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, 2006.
 
  ̈
              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(Exact
                    name of small business issuer as specified in its
                    charter)
 
 Delaware
              
              22-2442356(State
                  or other jurisdiction of incorporation or organization
              
              (I.R.S./Employer
                  Identification Number)
 1155
                    Dairy Ashford Rd., Suite 650, Houston, Texas 77079(Address
                    of principal executive
                    offices)
 
 Issuer's
        telephone number, including area code:   (281)
        870-1197
  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  ̈
 
 State
        the
        number of shares outstanding of each of the issuer's classes of common equity,
        as of the latest practicable date.
 
 Class
              
              Outstanding
                  at June 5, 2006Common
                  Stock, par value $.01 per share
              
              6,945,118
                  Shares
  Preferred
        Stock, $.01 Par.
 (Title
        of
        Class)
 
 Transitional
        Small Business Format (check one): Yes  ̈ No x
 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 $37,381.
 
 The
          aggregate market value of the voting stock held by nonaffiliates of the
          registrant is approximately $757,192 as of June 5, 2006.
 
 6,970,118
  (Number
          of shares of common stock outstanding as of June 5, 2006)
 
 
 
 
 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. 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.
 
 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.
 
 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 specialty clinic
        in the
        Los Angeles, California area. This client concentrated its practice on workers'
        compensation medicine and treatment for personal injury victims, providing
        services primarily on a lien basis. Beginning in June 2000, the client decided
        to stop practicing medicine and transfer his clients and files to another
        provider. In April 2000, Med-Fin Management Services, Inc. was created to
        provide the new client with the same service.
 
 MedFin
        Management Corp. and Med-Fin Management Services, Inc. receive, as a fee
        for
        their clinic management services, revenues that are indirectly related to
        the
        overall collections of their client practitioners' receivables. MedFin
        Management Corporation and Med-Fin Management Services, Inc. also provide
        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.
 
 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, however, until advances made to
        HPB
        are paid off the Company will receive part of HPB's positive cash
        flow.
 
 The
        Company wound down its medical business management office in February 2005,
        the
        date its medical office lease expired. The Company provided medical business
        management services through that time to providers it managed related to
        existing patients and new patients for physical therapy only. In February
        2005
        the Company had closed all its patients cases and final billed all the services
        rendered by the providers and for the patients that could not be finalized,
        referred them to other providers but billed through the date that the providers
        had rendered services. The Company is now employing 1 person to follow up
        on
        collections for all its receivables that have been assigned to the medical
        business management entity. The collection of these receivables is expected
        to
        take several years as with previous provider receivables. The Company does
        not
        expect a significant change in realization rate of provider receivables that
        it
        manages. The valuation of the existing receivables as of March 31, 2006 takes
        into consideration the expected future collection costs. There were no
        long-lived assets related to the discontinued operation nor are there expected
        to be gains or losses from the discontinuance of the medical business management
        segment.
 
 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.
 
 Employees:
 
 The
        Company employs 1 person in the medical management field that is engaged
        in an
        administrative and clerical position. 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.
 
 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 currently leases office space in Sherman Oaks, California
        that is being utilized for collection and record storage purposes. Monthly
        rental payments are $500, 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
 
 The
        Company did not have any matters to submit to a vote of the security
        holders.
 
 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, 2006 are as follows:
 
 For
                  the Quarter Ended
              
              High
              
              LowJune
                  30, 2004
              
              $
              .15
              
              $
              .15September
                  30, 2004
              
              $
              .15
              
              $
              .15December
                  31, 2004
              
              $
              .15
              
              $
              .15March
                  31, 2005
              
              $
              .15
              
              $
              .15June
                  30, 2005
              
              $
              .15
              
              $
              .15September
                  30, 2005
              
              $
              .15
              
              $
              .15December
                  31, 2005
              
              $
              .15
              
              $
              .15March
                  31, 2006
              
              $
              .11
              
              $
              .11
 
 The
        above
        quotations do not include commissions, markups, or markdowns and may not
        represent actual transactions.
 
 b)
              Number
                  of Holders of Common Stock
 
 As
        of
        June 5, 2006 the Company had approximately 139 shareholders of record. Cede
        & Co. was the registered holder of 1,041,326 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, 2006.
 
 
 ITEM
                  6.
              MANAGEMENT'S
                  DISCUSSION AND ANALYSIS OR PLAN OF
                  OPERATION
 
 Critical
        Accounting Policies:
 
 The
        discussion of the financial condition and results of operations are based
        upon
        the audited consolidated condensed financial statements, which have been
        prepared in conformity with accounting principles generally accepted in the
        United States. As such, management is required to make certain estimates,
        judgments and assumptions that are believed to be reasonable based on the
        information available. These estimates and assumptions affect the reported
        amount of assets and liabilities, revenues and expenses, and disclosure of
        contingent assets and liabilities at the date of the financial statements.
        Actual results may differ from these estimates under different assumptions
        or
        conditions.
 
 Critical
        accounting policies are defined as those that are reflective of significant
        judgments and uncertainties, and potentially result in materially different
        results under different assumptions and conditions. The Company has determined
        that the following accounting policies and estimates are critical to the
        understanding of the Company's consolidated financial statements.
 
