SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
 (Mark One)

(X)  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
     ACT OF 1934

For the Fiscal Year Ended June 30, 2000
                                       OR
    ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

Commission File No. 0-25474

                            MEDCOM USA, INCORPORATED
                  ----------------- --------------------------
                 (Name of Small Business Issuer in its charter)

            Delaware                                    65-0287558
     ------------------------                      -------------------
     (State of incorporation)                        (IRS Employer
                                                    Identification No.)
       18001 Cowan, Suites C&D
       Irvine, California                                 92614
    ---------------------------------------            -----------
    (Address of Principal Executive Office)              Zip Code

Registrant's  telephone number,  including Area Code: (949) 261-6665  Securities
registered  pursuant to Section  12(b) of the Act:  None  Securities  registered
pursuant to Section 12(g) of the Act:

                                  Common Stock
                                (Title of Class)

Check whether the Registrant  (1) has filed all reports  required to be filed by
Section 13 or 15(d) of the  Securities  Exchange  Act of 1934 during the 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.
                                      X
                                     YES       NO

Check if disclosure  of delinquent  filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure  will be contained,  to the
best  of  the  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]

The Company's revenues for the most recent fiscal year were $3,253,489.

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Company,  (32,416,278  shares)  based upon the  closing  price of the  Company's
Common Stock on September 18, 2000 was approximately $44,572,382.

As of  September  18,  2000 the Company had  31,916,799  issued and  outstanding
shares of common stock.


<PAGE>


ITEM 1.  DESCRIPTION OF BUSINESS

     MedCom USA,  Incorporated  (the "Company") was  incorporated in Delaware in
August 1991 under the name Sims  Communications,  Inc.  The Company  changed its
name to MedCom  USA,  Incorporated  in  October,  1999.  The  Company's  initial
business  focus was in the  telecommunications  industry.  It  initially  rented
cellular  telephones  through  a  stand-alone  dispensing  station  known  as an
Automated Communications Distribution Center ("ACDC").

      In 1996 the Company introduced four programs in an effort to diversify and
broaden  the  Company's   product  and  service  mix:  (i)  cellular   telephone
activations,  (ii) sale of prepaid  calling  cards,  (iii) sale of long distance
telephone service and (iv) rental of cellular telephones using overnight courier
service.  With the exception of the sale of prepaid  calling  cards,  these four
programs were discontinued in December 1997.

      During the year ended June 30, 1998,  the Company  recognized  the need to
diversify  its  operations.  The Company  began to move into the  medical  field
whereby it could utilize its existing  technology.  During fiscal years 1999 and
2000,  the  Company  continued  to expand its focus in the medical  area,  while
de-emphasizing its other products and services. As of June 30, 2000, the Company
currently  operates in two  medical  related  areas and one area  outside of the
healthcare field. The sectors are:

o  Medical Transaction Processing
o  Healthcare Management Software Development
o  Intelligent Vending Machines

      The Company's operations in each business segment are described below:

Medical Transaction Processing

      One Medical Services

      In  May  1998  the  Company   acquired  One  Medical   Services,   LLC  in
consideration   for  142,350  shares  of  common  stock  and  187,500   warrants
exercisable  at $2.00 per share at any time prior to May 30, 2003.  The warrants
had an imputed value of $213,870  using the Black Scholes  option pricing model.
The  One  Medical   Service   network   provides  a  financial   processing  and
communications  network  for the  Home  Medical  Equipment  (HME)  industry.  In
addition to processing  information and verifying  insurance medical cards, this
network  connects  HME buyers with a network of HME  vendors.  This  proprietary
network has been designated for the medical and managed  healthcare  market, but
at the present  time is being  marketed  to the retail  pharmacy  industry.  The
Company  has also  agreed to issue to the  former  owners of One  Medical  up to
1,485,000  additional  shares of common stock depending on the future  operating
results of One Medical.  The number of shares to be issued will be determined by
dividing  the  quarterly  net income of One  Medical  (for each  fiscal  quarter
beginning June 30, 1998 and ending June 30, 2001),  by the average closing price
of the Company's  common stock for the five-day  trading period prior to the end

<PAGE>

of each quarter. As of September 15, 2000, no additional shares have been issued
related to the acquisition.

