U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   FORM 10-KSB

[X]  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934 [FEE REQUIRED]
     For the fiscal year ended March 31, 2000.

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [NO FEE REQUIRED]

     For the transition period from            to            .
                                    ----------    -----------

                       Commission file number  2-87738

                       T.H. LEHMAN & CO., INCORPORATED
                (Name of small business issuer in its charter)

            Delaware                                           22-2442356
(state or other jurisdiction                               (I.R.S./Employer
of incorporation or organization                         Identification Number)

4900 Woodway, Suite 650, Houston, Texas                            77056
(Address of principal executive offices)                         (Zip Code)

Issuer's telephone number:  (713) 621-8404

Securities registered under Section 12(b) of the Exchange Act:

                             Common Stock, $.01 Par.
                                (Title of Class)

Securities registered under Section 12(g) of the Exchange Act:  None.

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

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will 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-
KSB or any amendment to this Form 10-KSB. [X]

     Issuer's revenues for its most recent fiscal year were $605,521.

     The aggregate market value of the voting stock held by nonaffiliates of the
registrant is approximately $493,619 as of June 15, 2000.

                                  4,742,720
                                  _________
        (Number of shares of common stock outstanding as of June 15, 2000)

                                     PART I

BUSINESS ITEM 1.  DESCRIPTION OF BUSINESS

Introduction:

T.H. Lehman & Co.,  Incorporated  (referred to as the "Company or  Registrant"),
was organized in March,  1983 as a Small Business  Development  Company ("SBDC")
and was an SBDC until April, 1988. From April, 1988 to August,  1990 it operated
through  subsidiaries  as a  broker/dealer  and  investment  advisor.  Effective
October 27,  1989,  the Company  acquired all of the  outstanding  stock of Self
Powered Lighting, Inc. a New York corporation with offices in Elmsford, New York
("SPL") from an entity affiliated with two of the Company's directors. Effective
July  1,  1993  the  Company  sold  all  of  the  outstanding  stock  of  SPL to
Helionetics,  Inc. Although it is no  longer an SBDC and has sold its
broker/dealer  and  investment  advisory business,  the Company continues to
maintain certain of its investments.  During 1992 the Company entered the
business of medical accounts  receivable  financing and furnishing medical
providers with non-medical management services.

Medical Financial Services:

The Company in August  1992 began  operations  in the area of medical  financial
services,  such services  being  provided  through  specific  subsidiaries.  The
primary focus of these  operations  is the financing and  collection of accounts
receivable  generated  by  medical  practitioners  through  their  provision  of
diagnostic services and patient treatment.  However,  some of these subsidiaries
offer substantial additional services to medical practitioners. The services are
marketed both on an integrated and on an unbundled  basis to doctors,  depending
upon their individual needs.  Initially,  this is being accomplished through the
following operating entities:

MedFin Management Corp. was created to provide medical  practitioners  with non-
medical  general and  administrative  functions such as  accounting,  marketing,
management,   non-medical  staffing,  facilities,  equipment,  and  billing  and
collection  of  receivables.  Revenues  are derived  from fees charged for these
services.  Presently,  the  company  has one  client,  which  operates  a multi-
specialty clinic in the Los Angeles,  California area. This client  concentrates
its practice on workers' compensation medicine and treatment for personal injury
victims, providing services primarily on a lien basis.

MedFin  Management  Corporation  receives,  as a fee for its  clinic  management
services, revenues that are indirectly related to the overall collections of its
client practitioners' receivables. MedFin Management Corporation also provides
working capital on an as-needed basis to those clients with receivables as
collateral  for such  advances and UCC filings made  thereon.  However, the
Company is not  engaged in the  practice  of  medicine  which,  for non-  doctor
controlled entities, is not legally allowed in California.

As a further  adjunct  to the  financing/management  services  provided  through
subsidiaries to medical  practitioners,  effective February 1, 1993, the Company
purchased Healthcare Professional Billing Corp. (HPB), in Broomfield, Colorado a
billing and collection  service that is utilized by doctors in the  metropolitan
Denver and  surrounding  areas.  The purchase price was $354,080,  consisting of
$140,000 in cash and the balance of $214,080 in notes payable.

In a transaction that was effective October 1, 1996, the Company transferred 50%
of the  outstanding  stock and  substantially  all of the control of  Healthcare
Professional Billing Corp. to certain key employees of that company.  Until that
time, Healthcare Professional Billing Corp. was a wholly-owned subsidiary of the
Company.  As a result of the  transfer,  the  subsidiary's  financial  position,
results  of  operations  and cash  flows are not  consolidated  with that of the
Company's subsequent to the transfer date.

MedFin Capital Resources,  Inc. and HLT Holding  Corporation were established to
engage in the  purchase of medical  accounts  receivable  as well as the secured
lending of funds to doctors against their receivables.  This is accomplished via
bulk purchases of accounts receivable, often in conjunction with commitments for
purchases  of future  receivables  generated  or  advances  against  such future
receivables.

HLT Holding  Corporation has, purchased one accounts  receivable  portfolio that
was  derived  from  medical  services  provided  to  plaintiffs,  an August 1992
transaction  consisting of gross account  balances of $2,639,010.  Consideration
given amounted to $250,000 cash and $500,000 in notes payable. Gross collections
through  March,  2000  amounted to $863,592 and  write-offs  totaled  $1,283,299
leaving a balance of $492,119 face value with an expected nominal realization.


Environmental Matters:

The company is subject to various laws and regulations  with respect to employee
health and safety and the protection of the  environment.  The Company  believes
that it is in  substantial  compliance  with  such  laws  and  regulations.  See
Footnote 12: Allowance for Environmental Liability.


Employees:

The Company employs 8 persons in the medical management field who are engaged in
executive,  administrative and clerical positions. The Company believes that its
employee relations are satisfactory. Employees are not subject to any collective
bargaining  agreement and work stoppages  have not yet  materially  affected the
Company's business.

                                     Page 2

<PAGE>
ITEM 2.
DESCRIPTION OF PROPERTY

The Company presently has an administrative  sharing  arrangement  which,  among
other things,  provides use of other office facilities in Houston, Texas. MedFin
Management  Corporation  leases  office  space in Burbank,  California  under an
operating  lease that expires on October 31, 2000.  Monthly rental  payments are
$7,559, including all utilities.