 Revenue
        Recognition and Allowance for Doubtful Accounts:
 
 The
        Company derives it management fee (discontinued operations) revenue under
        the
        contractual provisions between the Company as the manager and the professional
        health care provider. The Company earns its management fee based on a percentage
        of net revenue to be derived by the health care provider. This management
        fee is
        recorded in the accounting records on an accrual basis as a percentage of
        the
        professional health care company's net revenues, which gives effect to the
        difference between, established charges and estimated third-party payer
        payments. The Company further provides an allowance for doubtful accounts
        to
        reduce its receivables to their net realizable value based on estimates by
        management for general factors such as the aging of the receivables and
        historical collection experience.
 
 Statements
        of Operations for continuing operations:
 
 Fiscal
        Year Ended March 31, 2006 Compared to Fiscal Year Ended March 31,
        2005
 
 Revenues
        totaled $37,381 during the fiscal year ended March 31, 2006, 29% higher than
        the
        previous year’s revenues of $29,050. Included in the total 2006 revenues is
        $24,195 of realized gain from sales of KSW, Inc. shares offset by a decrease
        in
        the Company’s portion of net income from Healthcare Professional Billing Corp.
        (HPB) under the 1996 transfer agreement. Operating expenses decreased by
        6% from
        $97,643 in 2005 to $91,788 in 2006. General and Administrative expenses were
        relatively the same with interest expense decreasing 18.7% from 19,873 to
        16,148
        after two loans were paid off in 2006.
 
 
 
 Fiscal
        Year Ended March 31, 2005 Compared to Fiscal Year Ended March 31,
        2004
 
 Revenues
        totaled $29,050 during the fiscal year ended March 31, 2005, 33% lower than
        the
        prior year's revenues of $43,675. Included in the total 2005 revenues is
        $25,663
        related to the Company's portion of net income of Healthcare Professional
        Billing Corp. (HPB) under the 1996 transfer agreement. The Company recorded
        $39,245 in 2004 related to its portion. This is the major reason for the
        decrease in revenues for the year. Interest expense decreased from $27,078
        for
        the fiscal year ended March 31, 2004 to $19,873 for the fiscal year ended
        March
        31, 2005. This was due to the convertible preferred shares of Famoice (an
        investment) being exchanged to a related entity, as per the agreement, for
        the
        cancellation for the note payable. General and Administrative expenses were
        12%
        lower for 2005 than year ending 2004, being $77,770 and $88,382
        respectively.
 
 
 Statements
        of Operations for discontinued operations:
 
 Fiscal
        Year Ended March 31, 2006 Compared to Fiscal Year Ended March 31,
        2005
 
 Due
        to
        the winding down of patient activity in December 2004, fiscal year ended
        March
        31, 2006 had zero revenues compared to $336,383 for the prior fiscal year
        ended
        March 31, 2005. General and Administrative expenses decreased to $134,750
        in
        2006 compared to $916,557 in 2005 for the same lack of patient activity and
        costs associated with that not occurring. Payroll, Rent, Management Fees
        and
        Uncollectible accounts expenses are all significantly lower than in the previous
        year due to no patient activity.
 
 Fiscal
        Year Ended March 31, 2005 Compared to Fiscal Year Ended March 31,
        2004
 
 Revenues
        totaled $336,383 during the fiscal year ended March 31, 2005, 61% lower than
        the
        prior year's revenues of $863,395. Management fees decreased due winding
        down of
        patient activity in December 2004. General and Administrative expenses increased
        15.9% to $916,557 from $790,733 mainly due to management’s review of its
        remaining net receivables requiring an additional adjustment to bad debt
        expense
        of $442,000, that reflects, in part, the additional costs of future collections.
  Liquidity,
        Capital Resources and Income Taxes
 
 At
        March
        31, 2006 cash amounted to $46,254 an increase of $36,741 over the cash balance
        of $9,513 at March 31, 2005.
 
 The
        Company's primary source of liquidity has been the cash it has obtained from
        the
        liquidation of its investment portfolio, distribution of HPB's profit, 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’s consolidated financial statements have been prepared assuming the
        Company will continue as a going concern, which contemplates the realization
        of
        assets and satisfaction of liabilities in the normal course of business.
        Management of the Company expects that the collections on the remaining
        receivables balance during the year ended March 31, 2007 will be adequate
        to
        maintain its corporate existence. However, no assurance can be provided that
        these results will materialize.
  Ultimately,
        the Company’s ability to continue as a going concern is dependent upon its
        ability to attract new sources of capital, establish an acquisition or reverse
        merger candidate with continuing operations, attain a reasonable threshold
        of
        operating efficiencies and achieve profitable 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, 2006, the Company had an operating tax loss carryforward of approximately
        $6,205,000.
 
 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.
 
 
 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.
 
 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
              
              PositionElliot
                  Gerstenhaber
              
              60
              
              1996
              
              DirectorRaffaele
                  Attar
              
              33
              
              2000
              
              DirectorGary
                  Poe
              
              39
              
              
              
              Secretary/Treasurer
 
 
 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:
 
 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. In 1995 he
        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.
 
 Raffaele
        Attar graduated from St. John's College in 1995 with a degree in Philosophy
        and
        Mathematics. Mr. Attar has 9 years of experience as an investment analyst
        including 7 years experience in the medical financing industry. Mr. Attar
        currently sits on the Board of Directors of Rollouts, Inc., a privately held
        multi-site equipment deployment company based in Minneapolis, MN.
 