   In July 1999 the  Company  licensed  its  rights to the One  Medical  Service
Network to an unrelated third party (Licensee) for $1,377,000  because this line
of  business  was not  profitable  and was  resulting  in a cash  deficit to the
Company.  The License  provided the Company with an immediate  cash infusion and
monthly income. The license fee was comprised of $567,000 cash plus an unsecured
promissory  note for $810,000  bearing  interest at 8% per year. The Licensee is
required to make monthly  principal  payments equal to $8 per platform using the
One Medical Services  Network,  with a minimum of $1,000 and a maximum of $6,000
per month, plus prepaid phone card credits of $3,000 per month. On July 30, 2002
the Licensee is required to make a one-time  payment to the Company equal to 25%
of the then outstanding principal on the note plus accrued interest.  All unpaid
principal  and  interest is due on July 30,  2006.  The Licensee can convert the
total amount paid into an 81%  interest in One Medical  Services and can acquire
the remaining 19% for the greater of $132,000 or its fair market value. However,
if the Licensee does not acquire the remaining 19%, no money will be refunded to
the Licensee.

The Licensee also agreed to purchase approximately $200,000 of certain inventory
as it needed it, and pay the related accounts  payable.  The Licensee  purchased
approximately  $186,000  of such  inventory.  The  Licensee  hired the full time
employees involved with this operation.  The Company retained as employees those
persons who devoted  less than full time to the One  Medical  Services  Network.
These  people  primarily  provide  technical  support,  installations,  repairs,
maintenance of the underlying software and billing support.  The Company charges
the Licensee for these services on a time and materials basis. The Licensee also
assumed other overhead  associated with the One Medical  operation.  The Company
uses the prepaid phone card credits in the sale of its prepaid calling cards and
for general  Company  phone use. As a result of the  license  agreement,  income
related  to the One  Medical  Network  was in the form of license  fee,  sale of
inventory and providing the various support services. Revenue for future periods
will only consist of ongoing licensing fees and support services,  which will be
considerably less than what was earned during the year ended June 30, 2000.

      MedCard System

      In November  1998 the Company  acquired  from an unrelated  entity,  Dream
Technologies,  LLC (Dream), a worldwide license to software programs and related
technology known as the MedCard System. In consideration for this license, Dream
received $450,000 in cash, 100,000 shares of the Company's  restricted stock and
a three-year warrant to purchase 350,000 shares of the Company's common stock at
$1.28 per share.  The warrant had an imputed value of $333,904,  using the Black
Scholes option pricing  model.  The MedCard  license was for a period of fifteen
years and was exclusive  for the entire term provided at least fifteen  thousand
systems were sold to end users by May 31, 2001.

      In May 2000 the  license  agreement  with Dream was  amended  whereby  the
Company  acquired direct  ownership of the MedCard System including all software
programs,  intellectual  property,  trade  names  and  existing  contracts.  The
amendment effectively terminated the original license agreement, except that the


<PAGE>

royalty provisions (as discussed below) of the original license agreement remain
in effect until  November  2013.  In  consideration  for this  amendment,  Dream
received 100,000 shares of the Company's  restricted  common stock and a warrant
to purchase  400,000 shares of the Company's  common stock at $3.57 per share at
any time prior to May 11, 2003. The warrant had a cost of $449,446 based upon an
imputed value of $1.12 per share,  using the Black Scholes option pricing model.
The Company  believes the  acquisition  of the rights to the  technology and the
other aspects, along with the simultaneous  termination of the license agreement
ensures its exclusive and perpetual use of the MedCard System and will allow the
Company to use the technology in its other products.

      The Company is  required  to pay a royalty to Dream  equal to  twenty-five
percent of the first  $1,000,000  of net monthly  revenue and ten percent of net
monthly  revenue in excess of  $1,000,000.  The term net  revenues is defined as
gross revenues  received from the use of the MedCard software  programs less (a)
terminal lease costs of up to $50 per month;  (b) commissions  payable to agents
that place  terminals  with end users;  and (c) network  costs that  include (i)
claim fees payable to data vendors,  (ii) charges for  verification of insurance
coverage  and (iii)  similar  telecommunications  charges  related to  obtaining
claims processing and/or benefits verification information.