ITEM 3.
LEGAL PROCEEDINGS

Neither the Company nor its subsidiaries is currently party to any other
material legal proceeding.


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

There has not been an annual meeting held since November 1991.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

a)       Market Information

The  Company's  Common  Stock  (symbol  THLM) is traded in the  Over-The-Counter
Market,  on the  Electronic  Bulletin  Board.  The  range  of  high  and low bid
quotations as reported by the NASDAQ  Inter-Dealer  Quotation System for the two
year period ended March 31, 2000 are as follows:

For the Quarter Ended               High                     Low

        June 30, 1998                        1/2                      1/2
        September 30, 1998                   1/2                      1/2
        December 31, 1998                    1/2                      1/2
        March 31, 1999                       1/2                      1/2

        June 30, 1999                        1/8                      1/8
        September 30, 1999                   1/8                      1/8
        December 31, 1999                    1/8                      1/8
        March 31, 2000                       1/8                      1/8

The above quotations do not include  commissions,  markups, or markdowns and may
not represent actual transactions.

On August 15, 1994, the Company was delisted from the NASDAQ Small Cap Market as
a result of failing to timely file the annual report.

b)   Number of Holders of Common Stock

As of June 15, 2000 the Company had  approximately  138  shareholders of record.
Cede & Co. was the  registered  holder of 965,600  shares.  Because  many of the
shares are  registered  in street name,  the Company  believes  that there are a
substantially greater number of beneficial owners.

c)   Dividends on Common Stock

The Company's Board of Directors does not currently intend to pay cash dividends
and has not paid any in the two year period ended March 31, 2000.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Statements of Operations:

Fiscal Year Ended March 31, 2000 Compared to Fiscal Year Ended March 31, 1999

Revenues  totaled  $605,521  during the fiscal year ended March 31,  2000,  45%
lower than the prior year's  revenues of  $1,106,404.  The gain on  investments
decreased to $0  from the previous  year's  $447,589  when there had been a gain
attributed to sales of its investment in KTI, Inc. to settle certain notes
and accounts payable.  Income from Finance Receivables also decreased 40% due to
decreased collections on past receivables. Interest expense increased $56,343
from the prior years  $34,637 due to an increase in notes payable. General
and Administrative expenses decreased 40% to $681,920  mainly due to
Uncollectible  accounts  expense  decreasing and lower  employee  expenses.


                                     Page 3

<PAGE>

Fiscal Year Ended March 31, 1999 Compared to Fiscal Year Ended March 31, 1998

Revenues  totaled  $1,106,404  during the fiscal year ended March 31,  1999,  5%
higher than the prior year's  revenues of  $1,057,377.  The gain on  investments
increased to $447,589  from the previous  year's  $391,576  with the entire gain
being attributed to sales of its investment in KTI, Inc. to settle certain notes
and accounts payable in the aggregate amount of $400,920.  Also, Management fees
increased to $629,371  from the prior year's  $516,034 due to increased  patient
activity.  Although total revenue was slightly up due to the gain on investments
and  income  from  Management  fees,  other  revenues  were down.  Interest  and
dividends  were  $3,608  compared to $75,594  for the  previous  year due to the
discontinuance of interest being recorded on a certain note receivable. Interest
expense  decreased to $34,637 from the prior years  $84,736 due to a decrease in
notes payable. General and Administrative expenses increased 9% to $1,128,269
mainly due to Uncollectible  accounts  expense  increasing and being  partially
offset  by lower  employee  expenses.  Collection  costs  also decreased 68% to
$20,808 in 1999 from $64,337 in 1998.


Liquidity, Capital Resources and Income Taxes

At March 31, 2000 cash  amounted to $9,081,  56% less than the cash  balance of
$20,677 at March 31, 1999.

The Company's primary source of liquidity has been the cash it has obtained from
the liquidation of its investment  portfolio and collection of medical  accounts
receivable.

The Company  anticipates that internally  generated cash and its lines of credit
will be sufficient to finance overall operations.

The Company is continually  seeking to acquire  businesses and may be in various
stages  of  negotiations  at any point in time  which  may or may not  result in
consummation of a transaction. To provide funding for such acquisitions it may
take a number of actions including (i) selling of its existing  investments (ii)
use of available  working  capital  (iii)  seeking short or long term loans (iv)
issuing  stock.  In addition,  the Company may seek  additional  equity funds if
needed.  These sources of capital may be both conventional and  non-traditional.
The  Company has no  existing  funding  commitments  and is  presently  under no
contractual obligation to make any investment or acquisition.

At March 31,  2000,  the  Company  had an  operating  tax loss  carryforward  of
approximately $5,365,000.

Impact of Inflation and Other Business Conditions

Generally,  increases in the Company's  operating costs  approximate the rate of
inflation. In the opinion of management, inflation has not had a material effect
on the operation of the Company. The Company has historically been able to react
effectively to increases in labor or other operating costs through a combination
of greater productivity and selective price increases where allowable.

Year 2000 Issue

The Company purchased a medical practice management system (including  software,
hardware  needed to utilize the system,  licensing,  training  and  support) for
approximately  $30,000 in 1996.  This system is  specifically  designed  for the
management of medical  practices,  which accounts  for  most  of  the  Company's
revenue.  The  version  of  the  system  the  Company  owned  was  not Year 2000
compliant.  However the vendor of this  system updated the version with one that
is fully Year 2000 compliant without charge.

The Company's  financial  statements are produced by the  management  company of
T.H.  Lehman & Co.,  Inc.  which uses a licensed  financial  and general  ledger
software program which is currently Year 2000 compliant.

The Company utilizes  personal  computers that utilizes  Microsoft Windows 95 or
higher.  The Company  believes  that the Windows  operating  system is Year 2000
compliant.


ITEM 7. FINANCIAL STATEMENTS

The financial statements and supplementary data are listed at "ITEM 13: EXHIBITS
AND REPORTS ON FORM 10-KSB" in this document.

 (See Index Exhibits Part IV Item 13 (a) Financial Statements: F1)


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

Not Applicable.

                                     Page 4

<PAGE>
                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The Directors and Executive Officers of the Company are as follows:

Name                     Age              Director Since              Position

Dibo Attar               60                1988                       Director
Elliot Gerstenhaber      54                1996   Director/Secretary/Treasurer
Richard Farkas           74                1996                       Director

On December 5, 1997,  Edmond Nagel  resigned as President of the Company.  As of
the date of filing  this  report,  the  Company is still  searching  for his re-
placement.