 Gary
        Poe
        is a 1989 graduate of Sam Houston State University holding a B.A. degree
        in
        General Business. Mr. Poe has been associated with Woodco Fund Management
        (WFM)
        since March 1999. Prior to joining WFM, Mr. Poe worked as an assistant
        controller with a hotel management company in Houston, Texas. Mr. Poe has
        over
        17 years of financial accounting experience.
 
 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, 2006, 2005, and 2004.
 
 Name
                  and Principal Position
              
              Year
              
              Salary
              
              Restricted
                  Stock AwardsNone
              
              
              2006
              
              $
              0
              
              $
              0None
              
              
              2005
              
              $
              0
              
              $
              0None
              
              
              2004
              
              $
              0
              
              $
              0
 
 
 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 5, 2006:
 Name
                    and Address Of Beneficial Owner
                
                Amount
                    and Nature Of Beneficial Owner
                
                Percent
                    of ClassTitle
                    of Class(a)
                    Common StockMonahan
                    Corporation, N.V. (2)Landhuis
                    Joonchi
                
                
                3,144,238
                
                
                45.11
                %Kaya
                    Richard J. Beaujon z/nP.O.
                    Box 837Curacao,
                    Netherlands AntillesBurton,
                    N.V. (2)Landhuis
                    Joonchi
                
                
                281,383
                
                
                4.04
                %Kaya
                    Richard J. Beaujon z/nP.O.
                    Box 837Curacao,
                    Netherlands AntillesRussell
                    Molina (3)6616
                    Sewanee
                
                
                480,000
                
                
                6.89
                %Houston,
                    Texas 77005Beech
                    Glen, Inc. (1)c/o
                    Capital Holdings, Inc.
                
                
                598,164
                
                
                8.58
                %1155
                    Dairy Ashford, Suite 650Houston,
                    TX 77079New
                    Horizons Investments Fund N.V. (2)Landhuis
                    Joonchi
                
                
                610,538
                
                
                8.76
                %Kaya
                    Richard J. Beaujon z/nP.O.
                    Box 837Curacao,
                    Netherlands, Antilles(b)
                    Security Ownership of ManagementDibo
                    Attar (1)
                
                
                200,000Elliot
                    Gerstenhaber
                
                
                -0-Raffaele
                    Attar
                
                
                90,400Directors
                    and Officersas
                    Group 5 persons
                
                
                5,404,723
                
                
                77.54
                %(1)
                    (2) (3)
  Notes
        to
        Table of Beneficial Owners and Management:
 
 (1)
        Dibo
        Attar is a consultant to Capital Holdings, Inc., parent to Beech Glen, Inc.
        and
        father of Raffaele Attar.
 
 (2)
        Monahan Corporation, N.V., Burton, N.V., and New Horizons Investments 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%.
 
 (3)
        Russell Molina resigned as Director and President of T.H. Lehman & Co., Inc.
        effective October 3, 2002.
 
 Except
        as
        otherwise indicated, the address for each of the above persons is c/o T.H.
        Lehman & Co., Incorporated, 1155 Dairy Ashford Rd., Suite 650, Houston,
        Texas 77079.
 
 ITEM
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED
                  TRANSACTIONS.
 
 During
        the year ended March 31, 2006 the Company deposited approximately $80,000
        in
        fees receivable in a bank account, which was controlled by the Company but
        was
        in the name of a former client/provider who also had signature authority
        over
        the account. The former client removed $73,919 from the account without
        authority from the Company and has refused to return the funds to the Company.
        The Company is considering its legal options to affect the return to the
        Company
        of these funds. The Company feels a settlement can be reached for a return
        of a
        majority of these funds less any legal costs if it proceeds that far. If
        a
        settlement is not reached during the second fiscal quarter, then the Company
        will file suit against the former provider by September 30, 2006. As such
        the
        Company has recorded an allowance based on management’s estimate of
        realization.
  During
        the years ended March 31, 2006 and March 31, 2005, the Company incurred
        management fees for facilities and services provided by Woodco Fund Management
        Inc., in the amount of $49,350 and $124,350 respectively. Such services are
        believed to have been provided on terms no less favorable than available
        from a
        third party.
 
 During
        the 2004 fiscal year the Company entered into a formal note arrangement with
        its
        chairman regarding advances made by the Company to an entity controlled by
        the
        chairman. The term of the notes require annual 6% interest payments and all
        remaining balances are due at the end of three years (2006). The aggregate
        principal balances of the notes are $46,000. Subsequent to year-end the Company
        received an interest only check for $8,452 on the above notes.
 
 During
        the current fiscal year the Company entered into another formal note Arrangement
        with its chairman regarding additional advances made by the Company to an
        entity
        controlled by the chairman. The terms of the note require annual 6% interest
        payments and all remaining balances are due at the end of three years (2008).
        The aggregate principal balance of this note is $45,000. Subsequent to year-end
        the Company received an interest only check for $1,800 on the above
        note.
 