      The  original  license  agreement  also  required the Company to retain as
consultants  two  owners of Dream  Technologies  until May 31,  2001 at a fee of
$2,000 per person per week.  The Company  hired these  individuals  as employees
under two year  employment  contracts  with  essentially  the same terms in June
2000.

      The MedCard System is an electronic  processing  system that  consolidates
insurance eligibility verification and processes medical claims and approvals of
credit card and debit card payments in under 30 seconds through a small terminal
or personal  computer.  Using the MedCard  system,  patients are relieved of the
problems  associated  with  eligibility  confirmation  and billings,  healthcare
providers'  reimbursements are accelerated and account  receivables are reduced.
The average  time it takes the  healthcare  providers to collect  payments  from
insurance carriers and plans decreases from three months to three weeks.

      The  MedCard  System  currently  operates  through  either a point of sale
terminal or a personal computer.  The point of sale terminals are purchased from
Hypercom USA, Inc.  (Hypercom) under a non-cancelable  agreement that expires in
February  2001. If the contract with Hypercom is not renewed,  the Company could
purchase its terminals from another supplier. This may result in a disruption of
the  Company's  sales  process  for a short  period of time while the  Company's
software  is  reconfigured  to meet  the  specifications  of the  new  supplier.
However,  the Company  believes  that it is unlikely  that the Company will stop
purchasing terminals from Hypercom upon the expiration of the current agreement.
If this occurs, the Company anticipates that it will have adequate  notification
to make the  necessary  software  modifications  in a timely manner so as to not
disrupt operations to a significant  degree. The MedCard System also operates in
a PC version and an on-line version is under development.

<PAGE>


      The  MedCard  System also allows a patient's  primary  care  physician  to
request approval from the patient's insurance carrier or managed care plan for a
referral to a secondary  physician or  specialist.  The  secondary  physician or
specialist  can use the  MedCard  system to verify  that the  referral  has been
approved  by the  patient's  insurance  carrier,  thereby  eliminating  numerous
telephone calls that are normally required with referrals.  The MedCard system's
referral  capabilities  reduce  paperwork  and  administrative  costs,  increase
productivity and provide greater patient information for the specialist, as well
as a written record of the referral authorization.

      The MedCard System can record and track  encounters  between  patients and
health care providers for  performance  evaluation  and  maintenance of records.
After  examining  a patient a  physician  is able to enter the  patient's  name,
procedure code and diagnostic code at a nearby  terminal.  This  information can
then be downloaded to MedCom's computer network,  processed and transmitted back
to the  provider  in both  summary  and  detail  reports  sorted in a variety of
manners.

      The MedCard System is marketed through Company sales personnel, as well as
independent  sales  representatives  and  financial  institutions  such  as  EFS
National Bank, a subsidiary of Concord EFS, Inc.,  Physicians  Management Group,
and Healthtech  Systems.  Company sales personnel generally receive a commission
for sales of the terminals, and for the revenues for the processing of insurance
claims and verifying insurance  eligibility.  Independent sales  representatives
either purchase the terminals  directly from the  manufacturers or purchase them
from the Company at a reduced  price.  They also receive a  commission  for each
transaction processed.

      Revenues  from  the  MedCard  system  are  generated  through  the sale of
terminals,  for verifying  insurance  eligibility  and for processing  insurance
claims. The Company receives a fixed amount per terminal if the sale is not made
by Company sales personnel. The Company also receives a fee for each transaction
processed through the MedCard System. Potential revenue sources include fees for
credit card transactions processed through the terminal,  fees for collection of
receivables if the Company provides billing services, reimbursement by insurance
carriers for  submission of claims  electronically,  fees for using the system's
referral program and fees for processing encounter data.

      The Company  also  markets a complete  billing  service  using the MedCard
System to hospitals and large practice groups. The Company receives a percentage
of the amounts collected under these arrangements,  as opposed to a fee for each
item  processed.  As of June 30, 2000, the Company was providing this service to
one hospital and one medical practice group.

      The Company is exploring the  feasibility  of offering a bundled  package,
that  would  include an  Internet  enabled  computer,  an  Internet  connection,
unlimited claims processing and eligibility verification all for a fixed monthly
fee.  This  application  would be made  available  after the on-line  version is
completed.