The term of  office  of each  director  is  until  the next  Annual  Meeting  of
Shareholders,  or until  such  time as their  successors  shall  have  been duly
elected and qualified. Officers serve at the pleasure of the board. There are no
family relationships between any of the Company's directors or officers.


Background of Officers and Directors:

Dibo Attar's principal  business is an investor and a consultant to domestic and
international companies.

Richard P. Farkas is a graduate of Princeton and Yale  Universities and attended
New Jersey Law School. He held corporate  executive and operating positions with
major international companies prior to acquiring his own paper products company,
which was later sold to a major consumer products  company.  He then founded IMC
International  Management  Consultants,  Inc.,  which  operates  out of  several
domestic and European offices providing services to multi-national  corporations
ranging in annual revenue size from $5 million to $4 billion.

Elliot  Gerstenhaber  is a 1968 graduate of the University of  Pennsylvania.  He
received a juris  doctorate  degree from South Texas  College of Law in 1975. He
recently left the private practice of law to develop real estate  throughout the
southeastern  United States.  He is President of Segue,  Inc., a  privately-held
company.

ITEM 10.  EXECUTIVE COMPENSATION

Compensation of Officers and Directors:

Set forth below is the aggregate  remuneration  paid to the  Company's  officers
during the fiscal years ended March 31, 2000, 1999, and 1998.

     Name and                                               Restricted
     Principal                                                Stock
     Position                     Year        Salary         Awards
 N/A                              2000        $     0        $     0
 N/A                              1999        $     0        $     0
 Edmond C. Nagel, President       1998        $45,833        $     0

Stock Options:

In November 1990 the Board of Directors adopted, and subsequently on November 8,
1991  shareholders  approved,  the adoption of the 1990 Stock Option Plan ("1990
Plan"),  under which options will be granted for an aggregate of 500,000  shares
of  Common  Stock  prior  to  November  20,  2000.  Such  Plan  resulted  in the
termination  of the 1988 Stock  Option  Plan.  Certain  options  were granted to
officers and directors of the Company under the 1990 Stock Option Plan which was
approved by the shareholders. All employees of the Company and its subsidiaries,
as well as  directors,  officers  and third  parties  providing  services to the
Company or its subsidiaries are eligible to participate in the 1990 Plan.

All shares  available under the 1990 Plan are subject to adjustments that may be
made  for a  merger,  recapitalization,  stock  dividend,  stock  split or other
similar  change  affecting  the number of  outstanding  shares of Common  Stock.
Shares  subject to an option that lapses,  terminates  or is  forfeited  will be
available for future options or awards.

Options granted may either be Incentive Stock Options ("ISO")  pursuant to which
the recipient  receives tax benefits or  non-incentive  stock options.  The 1990
Plan provides, among other things, that options may be granted to purchase
shares of Common Stock at a price per share fixed by the Board of Directors and,
in the case of an ISO, at not less than the fair market value of the  applicable
class of the  Company's  Common  Stock on the date of option grant (110% of such
fair market value in the case of optionee's  holding 10% or more of the combined
voting  rights  of the  Company's  securities).  The  Board  of  Directors  or a


                                     Page 5

<PAGE>
committee  appointed  or elected by the Board of one or more Board  members (the
"Committee") may determine the persons to whom options are to be granted and the
number of shares subject to each option. Options may be exercised by the payment
in full in cash or by, with approval of the Board of  Directors,  payment of par
value with a note for the balance.

The Board may at any time amend, suspend, or discontinue the Plan, provided that
certain  amendments  may  not be  made  by the  Board  without  approval  of the
stockholders. Amendments may not alter an outstanding option without the consent
of the optionee.

At the time of adoption of the Plan the Company  issued  ten-year  Stock Options
with an exercise  price at $1.50 to  purchase  350,000  shares of which  350,000
shares were issued to officers,  a consultant and directors.  At the date of the
award the high bid price of the Common Stock was $.75. All outstanding  employee
options are  exercisable at $1.50 per share and all are  non-incentive  options.
60,000  options  were  granted  during the year ended March 31, 1993 at exercise
prices  ranging from $1.50 to $2.00 per share  expiring  through  2000.  105,000
options  were  granted  during the fiscal  year ended March 31, 1995 at exercise
prices of both $1.50 per share and $2.00 per share which  expires in five years.
No options were granted during the fiscal year ended March 31, 1996, 1997, 1998,
1999 and 2000.

Following is a list of all stock options granted:

                        Number of        When         Exercise     Current
     Name               Options         Issued         Price      Status
Julio Henriquez         100,000          1990          $1.50      Canceled
Edmond Nagel            100,000          1990          $1.50      Outstanding
Charles Olson, Jr.       50,000          1990          $1.50      Canceled
Ivor Braka               25,000          1990          $1.50      Canceled
Vincent Galano, Sr.      50,000          1990          $1.50      Canceled
Rodolfo Oeschslin        25,000          1990          $1.50      Canceled
Lee R. Mathis             5,000          1992          $1.90      Expired
Mark S. Cox              20,000          1992          $2.00      Canceled
Murray Husarsky          20,000          1992          $2.00      Expired
Brenda Heartfield        10,000          1992          $1.50      Expired
Julio Henriquez           5,000          1993          $2.00      Expired
Linda Carroll            10,000          1994          $1.50      Expired
Ramanathan Prakash       10,000          1994          $2.00      Expired
Russell Molina            5,000          1994          $2.00      Expired
Allen Goldstone          15,000          1994          $2.00      Expired
Sandy Schwartz           15,000          1994          $2.00      Expired
Brenda Heartfield        50,000          1994          $1.50      Expired
                       ---------
Total Issued            515,000
Less Canceled Shares   (270,000)
Less Expired           (145,000)
                       ---------
Total Outstanding       100,000
                       =========

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Principal Shareholders

The  following  table  lists,  to the  best  of  the  Company's  knowledge,  the
beneficial stock ownership of those persons owning  beneficially more than 5% of
the  Company's  outstanding  common  stock,  as well as the stock  ownership  of
executive officers and each director as of June 15, 2000:


Name and Address Of                   Amount and Nature Of   Percent of Class
 Beneficial Owner                       Beneficial Owner