 
  On
        November 11,  2002,
        the
        Company acquired 372,348 shares of KSW common stock from seven related entities
        (“seller”) in consideration for interest-bearing, nonrecourse notes evidencing
        the purchase price paid by the Company to each such seller. The purchase
        price
        was $1.00 per share, or an aggregate of $372,348. Each note bears interest
        at 6%
        per annum and is payable in annual interest only installments and is due
        and
        payable in full on or before November 6, 2005. The Company granted the seller
        a
        security interest in the shares of KSW common stock purchased from such seller.
        As of the close of business on November 7, 2002, the share price was $.80.
        A
        premium was paid for these shares to insure the Company acquired at least
        5% of
        the outstanding shares of KSW. The Company was unable to make the interest
        payments as required in the notes. Two of the seller entities asked that
        their
        respective shares (47,000) be returned in full settlement of the notes. At
        the
        time of the request (August 9, 2005), the share price was $1.65 for a value
        of
        $77,550 on the 47,000 shares. The pay-out amount on these shares would have
        been
        $54,834. The Company determined it was in the best interest of the Company
        to
        return the shares as requested and not engage in a legal battle and related
        expense which at best would have yielded an additional $22,716 in revenue.
        This
        transaction was completed on August 17, 2005. The Company has since obtained
        extensions on the remaining notes and is contemplating what actions it will
        take. Subsequent to year-end the Company made a payment for $150,000 towards
        accrued interest and principal on the above notes.
 
 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 representation that no other reports were required,
        during the fiscal year ending March 31, 2006 all Section 16(a) filing
        requirements were complied with in a timely manner.
  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, 2006 and 2005
 Consolidated
        Statements of Operations
 Years
        Ended March 31, 2006 and 2005
 Consolidated
        Statements of Changes in Stockholders' Equity
 Years
        Ended March 31, 2006 and 2005
 Consolidated
        Statements of Cash Flows
 Years
        Ended March 31, 2006 and 2005
 Notes
        to
        Consolidated Financial Statements
 
 (a)
              Financial
                  Statements - See Index to Financial Statements at Page
                  F-1.
 
 (b)
              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.*
 
 14.1
              Code
                  of Ethics
 
 *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.
  Controls
        and Procedures:
 
 Within
        90
        days prior to the date of this report, we carried out an evaluation, under
        the
        supervision and with the participation of our management including the Company's
        Acting Chief Executive Officer and Principal Financial Officer, of the
        effectiveness of the design and operation of our disclosure controls and
        procedures pursuant to Exchange Act Rule 13a-14. Based upon that evaluation,
        the
        Acting Chief Executive Officer and Principal Financial Officer concluded
        that
        our disclosure controls and procedures are effective.
 
 There
        have been no significant changes in our internal controls or in other factors
        that could significantly affect these controls subsequent to the date we
        carried
        out this evaluation.
  
  SIGNATURES
 
 Pursuant
        to the requirements of the Securities Exchange Act of 1934, the registrant
        has
        duly caused this report to be signed on its behalf by the undersigned thereunto
        duly authorized.
 
 DATE:
        June 22, 2006
 T.H.
                  LEHMAN & CO., INCORPORATED AND SUBSIDIARIESBy:
              /s/
                  Raffaele AttarRaffaele
                  AttarActing
                  Chairman andChief
                  Executive OfficerBy:
              /s/
                  Gary PoeGary
                  PoePrincipal
                  Financial Officerand
                  Secretary





T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
      FINANCIAL STATEMENTS


YEARS
      ENDED MARCH 31, 2006 AND MARCH 31, 2005





INDEX
                TO CONSOLIDATED FINANCIAL STATEMENTS:Report
                of Independent Registered Public Accounting Firm
            
            F-2Consolidated
                Balance SheetsAs
                of March 31, 2006 and 2005
            
            F-3Consolidated
                Statements of Operations and Comprehensive Income (Loss)Years
                Ended March 31, 2006 and 2005
            
            F-4Consolidated
                Statements of Stockholders' EquityYears
                Ended March 31, 2006 and 2005
            
            F-5Consolidated
                Statements of Cash FlowsYears
                Ended March 31, 2006 and 2005
            
            F-6Notes
                to Consolidated Financial Statements
            
            F-7







REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM





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 (the "Company") as of March 31, 2006 and 2005 and the related
      consolidated statements of operations, stockholders' equity and cash flows
      for
      the years then ended. These consolidated financial statements are the
      responsibility of the Company's management. My responsibility is to express
      an
      opinion on these consolidated financial statements based on my
      audits.





I
      conducted my audits in accordance with standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that I
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement. An audit
      includes consideration of internal control over financial reporting as a basis
      for designing audit procedures that are appropriate in the circumstances, but
      not for the purpose of expressing an opinion on the effectiveness of the
      Company's internal control over financial reporting. Accordingly, I express
      no
      such opinion. An audit also includes examining, on a test basis, evidence
      supporting the amounts and disclosures in the consolidated 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 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 positions of T.H. Lehman
      & Co., Incorporated and Subsidiaries as of March 31, 2005 and 2004 and the
      results of their operations and their cash flows for the years then ended,
      in
      conformity with accounting principles generally accepted in the United States
      of
      America.





As
      discussed in Note 1 to the consolidated financial statements, the Company during
      2004 discontinued its remaining operations.





The
      accompanying consolidated financial statements have been prepared assuming
      the
      Company will continue as a going concern. As discussed in Note 1 to the
      consolidated financial statements, the Company has limited liquid resources,
      recurring losses, and is seeking to implement its business plan, which requires
      the Company to acquire or develop a business. These matters raise substantial
      doubt about its ability to continue as a going concern. Management's plans
      in
      regard to these matters are also discussed in Note 1. The consolidated financial
      statements do not include any adjustment that might result from the outcome
      of
      this uncertainty.