      For the year ended June 30, 1999,  the majority of MedCard  System revenue
was  developed  by  Company  sales  personnel,   with  the  remaining   revenues
distributed  among  several  independent  sales  representatives,  none of whom,

<PAGE>

individually,  resulted in a material  amount of MedCard  System sales.  For the
year ending June 30, 2000, 95% of terminal sales were completed by Company sales
personnel,  including the sale of 500 terminals to Executive Healthcare Services
and 68 terminals to Physician  Management  Group,  both of which are independent
sales  organizations.  The remaining  MedCard System  revenues were generated by
several other independent sales  representatives,  none of which,  individually,
resulted in a material amount of sales.

      As of September 15, 2000 the MedCard  system was able to retrieve  on-line
eligibility  and  authorization   information  from  approximately  125  medical
insurance  companies  and  electronically  process and submit  billings  for its
healthcare providers to over 1,650 companies.  These insurance providers include
CIGNA,  Prudential,  Oxford  Health  Plan,  United  Health  Plans,  Blue  Cross,
Medicaid, Aetna, Blue Cross/Blue Shield and Metrahealth.

      Website

      The JustMed.com  website is an Internet web site which became  operational
on July 1, 1999. The website advertises  healthcare  products and services which
are available to the general public and provides medical information. Persons in
need of  healthcare  products  and  services  can access the  website  and order
products  (see  "MedStore"  below) or  transfer  to the more  detailed  websites
maintained by the companies that provide the products and services.  The Company
will  only  generate  revenues  from  this  website  by  charging  providers  of
healthcare  products  and services  fees for  advertising  on the  website.  The
Company may also receive fees when a user transfers  from the Company's  website
to the websites maintained by a provider of healthcare products or services.  If
the Company begins to promote its website,  the Company expects that advertisers
on its website will include  distributors of healthcare  equipment and products,
hospitals,  physician practice groups and clinics.  The Company is not currently
marketing  its web site and, as such,  has not  generated  any revenue  from the
website.  The Company does not have plans to market its website to a significant
degree during the year ending June 30, 2001.

      The Company  obtains the  medical  and other  information  for its website
primarily from two independent suppliers,  Healthology and InfoSpace.com.  These
suppliers  operate under agreements with terms ranging from one to two years. In
the event  that  either or both of these  providers  decide  not to renew  their
contract with the Company,  the Company  believes that it could locate alternate
website  content  providers  with  no  interruption  to  the  Company's  website
operations.

      Med Store

      The Med  Store is a feature  of the  website  that  allows  consumers  and
physicians  to purchase,  through their own  computers,  a variety of healthcare
products and services supplied by unrelated manufacturers and healthcare service
providers.  Items available for purchase include canes, crutches,  walkers, bath
chairs,  blood pressure units,  cold therapies,  exercise  equipment and hot and
cold packs. The Med Store became operational on July 1, 1999. The Company is not
currently  directly  marketing the Med Store and, as such, has not generated any

<PAGE>

significant  revenue from the Med Store.  The Company  intends to market the Med
Store to  physicians  and other  users of the  MedCard  system  when an  on-line
version is available.

      Accredited   Homecare   Pharmacy  and  Accredited   Medical  Services  are
responsible  for filling orders for products or services  purchased from the Med
Store.  The  providing of these  fulfillment  services can be  terminated at the
discretion of either party.  If the  fulfillment  companies  decide to no longer
service the Company,  management believes that another supplier could handle the
fulfillment process, with no disruption to the Med Store Company's operations.

Healthcare Management Software Development

      DCB Actuaries & Consultants

      In April 2000,  the Company  acquired 100% of the stock of DCB Actuaries &
Consultants,  s.r.o.  (DCB), a Czech  Republic based company.  DCB developed and
currently operates a health insurance decision support system with advanced data
structures known as the Health  Information  Gateway,  which is described below.
The purchase price of DCB was $2,095,270 and was comprised of the following:

      494 shares of Series D preferred stock            $   494,000
      Purchase price - cash                               1,403,847
      Direct costs of  acquisition  including  12,880
      shares                                                197,423
                                                         ----------
         of common stock
       Total acquisition cost                           $ 2,095,270
                                                        ===========