Title of Class
(a) Common Stock

          Monahan Corporation, N.V.   (4)
          Landhuis Joonchi                   916,840                19.3%
          Kaya Richard J. Beaujon z/n
          P.O. Box 837
          Curacao, Netherlands Antilles

          Burton, N.V.                (4)
          Landhuis Joonchi                   281,383                 5.9%
          Kaya Richard J. Beaujon z/n
          P.O. Box 837
          Curacao, Netherlands Antilles

          Greenwich Securities, Ltd.  (1)
          Via Canc. Molo II                  985,800                20.8%
          CH-6501
          Bellinzona, Switzerland 6901


                                     Page 6

<PAGE>
          Millingway, Inc.            (2)
          c/o Capital Holdings, Inc.         598,164                12.6%
          4900 Woodway, Suite 650
          Houston, TX 77056

          The Bridge Fund N.V.        (4)
          Landhuis Joonchi                   529,893                11.2%
          Kaya Richard J. Beaujon z/n
          P.O. Box 837
          Curacao, Netherlands, Antilles


(b) Security Ownership of Management

          Dibo Attar              (1) (2)         -0-

          Elliot Gerstenhaber                     -0-

          Richard Farkas                          -0-

          Edmond Nagel                (3)    195,601                4.1%


          Directors and Officers
          as Group 5 persons               3,507,681               73.9%
          (1) (2) (3) (4)


Notes to Table of Beneficial Owners and Management:

(1) The securities of Greenwich Securities, Ltd. are owned by the Ezra and Linda
Attar Family  Foundation,  which is a family trust  organized  under the laws of
Lichenstein.  Mr. Dibo Attar,  a  director,  has the sole voting and  investment
power with respect to the common stock owned by Greenwich Securities Ltd.

(2) Dibo Attar is a consultant to Capital Holdings,  Inc., parent to Millingway,
Inc.

(3) Does not include  100,000  stock  options which are fully vested and held by
Edmond Nagel.

(4) Monahan Corporation,  N.V., Burton, N.V., and The Bridge Fund, N.V. are each
Netherlands Antilles corporations whose shareholders comprise groups of European
investors,  none of which are otherwise affiliated with the Company. None of the
individual  shareholders  holds an effective  ownership of the Company exceeding
4.9%.

Except as otherwise indicated,  the address for each of the above persons is c/o
T.H. Lehman & Co., Incorporated, 4900 Woodway, Suite 650, Houston, Texas 77056.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the years ended March 31, 2000 and March 31, 1999,  the Company  incurred
management  fees for  facilities and services  provided by GTD Capital  Holdings
Management  Company in the  amount of $79,200  and  $79,200  respectively.  Such
services  are  believed to have been  provided on terms no less  favorable  than
available from a third party.

Mr. Dibo Attar, a director and an indirect principal  shareholder of the Company
is a consultant to Capital  Holdings,  Inc., the parent of Millingway,  Inc. and
GTD Capital Holding  Management  Company.  During the year ended March 31, 1992,
the Company  entered into a two year line of credit for $450,000 with  Sogevalor
S.A. In exchange for the funding  commitment,  the Company issued a Common Stock
Purchase Warrant  Certificate for the purchase of 100,000 shares of common stock
at $1.25  originally  expiring  February 13, 1994. The company was involved in a
dispute in respect to ownership of this note payable that originally  expired on
December 31, 1997.  The note and the warrant  certificate  were extended to June
30, 1998 by what the Company  considered to be the rightful  owner of that note,
however another party filed a lawsuit  demanding  immediate payment on the note.
The  lawsuit  was  settled on June 8, 1998 for  $10,000  and payment of the note
payable was made in full on July 16, 1998 and the warrants have expired.


Stock Transaction Reports by Officers, Directors and 10% Stockholders:

Section 16(a) of the Securities  Exchange Act of 1934, as amended,  requires the
Company's  directors,  executive  officers  and  holders of more than 10% of the
Company's common stock to file with the Commission  initial reports of ownership
and reports of changes in ownership of common stock and other equity  securities
of the Company.  To the Company's  knowledge,  based solely on copies of reports
furnished to the Company and  information  furnished by the  reporting  persons,
each officer, director and 10% stockholder of the Company was in compliance with
all  reporting  requirements  under  Section  16(a) for the year ended March 31,
2000.


                                     Page 7

<PAGE>
PART IV

ITEM 13.  EXHIBITS AND REPORTS ON FORM 10-KSB

The following documents are filed as a part of this report:

Independent Auditor's Report

Consolidated Balance Sheets
           As of March 31, 2000 and 1999
Consolidated Statements of Operations
          Years Ended March 31, 2000 and 1999
Consolidated Statements of Changes in Stockholders' Equity
          Years Ended March 31, 2000 and 1999
Consolidated Statements of Cash Flows
          Years Ended March 31, 2000 and 1999
Notes to Consolidated Financial Statements

     (a)  Financial Statements - See Index to Financial Statements at Page F-1.

     (b)  Reports on Form 8-K.  No reports on Form 8-K were filed during the
          quarter ended March 31, 2000.

     (c)  Exhibits:

Exhibit No. Exhibit

3.1         Certificate of Incorporation of T.H. Lehman & Co., Incorporated
            (the Company) as amended.*

3.2         By-laws of the Company.  Incorporated by reference from the
            Company's Form 8-A dated October 31, 1984 for Registration of
            Certain Classes of Securities Pursuant to Section 12(b) or (g) of
            the Securities Exchange Act of 1934.*

4.1         Stock Purchase Agreement, dated February 23, 1988, by and between
            the Company and Greenwich Securities, Inc. incorporated by
            reference from the Company's Current Report on Form 8-K dated May
            10, 1988.*

10.1        Acquisition Agreement, dated December 28, 1988, by and between the
            Company and Greenwich Securities, Inc. incorporated by reference
            from the Company's Current Report on Form 8-K dated May 10, 1988.*

10.2        Letter Agreement, dated April 30, 1990, between the Company and
            Millingway, Inc. amending the Acquisition Agreement, dated
            December 28, 1989.*

10.4        Employment Agreement, dated as of January 2, 1990, between SPL and
            Julio Henriquez.*

10.6        Agreement, dated March 14, 1991, by Convergent Solutions, Inc.,
            Vincent Galano, Ralph Reda, Thomas Borsanko, The Company, Dibo
            Attar, and Attar ISERP (Profit Sharing Plan).*

10.7        Sales contract dated October 8, 1993 by and between the Company and
            Helionetics, Inc. incorporated by reference from the Company's
            current report on Form 8-K dated July 1, 1993.*


*These items have been previously submitted and are therefore  incorporated only
by reference.

