered by their respective officers there into  duly
authorized as of the date first above written.

                              MED SERVICES CORP.


                              By:    /s/ David L. Koffman
                              Name:  David L. Koffman
                              Title: President


                              AGREED:

<PAGE>

                              ATLANTIC BANK OF NEW YORK

                              
                               By:    /s/ Paula Park
                               Name:  Paula Park
                               Title: Vice President

<PAGE>

                         Schedule A to
                       Security Agreement



                  PRINCIPAL PLACE OF BUSINESS:

















                        RECORDS, CHATTEL PAPER,
                                                                  ETC.
LOCATED AT:

<PAGE>

                         Schedule B to
                       Security Agreement



              LOCATION OF INVENTORY AND EQUIPMENT:


Florida -           Broward County, Palm Beach County, Dade County

New Jersey -        Camden County

Conn. -             Middlesex County

New Hampshire -     Rockingham County

Georgia -           Macon County

Maryland -          Howard County

Texas -             Harris County

<PAGE>

Exhibit 1 to
Security Agreement

<PAGE>

Exhibit 2 to
Security Agreement

_______________________________
     1At the date hereof the Benchmark Rate is 8.5%.