      Each of the  Series D  preferred  shares  issued  in  connection  with the
acquisition of DCB are  convertible  into 202.43 shares of the Company's  common
stock at any time at the  holder's  option,  for a total of  100,000  shares  of
common stock.  The Company can convert the Series D Preferred shares into shares
of the Company's  common stock, in the manner described above, at any time after
April 15, 2001 so long as the bid price of its common  stock  exceeds  $4.94 and
the  shares  of  common  stock  issuable  upon the  conversion  of the  Series D
Preferred  shares are either covered by an effective  registration  statement or
are  eligible  for sale  pursuant  to Rule 144 of the  Securities  and  Exchange
Commission.

      DCB is a member Woodrow  Milliman,  an international  network of actuarial
and consulting  firms  represented in 34 countries,  employing over 3,000 people
worldwide.  DCB was  formed  in 1991  and  currently  employs  approximately  70
professionals  in  the  Czech  Republic,  primarily  highly  qualified  software
engineers, actuaries and consultants.

      DCB developed and operates a Health Information Gateway,  which is a state
of  the  art,   web-based   infrastructure,   featuring   advanced  data  mining
capabilities,  designed to meet the  information  needs of the worldwide  health
care  industry in a real time  basis.  The Health  Information  Gateway can be a
valuable  tool for  healthcare  entities  of  almost  any  size,  from the small
physician group to the large hospital chain or insurance company and plan.

<PAGE>


      There are four main components, each targeting a different group of users.
They include:

o     Risk Management - Actuarial  analysis and PMPM predictions (per member per
      month  predicted  cost) are  provided.  These  features  are ideal for the
      insurance  company or managed care plan,  as well as a hospital  concerned
      with  controlling  its costs.  This segment is of  particular  interest to
      those involved with the financial  implications  of operating a healthcare
      facility or insurance concern.

o     Clinical  Services -  Electronic  patient  record  system,  critical  care
      pathways and electronic medical documents are available. On-line documents
      include x-rays, diagnostic results, lab reports, EKGs and physician notes.
      The electronic  medical documents feature allows a healthcare  provider to
      review these patient critical documents on-line, possibly from home or the
      office.  More than one physician in multiple locations can also review the
      records  simultaneously.  This has significant  implications regarding the
      ability to provide quick and effective  consultations.  This aspect can be
      used by healthcare  providers of any size,  while improving the care given
      to the  patient.  The  critical  care  pathways  can  indicate  a standard
      treatment  regimen  based upon the  patient's  particular  background  and
      symptoms,  as compared to the actual course of action being followed.  The
      Clinical Services component is geared towards the physicians and improving
      the overall  standard of care and the ability to enhance the ease by which
      it is given.

o     Administrative and Management  Functions - The Health Information  Gateway
      can  assist  with  quality  assurance  and  management,  as well as claims
      analysis. Market and sales scrutiny can also be accomplished.  This aspect
      covers not only certain of the  financial  concerns,  but also enables the
      healthcare  provider  (from  the  small  physician  practice  to the large
      hospital  organization  or insurance  company) to review its  performance,
      against its own goals or the results of other  similarly  sized or located
      organizations.  It provides a barometer of their overall performance.  The
      reporting  features can be tailored to meet the  information  needs of the
      user,  whether  they  are a  small  independent  practitioner  or a  large
      healthcare chain.

o     Patient  Services  - The  patients  will  also  benefit  from  the  Health
      Information  Gateway.  They  will  be  able  to  monitor  personal  health
      profiles,  in  addition to their own medical  treatment  histories.  Early
      warning and reminder alerts will also be available on line.

      The  Company  intends  to  market  DCB's  Health  Information  Gateway  to
hospitals,  insurance  companies,  consultants and governmental  agencies in the
United States and abroad.  Both Company  personnel and outside  consultants will
market DCB's products.  The Company will offer the Health Information Gateway in
two formats, a direct license of the software to the end user, and providing the
service under an Application  Service Provider (ASP)  relationship.  By offering
both  alternatives,  the  Company  believes  it will be able to capture a larger
market share,  since it will be able to accommodate the needs of different sized
organizations  with varying budgetary  constraints.  The ASP center is currently
under  construction  in a newly  leased  facility  in Florida.  The  facility is
expected to be completed by mid October 2000.  The ASP center is a  state-of-the
art data warehouse and computer  operations center. It is located in a hurricane

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hardened   facility  with  a  first  rate  security  system.  It  has  redundant
communication and power sources, including a back-up generator system and a dual
ring fiber optic bandwidth with expansion capabilities.