Individual  financial  statements  of the  Company  are  not  furnished  because
consolidated financial statements are furnished.


                                     Page 8

<PAGE>
SIGNATURES

In accordance with 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.

T.H. Lehman & Co., Incorporated

Dibo Attar, Acting Principal Executive Officer

Date: June 28, 2000

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

Signature                     Capacities                 Date



/s/ Dibo Attar              (Acting Principal            June 28, 2000
Dibo Attar                 Executive Officer)


/s/ Elliot Gerstenhaber     Secretary/Treasurer          June 28, 2000
Elliot Gerstenhaber       (Principal Accounting &
                             Financial Officer)


/s/ Dibo Attar                 Director                  June 28, 2000
Dibo Attar

/s/ Elliot Gerstenhaber        Director                  June 28, 2000
Elliot Gerstenhaber


/s/ Richard P. Farkas          Director                  June 28, 2000
Richard P. Farkas


                                     Page 9
<PAGE>

T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED MARCH 31, 2000 AND MARCH 31, 1999

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:

Report of Independent Auditor                                          F-2

Consolidated Balance Sheets
           As of March 31, 2000 and 1999                               F-3

Consolidated Statements of Operations and Comprehensive Income (Loss)
          Years Ended March 31, 2000 and 1999                          F-4

Consolidated Statements of Stockholders' Equity
          Years Ended March 31, 2000 and 1999                          F-5

Consolidated Statements of Cash Flows
          Years Ended March 31, 2000 and 1999                          F-6

Notes to Consolidated Financial Statements                             F-7


<PAGE>

REPORT OF INDEPENDENT AUDITOR

To the Board of Directors
T.H. Lehman & Co., Incorporated

I  have  audited  the  consolidated   balance  sheets  of  T.H.  Lehman  &  Co.,
Incorporated  and  subsidiaries  as of March 31, 2000 and 1999,  and the related
consolidated   statements  of  operations  and   comprehensive   income  (loss),
stockholders'  equity and cash flows for the years then ended.  These  financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on my audits.

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

In my opinion,  the consolidated  financial statements referred to above present
fairly, in all material  respects,  the consolidated  financial position of T.H.
Lehman & Co.,  Incorporated  and subsidiaries as of March 31, 2000 and 1999, and
the consolidated results of their operations, stockholders'equity and cash flows
for the years then ended,  in  conformity  with  generally  accepted  accounting
principles.


Jeffrey S. Gilbert, CPA


Los Angeles, California
June 28, 2000


                                F-2

<PAGE>
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2000 AND MARCH 31, 1999

                                ASSETS

                                                          2000        1999
                                                       ----------  ----------
CURRENT ASSETS

Cash                                                   $    9,081  $   20,677
Accounts receivable                                             0       8,278
Prepaid expenses and other current assets                       0       2,015
Current portion of non-current receivables
(Note 4)                                                  275,023     282,206
                                                       ----------  ----------

TOTAL CURRENT ASSETS                                      284,104     313,176

PROPERTY AND EQUIPMENT AT COST,
  less accumulated depreciation of $138,581 at
  March 31, 2000 and $119,958 at March 31, 1999
  (Note 5)                                                  9,950      25,544

OTHER ASSETS
Securities available for sale (Notes 3 and 10)          1,265,770      45,113
Investments in non-public companies (Note 10)             833,659         500
Non-current receivables (Note 4)                        1,080,933   1,091,910
Deposits                                                    6,514         514
                                                       ----------  ----------

TOTAL OTHER ASSETS                                      3,186,786   1,138,037
                                                       ----------  ----------
TOTAL ASSETS                                           $3,480,930  $1,476,757
                                                       ==========  ==========

       LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable                                       $  308,631  $  284,326
Accrued liabilities                                       136,408      49,033
Current portion of long-term debt (Note 6)              1,987,265     302,425
                                                        ---------    --------

TOTAL CURRENT LIABILITIES                               2,432,304     635,784

LONG-TERM LIABILITIES

Long-term debt, less current portion
(Note 6)                                                  310,826       6,749
                                                        ---------    --------

TOTAL LONG-TERM LIABILITIES                               310,826       6,749

          TOTAL LIABILITIES                             2,743,130     642,533

COMMITMENTS AND CONTINGENCIES (Note 9)

STOCKHOLDERS' EQUITY (Note 7)
Common stock-par value $.01; authorized
  5,000,000 shares, issued 4,742,720 shares
  at March 31, 2000 and 1999                               47,427      47,427
Additional paid-in capital                              7,764,014   7,764,014
Unrealized gain on investments                             68,396      32,078
Accumulated deficit                                    (7,093,599) (6,960,857)
Treasury stock at cost - 25,000 shares                    (48,438)    (48,438)
                                                        ---------  -----------

TOTAL STOCKHOLDERS' EQUITY                                737,800     834,224
                                                        ---------  -----------
                                                       $3,480,930 $ 1,476,758
                                                     ============  ===========


See accompanying Notes to Consolidated Financial Statements


                                     F-3

<PAGE>
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
YEARS ENDED MARCH 31, 2000 AND MARCH 31, 1999

                                                          2000        1999
                                                        ---------   --------
REVENUES
Management and billing fees, net of
  allowances                                           $  589,105  $  629,371
Income from finance receivables                            15,440      25,835
Interest and dividends                                          0       3,608
Realized gain from sales of securities
  available for sale                                            0     447,589
Miscellaneous income                                          976           0
                                                       ----------   ---------

TOTAL REVENUES                                            605,521   1,106,404
OPERATING EXPENSES
Selling, general and administrative                       681,920   1,128,269
Interest expense                                           56,343      34,637
                                                       ----------   ----------

TOTAL OPERATING EXPENSES                                  738,263   1,162,906
                                                        ---------   ----------

LOSS BEFORE INCOME TAXES                               (  132,742) (   56,502)

PROVISION FOR INCOME TAXES (Note 8)                             0           0
                                                       ----------     --------

NET LOSS                                              (   132,742) (   56,502)