/s/
      JEFFREY S. GILBERT, CPA





Los
      Angeles, California


June
      22,
      2006




F-2


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
      BALANCE SHEETS


MARCH
      31,
      2006 AND MARCH 31, 2005




ASSETS





2006
            
            2005CURRENT
                ASSETSCash
            
            $
            46,254
            
            $
            9,513Current
                portion of non-current receivable - related party
            
            
            56,253
            
            
            4,305Current
                portion of non-current receivables from discontinued
                operations
            
            
            103,951
            
            
            255,364TOTAL
                CURRENT ASSETS
            
            
            206,458
            
            
            269,182OTHER
                ASSETSSecurities
                available for sale
            
            
            1,233,069
            
            
            286,198Non-current
                receivables - related party
            
            
            45,000
            
            
            46,000Non-current
                receivables from discontinued operations
            
            
            49,359
            
            
            195,398Deposits
            
            
            0
            
            
            5,000TOTAL
                OTHER ASSETS
            
            
            1,327,428
            
            
            532,596TOTAL
                ASSETS
            
            $
            1,533,886
            
            $
            801,778LIABILITIES
                AND STOCKHOLDERS' EQUITY (DEFICIT)CURRENT
                LIABILITIESManagement
                fees - related party
            
            $
            560,775
            
            $
            511,375Current
                portion of long-term debt-related parties
            
            
            39,366
            
            
            429,181Management
                fees from discontinued operations - related party
            
            
            227,742
            
            
            323,949Accounts
                payable and accrued liabilities from discontinued
                operations
            
            
            0
            
            
            33TOTAL
                CURRENT LIABILITIES
            
            
            827,883
            
            
            1,264,538LONG-TERM
                LIABILITIESLong-term
                debt, less current portion due related parties
            
            
            383,964
            
            
            25,000TOTAL
                LIABILITIES
            
            
            1,211,847
            
            
            1,289,538COMMITMENTS
                AND CONTINGENCIESSTOCKHOLDERS'
                EQUITYCommon
                stock-par value $.01; authorized 20,000,000 shares, issued 6,970,118
                shares at March 31, 2006 and 2005
            
            
            69,701
            
            
            69,701Preferred
                stock-par value $.01; authorized 10,000,000 shares, issued 0 shares
                at
                March 31, 2006 and 2005
            
            
            0
            
            
            0Additional
                paid-in capital
            
            
            8,076,340
            
            
            8,076,340Unrealized
                gain(loss) on investments
            
            
            907,721
            
            
            (
                91,235
            )Accumulated
                deficit
            
            
            (8,683,285
            )
            
            (8,494,128
            )Treasury
                stock at cost - 25,000 shares
            
            
            (
                48,438
            )
            
            (
                48,438
            )TOTAL
                STOCKHOLDERS' EQUITY (DEFICIT)
            
            
            322,039
            
            
            (
                487,760
            )TOTAL
                LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
            
            $
            1,533,886
            
            $
            801,778




See
      accompanying Notes to Consolidated Financial Statements




F-3


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)


YEARS
      ENDED MARCH 31, 2006 AND MARCH 31, 2005




2006
            
            2005REVENUESInterest
                and dividends
            
            $
            5,981
            
            $
            3,387Realized
                gain from sales of securities Available for sale
            
            
            24,195
            
            
            0Miscellaneous
                income
            
            
            7,205
            
            
            25,663TOTAL
                REVENUES
            
            
            37,381
            
            
            29,050OPERATING
                EXPENSESSelling,
                general and administrative
            
            
            75,640
            
            
            77,770Interest
                expense
            
            
            16,148
            
            
            19,873TOTAL
                OPERATING EXPENSES
            
            
            91,788
            
            
            97,643LOSS
                FROM CONTINUING OPERATIONS
            
            
            (
                54,407
            )
            
            (
                68,593
            )PROVISION
                FOR INCOME TAXES
            
            
            0
            
            
            0LOSS
                FROM CONTINUING OPERATIONS
            
            
            (
                54,407
            )
            
            (
                68,593
            )INCOME
                / (LOSS) FROM DISCONTINUED OPERATIONS
            
            
            (
                134,750
            )
            
            (
                580,175
            )NET
                INCOME / (LOSS)
            
            
            (
                189,157
            )
            
            (
                648,768
            )OTHER
                COMPREHENSIVE INCOME:Unrealized
                gain (loss) on securities
            
            
            1,023,151
            
            
            (
                80,135
            )Less:
                reclassification adjustment for gain included in net
                income
            
            
            (
                24,195
            )
            
            0TOTAL
                OTHER COMPREHENSIVE INCOME
            
            
            998,956
            
            
            (
                80,135
            )COMPREHENSIVE
                INCOME (LOSS)
            
            $
            809,799
            
            $
            (
                728,903
            )PER
                SHARE DATA:WEIGHTED
                AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
            
            
            6,945,118
            
            
            6,945,118NET
                LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS
            
            $
            (0.01
            )
            $
            (0.01
            )NET
                INCOME/(LOSS) PER COMMON SHARE FROM DISCONTINUED
                OPERATIONS
            
            
            (0.02
            )
            
            (0.08
            )NET
                LOSS PER COMMON SHARE
            
            $
            (0.03
            )
            $
            (0.09
            )




See
      accompanying Notes to Consolidated Financial Statements




F-4





T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY


YEARS
      ENDED MARCH 31, 2006 AND MARCH 31, 2005


BALANCE




Common
                  Stock
              
              
              
              
              
              Unreal.
              