      DCB has  other  products  related  to  healthcare,  pensions  and  medical
insurance.  One such  product is its Online  Benefits  ("OBE")  product that was
developed  jointly  with  Bacon &  Woodrow,  the UK  representative  of  Woodrow
Milliman.  OBE, in essence,  is a virtual flexible benefit system. By using OBE,
employees  will have the ability to  administer  their own benefits over a their
employers'  intranet from anywhere in the world. One such system was sold during
the quarter  ended June 30,  2000.  The Company  anticipates  marketing  the OBE
system  to large  companies  with  multi-national  operations.  The  Company  is
modifying this program to meet the needs of the United States  market.  Although
OBE and similar  products  are not truly  healthcare  management  systems,  they
utilize the same  intellectual  property and technology and are considered to be
part of the healthcare management business segment.

      The  Company  anticipates  that it will earn  revenues  from a variety  of
sources related to DCB operations including:

o     License of  software  - The  Company  will  receive  single  non-recurring
      revenues from the sale or licensing of the software.

o     Annual  maintenance  and  support  fees  - The  Company  will  charge  the
      purchasers  or licensees of the software  annual  maintenance  and support
      fees.

o     Needs analysis  studies - The Company will charge  customers,  either on a
      time and materials  basis,  or a fixed fee basis,  to evaluate their needs
      and compile suggested solutions.

o     Software development services - The Company will charge customers,  either
      on a time and  materials  basis,  or on a fixed  fee  basis  for  software
      development  services.  This will include the Company's rapid  prototyping
      group or standard software development services.

o     Sale of computer hardware -- The Company will purchase and resell computer
      hardware to customers that purchase or license the Company's software.

o     ASP  Healthcare  Providers - The Company  will receive  monthly  recurring
      revenues from customers that operate DCB's software  through the Company's
      ASP facility.

o     Co-Location  Operations  - The  Company  is  intending  to open  its  data
      warehouse facility to other users in terms of co-locating equipment.  Each
      such user would pay the  Company a fixed  monthly fee that would cover use
      of the space,  communication bandwidth,  utilities and system maintenance,
      if desired.

<PAGE>


o     Storage  Service  Provider  (SSP)  Operations  - In  addition  to its data
      warehouse  and ASP  facility,  the Company  intends to offer data  storage
      services  as an SSP to the  healthcare  industry.  This will be offered to
      both users of the Health  Information  Gateway and to  customers  that are
      only seeking a solution to their data storage concerns.

      DSM Intellectual Property Acquisition

      The Company also acquired certain  intellectual  property from DSM, LLC, a
Florida limited liability company. The intellectual property acquired is used by
DCB in its Health  Information  Gateway  and other  products.  The  intellectual
property enables the software to operate and communicate with other programs and
hardware.  It provides the backbone to the Health  Information  Gateway.  It was
originally licensed from DSM, LLC to DCB.

      The purchase  price of the  intellectual  property  acquired  from DSM was
approximately $3,287,930 and was comprised of the following:

      2,356 shares of Series D preferred stock           $2,356,000
      Purchase price of                                     746,153
      Direct costs of acquisition including 24,249
      shares of common stock                                185,777
                                                         ----------
       Total acquisition cost                            $3,287,930
                                                         ==========

      The Series D preferred  shares  issued as part of the  acquisition  of the
intellectual property form DSM have the same conversion features as the Series D
preferred shares issued as part of the DCB acquisition.

Regulatory Compliance

      The Health Insurance Portability and Accountability Act (HIPAA) was passed
in 1996 with a primary purpose to protect workers from losing their insurance if
they  changed  jobs.  The law also  called  for  rules  that  would  standardize
administrative  and  financial  transactions  in the  healthcare  industry.  The
Federal  Government  published  the first  set of rules  pertaining  to  uniform
electronic  data  standards  on August 17,  2000.  Rules on patient  privacy and
security are expected later this year. The published rules become  effective two
months after publication and compliance is required within two years.