OTHER COMPREHENSIVE INCOME:
Unrealized gain (loss) on securities                       36,317      97,695
Less: reclassification adjustment for
      Gain included in net income                               0  (  447,589)
                                                       ----------  -----------

TOTAL OTHER COMPREHENSIVE INCOME                           36,317  (  349,894)
                                                       ----------  -----------

COMPREHENSIVE INCOME (LOSS)                           ($   96,425)($  406,396)
                                                      ===========  ===========
PER SHARE DATA:

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING                                      4,717,720   4,717,720
                                                     ============  ===========

BASIC LOSS PER COMMON SHARE                           ($     0.03)($     0.01)
                                                      ============  ===========

See accompanying Notes to Consolidated Financial Statements


                                    F-4

<PAGE>
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 2000 AND MARCH 31, 1999
BALANCE

   Common Stock                           Unreal.     Treasury Stock
 ________________ Additional              Gain on     --------------
  Shares           Paid-in   Accumulated  Sec Avail.  for Shares
  Issued   Amount  Capital     Deficit    for sale  Held    Amount     Total
--------- ------- ---------- ------------ -------  ------ --------- -----------

4,742,720 $47,427 $7,764,014 ($6,904,355)$376,894  25,000 ($48,438) $1,235,542

Unrealized gain on securities
  available for sale:                    (344,816)                    (344,816)


Net loss                         (56,502)                              (56,502)
--------- ------- ---------- ------------ -------  ------ --------- -----------


BALANCE, March 31, 1999:

4,742,720 $47,427 $7,764,014 ($6,960,857) $32,078  25,000 ($48,438)   $834,224
--------- ------- ---------- ------------ -------  ------ --------- -----------

Unrealized gain on securities
  available for sale                       36,318                       36,318


Net loss                        (132,742)                             (132,741)
--------- ------- ---------- ------------ -------  ------ --------- -----------


BALANCE, March 31, 2000:

4,742,720 $47,427 $7,764,014 ($7,093,599)$ 68,396  25,000 ($48,438) $  737,800
========= ======= ========== ============ =======  ====== ========= ===========

See accompanying Notes to Consolidated Financial Statements



                                    F-5

<PAGE>
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED MARCH 31, 2000 AND MARCH 31, 1999


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

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                              ($  132,742)($   56,502)
Adjustments to reconcile net loss to
  net cash used in operating activities:
Depreciation and amortization                              18,623      45,336
Provision for bad debts                                    75,000     264,084
Realized gain from sales of securities avaiable
   for sale                                                     0    (447,589)
Loss on Disposition of Assets                                   0       1,413
Deposits (paid) received                                   (6,000)          0
Changes in operating assets and liabilities:
    (Increase) decrease in:
    Accounts receivable                                     8,278         929
    Prepaid expenses and other current assets               2,015       1,608
    Increase (decrease) in:
    Accounts payable                                       24,305     (12,203)
    Accrued liabilities                                   177,597    (149,908)
    Estimated environmental liability                           0     (43,235)
                                                        ---------     --------
NET CASH REQUIRED BY
  OPERATING ACTIVITIES                                    167,076    (396,067)
                                                        ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES

  Investment in 50% owned corporation                           0      (7,500)
  Loans made evidenced by notes receivable               (594,808)   (629,371)
  Collection of notes receivable                          537,968     647,516
  Acquisition of investments in non-public companies     (833,659)          0
  Acquisition of securities available for sale         (1,219,166           0
  Deposits and certificates of deposits                         0      81,000
  Proceeds from sale of securities
    available for sale                                          0     580,700
  Proceeds from sales of investments
    in non-public companies                                     0           0
  Acquisition of property and equipment                    (3,029)      3,381
                                                         ---------   --------
NET CASH USED IN
  INVESTING ACTIVITIES                                 (2,112,694)    675,726
                                                       -----------  ---------

CASH FLOWS FROM FINANCING ACTIVITIES

  Proceeds of loans payable - financial
     institution                                                0     (40,000)
  Proceeds of long-term debt                            1,953,816      30,000
  Repayment of long-term debt                             (19,794)   (273,104)
                                                        ----------  ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES               1,934,022    (283,104)
                                                        ----------  ---------

INCREASE (DECREASE)IN CASH                                (11,596)     (3,446)
CASH - BEGINNING                                           20,677      24,123
                                                       ----------   ---------

CASH - END                                             $    9,081  $   20,677
                                                       ==========   =========

CASH PAID DURING THE PERIODS FOR:

  Interest                                             $    1,341  $  135,259
                                                       ==========   =========


See accompanying Notes to Consolidated Financial Statements


                                F-6

<PAGE>
T.H. LEHMAN & CO., INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000 AND 1999


1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description  of the  Business  - T.H.  Lehman & Co.,  Incorporated,  a  Delaware
corporation, provides medical business management services including billing and
collection in California through one of its wholly-owned subsidiaries.

Principles of Consolidation - The consolidated  financial statements include the
accounts of the  Company and its  wholly-owned  subsidiaries.  All  intercompany
balances and transactions have been eliminated.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions   that  affect  certain   reported   amounts  and  disclosures.
Accordingly, actual results could differ from those estimates.

Securities - Marketable  securities that are bought and held principally for the
purpose of selling them in the near term are  classified  as trading  securities
and  reported  at fair  value,  with  unrealized  gains and losses  included  in
earnings.  Marketable  securities not classified as either investment securities
(which are held to maturity) or trading securities are  classified as securities
available for sale and reported at fair value,  with unrealized gains and losses
affecting   comprehensive  income  and  reported  in  a  separate  component  of
stockholders'  equity.  Average cost is used to determine cost when  calculating
realized gains or losses from sales of securities available for sale.

Investment in 50% owned  Corporation - Investment  in 50% owned  corporation  is
accounted for under the equity method.

Receivables - Assigned medical billings represent the contractual  percentage of
medical provider  receivables of medical practices to which the Company provides
management  services.  Revenues  are  recognized  when the medical  services are
provided,   according  to  the  contractual   percentage   after   uncollectible
allowances.

Property and Equipment - Property and equipment is stated at cost.  Depreciation
is  computed  over the  estimated  useful  lives of the  assets  using  both the
accelerated and straight-line methods.  Expenditures for repairs and maintenance
are charged to expense as  incurred,  while  expenditures  for  betterments  and
renewals are capitalized.