              Treasury
                  StockShares
              
              
              
              AdditionalPaid-in
              
              Accumulated
              
              Gain
                  on SecAvail.
              
              forSharesIssued
              
              Amount
              
              Capital
              
              Deficit
              
              for
                  sale
              
              Held
              
              Amount
              
              Total6,970,118
              
              $
              69,701
              
              $
              8,076,340
              
              $
              (7,845,360
              )
              $
              (11,100
              )
              
              25,000
              
              $
              (48,438
              )
              $
              241,143Unrealized
                  gain on securities available for sale:
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (80,135
              )
              
              
              
              
              
              
              
              (80,135
              )Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              (
                  648,768
              )
              
              
              
              
              
              
              
              
              
              
              (
                  648,768
              )BALANCE,
                  March 31, 2005:
              
              
              6,970,118
              
              
              69,701
              
              
              8,076,340
              
              
              (8,494,128
              )
              
              (91,235
              )
              
              25,000
              
              
              (48,438
              )
              
              (
                  487,760
              )Unrealized
                  gain on securities available for sale
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              998,956
              
              
              
              
              
              
              
              
              998,956Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              (
                  189,157
              )
              
              
              
              
              
              
              
              
              
              
              (
                  189,157
              )BALANCE,
                  March 31, 2005:
              
              
              6,970,118
              
              $
              69,701
              
              $
              8,076,340
              
              $
              (8,683,285
              )
              $
              907,721
              
              
              25,000
              
              $
              (48,438
              )
              $
              322,039





See
      accompanying Notes to Consolidated Financial Statements




F-5


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


CONSOLIDATED
      STATEMENTS OF CASH FLOWS


YEARS
      ENDED MARCH 31, 2006 AND MARCH 31, 2005






2006
            
            2005CASH
                FLOWS FROM OPERATING ACTIVITIESNet
                loss from continuing operations
            
            $
            (
                54,407
            )
            $
            (
                68,593
            )Net
                income(loss) from discontinued operations
            
            
            (
                134,750
            )
            
            (
                580,175
            )Adjustments
                to reconcile net income/(loss) to Net cash used in operating
                activities:Provision
                for bad debts
            
            
            0
            
            
            442,000Realized
                gain from sales of securities available for sale
            
            
            24,195
            
            
            0Deposits
                (paid) received
            
            
            5,000
            
            
            11,676Changes
                in operating assets and liabilities:(Increase)
                decrease in:Accounts
                receivable
            
            
            0
            
            
            12,000Value
                of marketable securities
            
            
            (
                971,066
            )
            
            80,135Increase
                (decrease) in:Accounts
                payable
            
            
            (
                46,839
            )
            
            (
                524
            )Accrued
                liabilities
            
            
            956,488
            
            
            (
                63,710
            )NET
                CASH FOR OPERATING ACTIVITIES
            
            
            (
                221,379
            )
            
            (
                167,191
            )CASH
                FLOWS FROM INVESTING ACTIVITIESLoans
                made evidenced by notes receivable
            
            
            (
                68,573
            )
            
            (
                772,396
            )Collection
                of notes receivable
            
            
            219,986
            
            
            568,191Decrease
                in non-current receivables
            
            
            146,039
            
            
            373,646Loan
                made/(paid) evidenced by notes receivable-related party
            
            
            (
                51,948
            )
            
            (
                1,510
            )Decrease
                in non-current receivables related party
            
            
            1,000
            
            
            0Acquisition
                of investments in non-public companies
            
            
            0
            
            
            56,500NET
                CASH FROM INVESTING ACTIVITIES
            
            
            246,504
            
            
            224,431CASH
                FLOWS FROM FINANCING ACTIVITIESProceeds
                of long-term debt
            
            
            58,616
            
            
            0Repayment
                of long-term debt
            
            
            (
                47,000
            )
            
            (
                56,500
            )NET
                CASH PROVIDED/(USED) BY FINANCING ACTIVITIES
            
            
            11,616
            
            
            (
                56,500
            )INCREASE
                IN CASH
            
            
            36,741
            
            
            740CASH
                - BEGINNING OF YEAR
            
            
            9,513
            
            
            8,773CASH
                - END OF YEAR
            
            $
            46,254
            
            $
            9,513




See
      accompanying Notes to Consolidated Financial Statements




F-6


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


MARCH
      31,
      2006 AND 2005








1.
            SUMMARY
                OF SIGNIFICANT ACCOUNTING POLICIES





**Outlook** -
      As of
      March 31, 2006, the Company had no continuing business operations. Any perceived
      value in the Company is both speculative and intangible in nature. The Company
      is operating as a public shell and its business operations consist of management
      seeking merger and acquisition candidates with ongoing operations and the
      collection of receivables from its discontinued operations.





Cash
      totaled $46,254 at March 31, 2006. The Company had nominal revenues from
      continuing operations for the year ended March 31, 2006. The Company’s cash
      position is insufficient to meet its ongoing expenses including its corporate
      maintenance requirements. The Company will be required to collect receivables
      from its discontinued operations or liquidate its securities held for sale
      in
      sufficient amounts to sustain basic operations through the remainder of the
      fiscal year and/or until a merger candidate with operations of its own is
      located and a transaction is consummated. While the Company is actively seeking
      investments through private investors and other parties, there is no assurance
      that the Company will be able to collect adequate receivables amounts or raise
      additional capital sufficient to meet its needs for the entire period required.





The
      Company’s consolidated financial statements have been prepared assuming the
      Company will continue as a going concern, which contemplates the realization
      of
      assets and satisfaction of liabilities in the normal course of
      business.