      Compliance  with  HIPAA  will  be a  major  issue  within  the  healthcare
industry.  The Company has been  studying how HIPAA will impact both its MedCard
and the Health  Information  Gateway  operations and believes that the Company's
Healthcare  Management and MedCard Systems will be "HIPAA  compliant" within the
required time frame.

Intelligent Vending Machines

      The Company operates three types of intelligent  vending  machines;  video
vending machines,  phone card dispensing  machines and ATM script machines.  The

<PAGE>

Company previously operated automated  communication  distribution centers (ACDC
units),  but the Company  decided to discontinue  this aspect of the business in
May 2000. The three intelligent vending machines are described below:

      Movie Vision

      In January 1998 the Company  issued  550,000 shares of its common stock to
the  shareholders  of Moviebar  Company USA and  Vectorvision,  Incorporated  in
consideration  for the  acquisition of businesses  known  collectively as "Movie
Vision."  Movie  Vision  rents   videocassettes,   primarily  containing  motion
pictures,  through automated  dispensing units in hotels. Movie Vision currently
has videocassette dispensing machines in approximately 110 hotels and time-share
facilities in the United States.  Machines are located in  approximately  twenty
states with the largest  concentration  in Florida and California.  Movie Vision
services are marketed  through  Company  personnel,  and commissions are paid to
hotel and timeshare  facilities and their personnel to promote the rental of the
videocassettes.

      The Company owns the video vending machines. Each machine holds between 24
and 184 videos,  with the average being 88 videos per machine.  The Company also
owns the videocassette players in some of the properties.  The Company purchases
videos,  consisting of both current releases, as well as established videos. The
videos are  periodically  rotated in the machines so that  current  releases are
available for viewing and to  continuously  change the mix of older movies.  The
Company periodically resells some of the older movies, primarily to the original
vendor and occasionally to other sources.

      The  customer can either rent a single video or purchase a video card that
entitles the customer to rent an  unlimited  number of videos  during the rental
period (three to seven days).  Approximately  50% of the customers rent a single
video  and 50%  acquire  a  video  card.  Seven  day  video  cards  account  for
approximately 80% of the video card transactions.

      Approximately  60% of the  customers  pay the Company  directly via credit
card and the balance pay the hotel or timeshare facility. The Company then bills
the hotel or timeshare facility on a monthly basis for all revenues collected by
them.  The  billing  information  is  downloaded  to  the  Company  via a  modem
connection from the video vending machine.

      The Movie Vision  operation is the only aspect of the intelligent  vending
segment to which  significant  employees and other  resources  are devoted.  The
Company  pursues  opportunities  as  they  arise,  although  it is not  actively
marketing the Movie Vision operations.

      Script Terminals

      In  December  1996 the  Company  acquired  all the issued and  outstanding
shares of Link International,  Inc. ("Link"). Link marketed a proprietary script
terminal  that  dispenses a receipt to the customer  that can be used to pay for
merchandise   and/or  services.   These  are  generally  located  in  fast  food
restaurants.


<PAGE>

      In June  1999 the  Company  sold 520 of  Link's  script  terminals  to the
employee  who was  responsible  for  overseeing  this  aspect  of the  business.
Although  the Company did not receive any material  cash  payment in  connection
with this sale, the purchaser of the assets agreed to assume $70,000 in accounts
payable and approximately  $600,000 in capitalized lease obligations  associated
with the  acquisition  of the script  terminals.  The assets sold had a net book
value of approximately  $635,000.  The Company  recognized as income  previously
recorded  deferred  gross  profit  related  to the sale and lease back of script
terminals totaling  $212,805,  as well as an immaterial gain related to the sale
of the assets and the release from the related  obligations.  Excluded  from the
sale of Link's assets were 117 script  terminals.  The purchaser  also agreed to
hire all of the  employees  involved  with this  business line and to assume the
lease  obligation for the related office space.  The script  terminals were sold
because  this line of  business  was not  profitable  and, in the opinion of the
Company's  management,  was not likely to become  profitable in the  foreseeable
future.