Property  and  equipment  are  reviewed  for  impairment   whenever   events  or
circumstances indicate that the asset's undiscounted expected cash flows are not
sufficient to recover its carrying  amount.  The company  measures an impairment
loss by comparing the fair value of the asset to its carrying amount. Fair value
of an asset is calculated as the present value of expected future cash flows.

Stock-Based  Compensation  - The Company  elected to account for employee  stock
options  based on the  provisions of APB Opinion No. 25,  "Accounting  for Stock
Issued to Employees" and adopted only the disclosure  requirements of SFAS No.
123, "Accounting for Stock-Based Compensation".

Basic Loss Per Share - Basic loss per common  share is  calculated  by  dividing
earnings  available to common  stockholders  by the weighted  average  number of
common shares outstanding during the period.

Recent  Accounting  Pronouncements  - The  Company  has  adopted  SFAS No.  130,
"Reporting  Comprehensive Income", and SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information",  in fiscal year ended March 31, 1999.
Components  of  comprehensive  income for the Company  include items such as net
income and changes in the value of available-for-sale  securities.  SFAS No. 131
requires segments to be determined based on how management measures  performance
and makes decisions about allocating resources.  The company only has one
segment, the medical business management.


                                   F-7

<PAGE>
2.     ACQUISITIONS AND DISPOSITIONS

In a transaction that was effective October 1, 1996, the Company transferred 50%
of the  outstanding  stock and  substantially  all of the control of  Healthcare
Professional  Billing  Corp.("HPB")  to certain key employees of HPB. Until that
time,  HPB  was a  wholly-owned  subsidiary  the  Company.  As a  result  of the
transfer,  the subsidiary's  financial position,  results of operations and cash
flows are not consolidated  with that of the Company  subsequent to the transfer
date.  The summarized unaudited financial  information of HPB at March 31, 2000
and March 31, 1999 is as follows:

                                                 March 31, 2000 March 31,1999
                                                 -------------- -------------
Financial Position:
Current Assets                                         $   62,927  $   43,578

Property and equipment                                      1,080       9,466
                                                        ---------  ----------
Total assets                                           $   64,007  $   53,044
                                                        =========   =========
Current liabilities(including
  due to the Company of $262,567)                      $  339,719  $  327,712
Long-term obligations (a)                                 122,700     122,700
Stockholders' deficiency                                 (398,412)   (397,368)
                                                        ---------   ----------
Total liabilities and stockholders'
  deficiency                                           $   64,007  $   53,044
                                                        =========   ==========

Results of Operation:
Revenues                                               $  254,615  $  190,642
Operating Expenses                                        255,658     218,609
                                                        ---------   ---------
Net loss                                               $  ( 1,043) $  (27,967)
                                                        =========   =========

(a) Certain creditors of HPB are also creditors of the Company.

3.     SECURITIES AVAILABLE FOR SALE

                                                          2000         1999
                                                        ---------   ---------
Casella Waste Systems, Inc.  (formerly KTI, Inc.)      $    9,926  $   34,708

KSW, Inc.                                                  21,966      10,405

KSW, Inc.                                                  14,250           0

KSW, Inc.                                                 254,917           0

Netsmart Technologies, Inc                                 14,711           0

OptiSystems Solutions, Ltd.                               950,000           0
                                                        ---------   ---------
                                                       $1,265,770  $   45,113
                                                        =========   =========

Unrealized gains and losses for marketable equity securities at March 31, 2000
and 1999 are as follows:

                                     2000                       1999
                              ---------------------      ---------------------
                               Current  Non-Current       Current  Non-Current

Aggregate Cost                $ 1,083,416 $   13,035     $      0    $ 13,035

Aggregate Market Value        $ 1,233,878 $   31,892     $      0    $ 45,113

Gross Unrealized Gains        $   150,462 $   18,857     $      0    $ 32,078

Less: Portion to Note Holders $   102,187 $        0     $      0    $      0

Add:  Unrealized Gain in
      Non-public companies    $     1,264 $        0     $      0    $      0

Net Unrealized Gains          $    49,540 $   18,857     $      0    $ 32,078


                                      F-8

<PAGE>
4. NON-CURRENT RECEIVABLES

     Non-current receivables at March 31, 2000 and March 31, 1999 consisted of
the following:

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

Assigned medical billings net of allowances of
which $275,023 of the unpaid is expected to be
collected during the current fiscal year.             $1,411,202   $1,354,362

Working capital advances at 12% per annum interest
to a provider of medical services who has contracted
with the Company to provide management services.
None of these advances are expected to be collected
during the current fiscal year, nor is interest
being accrued.                                           852,379      852,379
                                                      -----------  -----------

                                                       2,263,581    2,206,741
          Less Allowance for Uncollectible              (907,625)    (832,625)
                                                      -----------  -----------
                                                       1,355,956    1,374,116
          Less Current Portion                          (275,023)    (282,206)
                                                      -----------  -----------
                                                      $1,080,933   $1,091,910
                                                      ===========  ===========
5. PROPERTY AND EQUIPMENT

Property and equipment at March 31, 2000 and March 31, 1999 consisted of the
following:

                                Life                   2000         1999
                                                   -----------  ----------

Machinery and Equipment       5-10 Years           $    6,730   $   3,701
Leasehold Improvements        5-10 Years                  500         500
Furniture and Fixtures        5-10 Years              141,301     141,301
                                                   -----------  ----------
                                                      148,531     145,502
         Less Accumulated Depreciation               (138,581)   (119,958)
                                                   -----------  ----------
                                                   $    9,950   $  25,544
                                                   ===========  ==========


6. LONG-TERM DEBT

Long-term debt including  accrued  interest at March 31, 2000 and March 31, 1999
consisted of the following:

                                                           2000        1999
                                                        -----------  ----------
Related Party:

Note payable of $12,000 principal plus accrued
interest at 8%, all due on February 1, 2001 for
acquisition of certain public shares. (Note 10)              12,155           0

Note payable of $214,666 principal plus accrued
interest at 8%, all due on February 1, 2001 for
acquisition of certain public shares. (Note 10)             217,442           0

Note payable of $856,250 principal plus accrued
interest at 8%, all due on February 1, 2001 for
acquisition of certain public shares. (Note 10)             867,323           0