Ultimately,
      the Company’s ability to continue as a going concern is dependent upon it’s
      ability to attract new sources of capital, establish an acquisition or reverse
      merger candidate with continuing operations, attain a reasonable threshold
      of
      operating efficiencies, and achieve profitable operations.





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





During
      June 2004 the management of the Company decided to disengage itself from the
      medical business management segment of its business. This is the only
      significant operation of the Company. Management based its decision in part
      on
      the expected negative impact of California’s new workers’ compensation
      legislation on the medical providers that the Company manages. Therefore the
      medical business management operations are reflected on the statement of
      operations as discontinued operations.





The
      Company wound down its medical business management office in February 2005,
      the
      date its medical office lease expired. The Company provided medical business
      management services through that time to providers it managed related to
      existing patients and new patients for physical therapy only. In February 2005
      the Company had closed all its patients’ cases and final billed all the services
      rendered by the providers, and, for the patients that could not be finalized,
      referred them to other providers, but billed through the date that the providers
      had rendered services. The Company is now employing one person to follow up
      on
      collections for all its receivables that have been assigned to the medical
      business management entity. The collection of these receivables is expected
      to
      take several years as with previous provider receivables. The Company does
      not
      expect a significant change in realization rate of provider receivables that
      it
      manages. The valuation of the existing receivables as of March 31, 2006 takes
      into consideration the expected future collection costs. There were no
      long-lived assets related to the discontinued operation nor are there expected
      to be gains or losses from the discontinuance of the medical business management
      segment.





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





**Use
      of Estimates** - The
      preparation of financial statements in conformity with accounting principles
      generally accepted in the United States of America requires estimates and
      assumptions that affect the reported amounts of assets and liabilities, the
      disclosure of contingent assets and liabilities at the date of the financial
      statements, and revenues and expenses during the period reported. Actual results
      could differ from those estimates. Estimates are used when accounting for
      stock-based transactions, uncollectible accounts receivable, asset depreciation
      and amortization, and taxes, among others.





**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. Currently this investment is carried at no
      value.





**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.





**Stock-Based
      Compensation** - There
      are no employee stock options.





**Basic
      Income/Loss Per Share** - Basic
      income/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.








2.
            NON-CONSOLIDATED
                ENTITY





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 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 subsequent to the transfer
      date. The summarized unaudited financial information of HPB at March 31, 2006
      and March 31, 2005 is as follows:





March
                31, 2006
            
            March
                31,2005Financial
                Position:Current
                Assets
            
            $
            86,621
            
            $
            86,535Property
                and equipment
            
            
            0
            
            
            0Total
                assets
            
            $
            86,621
            
            $
            86,535




F-7


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


MARCH
      31,
      2006 AND 2005




Current
                liabilities(including due to the Company of $90,870)
            
            $
            220,136
            
            $
            212,805Long-term
                obligations (a)
            
            
            89,084
            
            
            89,084Stockholders'
                deficiency
            
            
            (222,599
            )
            
            (215,354
            )Total
                liabilities and stockholders' deficiency
            
            $
            86,621
            
            $
            86,535Results
                of Operations:Revenues
            
            $
            271,142
            
            $
            270,674Operating
                Expenses
            
            
            278,387
            
            
            266,481Net
                income
            
            $
            (
                7,245
            )
            $
            4,193





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




Under
      the
      1996 transaction the Company and/or related entities of the Company are to
      receive 90% of HPB's net income as defined, until the advances made by the
      Company and/or related entities of the Company have been paid. The Company
      with
      the concurrence of the related entities of the Company, has elected that its
      advances (non-interest bearing) are to be liquidated, in most part, before
      the
      other related entities. The remaining outstanding due from HPB to the Company
      is
      $90,870, although fully reserved by the Company. During the year ended March
      31,
      2006 and 2005 the Company received $7,205 and $37,663, respectively from
      HPB.





3.
            SECURITIES
                AVAILABLE FOR SALE




2006
            
            2005KSW,
                Inc.
            
            $
            1,233,069
            
            $
            286,198





Unrealized
      gains and losses for marketable equity securities available for sale at
      March
      31, 2006 and 2005 are as follows:





2006
            
            2005Current
            
            Non-Current
            
            Current
            
            Non-CurrentAggregate
                Cost
            
            $
            0
            
            $
            325,348
            
            $
            0
            
            $
            377,434Aggregate
                Market Value
            
            
            0
            
            
            1,233,069
            
            
            0
            
            
            286,199Net
                Unrealized Gains (Losses)
            
            $
            0
            
            $
            907,721
            
            $
            0
            
            $
            (
                91,235
            )





4.
            NON-CURRENT
                RECEIVABLES (DISCONTINUED
                OPERATIONS)





Non-current
      receivables at March 31, 2006 and March 31, 2005 consisted of the
      following:


2006
            
            2005Assigned
                medical billings net of allowances of which $259,669 of the unpaid
                balance
                are expected to be collected during the current fiscal
                year.
            
            $
            1,280,514
            
            $
            1,539,046Working
                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.
            
            
            1,037,530
            
            
            1,037,5302,318,044
            
            
            2,576,576Less
                Allowance for Uncollectible
            
            
            (2,164,734
            )
            
            (2,125,814
            )153,310
            
            
            450,762Less
                Current Portion
            
            
            (103,951
            )
            
            (255,364
            )$
            49,359
            
            $
            195,398




The
      above
      receivable balances have been reduced to reflect estimated cost associated
      with their collections.