Note payable of $252,901 principal plus accrued
interest at 8%, all due on March 14, 2001 for
acquisition of certain non-public shares. (Note 10)         253,844           0

Note payable of $575,699 principal plus accrued
interest at 8%, all due on January 3, 2001 for
acquisition of certain non-public shares. (Note 10)         586,802           0

Non-related Parties (all unsecured):

Equipment purchase contract with a monthly payment
of $886 and an effective interest rate of 11% payable
through November, 2000.                                      6,749       16,043


                                    F-9

<PAGE>
Advances from an available line of credit of
$300,000.  The loan bears interest at an annual
rate of 10%.  All principal and interest is due
and payable on or before November 1, 2001.                 167,965     153,462

Note payable of $87,500 principal plus accrued
interest at 10%, all due on October 1, 2001.               100,613      91,839

Note payable of $40,500 principal plus accrued
interest at 8%, all due on October 1, 2001.                 44,571      30,092

Note payable of $10,500 principal plus accrued
interest at 10%, all due on October 1, 2001.                     0      11,021

Note payable of $3,200 principal plus accrued
interest at 10%, all due on October 1, 2001.                 3,680       3,359

Note payable of $3,200 principal plus accrued
interest at 10%, all due on October 1, 2001.                 3,680       3,359

Note payable of $31,800 principal plus accrued
interest at 10%, all due on October 1, 2001.                33,267           0
                                                        -----------  ----------
                                                         2,298,091     309,174
               Less Current Portion                     (1,987,265)   (302,425)
                                                        -----------  ----------
                                                         $ 310,826   $   6,749
                                                        ==========   ==========

The amounts of long-term  debt maturing in each of the years ending March 31 are
as follows: 2001 - $1,987,265; 2002 - $310,826.

7. STOCKHOLDERS' EQUITY

In  November,  1991,  the Company  adopted a new stock  option plan (1990 Plan),
under which options will be granted for an aggregate of 500,000 shares of common
stock prior to November 20, 2000.  Options granted may either be incentive stock
options, pursuant to which the recipient receives tax benefits, or non-incentive
stock options.  At the time of the adoption of the 1990 Plan, the Company issued
ten-year non-incentive stock options with an exercise price of $1.50 to purchase
350,000 shares of which 250,000 shares (100,000 shares canceled in 1993;  40,000
shares  expired in 1994;  10,000  shares  cancelled in 1997) were issued to the
officers of the  Company,  50,000  shares (cancelled in 1997) were  issued to
the  directors  of the Company,  and 50,000  shares (cancelled in 1997)were
issued to a  consultant  who was  formerly an officer of the  Company.
At March 31,  2000,  100,000 of the  options are still outstanding.

In  June,  1994,  the  Company  issued  105,000  additional  options  which  are
exercisable at prices  ranging from $1.50 to $2.00 per share for five years.  At
March 31, 2000, all of these options have expired.


8. INCOME TAXES

At March 31,  2000,  for  income  tax  reporting  purposes,  the  Company  has a
consolidated  net  operating  loss  carryforward  of  approximately   $5,365,000
available to reduce future taxable income,  if any,  expiring through 2014. As a
result  of a 51%  change  in  ownership  in a  prior  year,  certain  of the net
operating  loss will be  subject  to an annual  limitation  and may not be fully
utilized in any one year.  Because of  histories  of losses,  the  estimate  for
future tax benefits has been offset by an equal asset valuation allowance.

9. COMMITMENTS AND CONTINGENCIES

Leases - The Company leases  medical  provider  facility and a billing  facility
under  noncancelable  operating leases expiring October 31, 2000. Minimum annual
future  rentals  on each of the years  ending  March 31 are as  follows:  2001 -
$52,913.

Rent expense  amounted to $95,243 and $93,017 for the years ended March 31, 2000
and 1999, respectively.

Medical Management  Agreement - The Company has entered into an agreement with a
medical provider whereby the Company provides  management and marketing services
and the leasing of facilities, furniture, fixtures and equipment for a fee equal
to  70%  of  the   provider's   medical  fee  revenues  (net  of  allowance  for
uncollectible  accounts).  The agreement is  automatically  renewed from year to
year  unless  either  party  gives 90 days  notice of  non-renewal  prior to the
renewal term.


                                F-10

<PAGE>
10. RELATED PARTY TRANSACTIONS

The Company has its corporate  headquarters in Houston,  Texas,  where it shares
office space and personnel with an entity for which a principal  stockholder and
director of the Company  serves as a  consultant.  The Company has entered  into
agreements with this entity whereby that entity will provide various accounting,
administrative  and managerial  services for the Company for stipulated  monthly
fees.  The  agreements  are for 12 months  and they  automatically  renew for an
additional  12 month period if not  terminated  within 60 days of the end of the
current  term.  The Company  incurred  fees to this entity under the  agreements
totaling  $79,200  and  $79,200  for the years  ended  March 31,  2000 and 1999,
respectively.

During the first quarter of 2000 the Company entered into a series of
transactions with various entities controlled by its major shareholder.  Under
these transactions, the Company acquired shares of two publicly traded companies
and two private companies for temporary investment purposes only.  These shares
were acquired at the fair market value at the date of the acquisition.  The
fair market value for the publicly traded shares was calculated at the then
quoted per share price.  The privately held shares were value based on the
percentage of the company acquired multiplied by the estimated net book value
of the company acquired.

The company acquired these shares by issuing 8% interest bearing unsecured
notes.  Under the terms of the notes the Company is to repay the notes
upon the earliest  occurrence of either one year or upon the sale of the
respective shares as follows:

    If upon sale of the shares the Company will pay all principal, accrued
interest and 75% of the gain from the sale of the respective shares.

    If the Company does not sell the shares, after one year it will exchange
the shares held for all amounts due under the respective notes even if the then
value of the shares are less than the outstanding amounts due, including
accrued interest.

The shares acquired consist of 113,333 shares of KSW, Inc. for $226,666;
100,000 shares of Optisystems Solutions, Ltd. for $856,250;  536,158 shares of
Canada Wood Holdings, Inc. for $575,698.58;  and 175 shares of Commercial
Bancshares, Inc. for $252,901.25.

Certain of the Company's  creditors  (See Note 7) are related as a result of one
of the  Company's  directors and  principal  stockholders  being a consultant to
these entities.

                                     F-11
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