F-8


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


MARCH
      31,
      2006 AND 2005





5.
            LONG-TERM
                DEBT





Long-term
      debt including accrued interest at March 31, 2006 and March 31, 2005 consisted
      of the following:


2006
              
              2005Related
                  Party:Note
                  payable of $10,000 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on May 6, 2007 for
                  acquisition of certain public shares.
              
              $
              12,081
              
              $
              11,438Note
                  payable of $121,805 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on May 6, 2007 for
                  acquisition of certain public shares.
              
              
              147,152
              
              
              139,325Note
                  payable of $97,043 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on May 6, 2007 for
                  acquisition of certain public shares.
              
              
              117,238
              
              
              111,001Note
                  payable of $34,000 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on November 6, 2005
                  for
                  acquisition of certain public shares.
              
              
              0
              
              
              38,890Note
                  payable of $13,000 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on November 6, 2005
                  for
                  acquisition of certain public shares.
              
              
              0
              
              
              14,870Note
                  payable of $17,000 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on May 6, 2007 for
                  acquisition of certain public shares.
              
              
              20,538
              
              
              19,445Note
                  payable of $79,500 principal plus accrued interest at 6%, payable
                  in
                  annual installments of interest only, all due on May 6, 2007 for
                  acquisition of certain public shares.
              
              
              96,044
              
              
              90,935Note
                  payable of $25,000 principal plus accrued interest at 8%, payable in
                  annual installments of interest only, all due on August 10, 2006
                  for
                  acquisition of certain non-public shares.
              
              
              30,277
              
              
              28,277423,330
              
              
              454,181Less
                  Current Portion
              
              
              (
                  39,366
              )
              
              (
                  429,181
              )$
              383,964
              
              $
              25,000




The
      amounts of long-term debt maturing in each of the years ending March 31 are
      as
      follows: 2006 - $39,366; 2007 - $338,964.




Two
      of
      the seller entities asked that their respective shares (47,000) be returned
      in
      full settlement of the notes. At the time of the request (August 9, 2005),
      the
      share price was $1.65 for a value of $77,550 on the 47,000 shares. The pay-out
      amount on these shares would have been $54,834. The Company determined it was
      in
      the best interest of the Company to return the shares as requested and not
      engage in a legal battle and related expense which at best would have yielded
      an
      additional $22,716 in revenue. This transaction was completed on August 17,
      2005. The Company has since obtained extensions on the remaining notes and
      is
      contemplating what actions it will take. Subsequent to year-end the Company
      made
      a payment for $150,000 towards accrued interest and principal on the above
      notes.




6.
            INCOME
                TAXES





At
      March
      31, 2006, for income tax reporting purposes, the Company has a consolidated
      net
      operating loss carryforward of approximately $6,205,000 available to reduce
      future taxable income, if any, expiring through 2024. 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 a history of losses, the estimate for future tax benefits has been
      offset by an equal asset valuation allowance.





7.
            COMMITMENTS
                AND CONTINGENCIES





Leases
      -
      The Company currently leases an office in Sherman Oaks, California on a
      month-to-month basis for collection of receivables and file storage purposes.
      The monthly rental is $500.





Rent
      expense for discontinued operations amounted to $9,238 and $101,296 for the
      years ended March 31, 2006 and 2005, respectively.




F-9


T.H.
      LEHMAN & CO., INCORPORATED AND SUBSIDIARIES


NOTES
      TO
      CONSOLIDATED FINANCIAL STATEMENTS


MARCH
      31,
      2006 AND 2005





8.
            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 of the
      Company serves as an unpaid consultant. The Company has entered into agreements
      with this entity whereby that entity will provide various accounting,
      administrative and managerial services for the Company and certain of its
      subsidiaries 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 $49,350 and $124,350 for the years ended
      March 31, 2006 and 2005, respectively.





Certain
      of the Company's creditors are related as a result of one of the Company's
      principal stockholders being a consultant to these entities.




During
        the year ended March 31, 2006 the Company deposited approximately $80,000
        in
        fees receivable in a bank account, which was controlled by the Company but
        was
        in the name of a former client/provider who also had signature authority
        over
        the account. The former client removed $73,919 from the account without
        authority from the Company and has refused to return the funds to the Company.
        The Company is considering its legal options to affect the return to the
        Company
        of these funds. The Company feels a settlement can be reached for a return
        of a
        majority of these funds less any legal costs if it proceeds that far. If
        a
        settlement is not reached during the second fiscal quarter, then the Company
        will file suit against the former provider by September 30, 2006. As such
        the
        Company has recorded an allowance based on management’s estimate of
        realization.


During
      the 2004 fiscal year the Company entered into a formal note arrangement with
      its
      chairman regarding advances made by the Company to an entity controlled by
      the
      chairman. The terms of the notes require annual 6% interest payments and all
      remaining balances are due at the end of three years (2006). The principal
      balances of these notes total $46,000. Subsequent to year-end the Company
      received an interest only check for $8,452 on the above notes.





During
      the current fiscal year the Company entered into another formal note Arrangement
      with its chairman regarding additional advances made by the Company to an entity
      controlled by the chairman. The terms of the note require annual 6% interest
      payments and all remaining balances are due at the end of three years (2008).
      The aggregate principal balance of this note is $45,000. Subsequent to year-end
      the Company received an interest only check for $1,800 on the above
      note.




F-10