      Another  employee  controlled the remainder of the script  machines.  This
individual  left the  Company in 1998 and has filed a legal  action  against the
Company (see Item 3). The Company learned,  through the legal discovery  process
and mediation,  that this  individual  purportedly no longer has the machines in
his possession or control,  and it appears  unlikely the Company will be able to
recover these units.  Accordingly,  the Company wrote off the cost,  accumulated
depreciation  and deferred  gross  profit  related to the sale and lease back of
these  terminals as of June 30, 2000. This resulted in the recognition of a loss
of $80,018 during the quarter ended June 30, 2000.

      The  Company  is  currently  receiving  residual  fees from  approximately
thirty-five  script terminals  currently in service.  Additionally,  the Company
provides  installation,  de-installations,  and repair  services to the employee
that  purchased  the 520  terminals.  These  services  are  billed to the former
employee at a standard rate per service call. The total amount of revenue earned
related to the script machines was  approximately  $47,000 during the year ended
June 30,  2000.  The amount  earned  during  the year  ended  June 30,  1999 was
$625,801, with the large decrease resulting from the sale of the majority of the
terminals.

      The Company is not pursuing any  opportunities  with respect to the script
terminals and does not expect to generate significant revenue in this area.

      Phone Card Dispensing

      The Company  operates  phone card  dispensing  machines  (PCD's) that were
manufactured by Link. A PCD is a full sized stand-alone  vending machine for the
sale of prepaid phone cards,  usually in $10 and $20  denominations.  Phone card
time for the  prepaid  calling  cards can be  purchased  from  various  vendors,
although  the  Company  currently  receives  all of the phone card time from the
Licensee of the One Medical Service Network.

      The units are typically placed at colleges and  universities,  car washes,
and other retail  establishments  that have a high level of foot traffic.  There
are currently six PCD's in operation,  all in southern  California.  The Company
has another 65 PCD's in  storage.  The Company is not  currently  marketing  the

<PAGE>

PCD's,  although  opportunities  to place  PCD's  periodically  arise from other
business  relationships.  Revenue  from the sale of phone cards  decreased  from
$89,635 to $18,260 during the years ended June 30, 1999 and 2000, respectively.

Competition

        Competing health insurance claims processing and/or benefit verification
systems include Envoy, NDC,  Medifacs,  Imperial Bank, and Spotcheck . There are
numerous companies that compete with the Company with respect to its credit card
processing services performed by the MedCard terminal.

      The Company  anticipates that DCB will compete with Eclipsys  Corporation,
Healtheon/Web MD, Meditech , SMS, Cerner  Corporation and McKesson/HBOC in terms
of providing high-end technical solutions to the healthcare  industry,  although
Company  management   believes  that  none  of  these  competitors   provide  as
comprehensive a system as is provided by DCB.

      The  Company  will face  competition  from  numerous  entities in the data
storage (SSP) industry, with the largest being StorageNetworks.

      The Company also faces  competition from a variety of sources with respect
to its Movie Vision  operations,  including  premium cable companies such as HBO
and Showtime,  video on demand companies including On Command Video and Lodgenet
Entertainment,  as  well  as  smaller  vendors,  such as  Video  Television  and
SuiteView that provide the same service as the Company.

      There are many companies that compete with the Company at some level. Many
of these  competitors  are far better  capitalized  than the Company and control
significant market share in their respective industry segments.

Employees and Offices

      As of September 20, 2000, the Company  employed 118 persons on a full-time
basis,  with 50 in the United  States and 68 in the Czech  Republic.  Twenty-one
employees  serve in  management  capacities,  and the  remainder are included in
sales, operations or administrative support. None of the Company's employees are
covered by a collective bargaining agreement.  The Company has never experienced
an organized work stoppage,  strike or labor dispute.  Management  considers the
Company's relations with its employees to be good.

      The  Company's  executive  offices are located at 18001 Cowan,  Suite C&D,
Irvine,  California  92614 and  consist of 4,900  square feet of space which are
leased at an annual  rent of $70,000.  This lease  expires in August  2003.  The
Company's telephone number is (949) 261-6665.

      The Company  leases a 7,000 square foot office and  warehouse  facility in
Orlando,  Florida  at an annual  rent of  $50,000.  The  lease on this  facility
expires in December 2005.

<PAGE>


      The Company  leases an 8,323 square foot office and  computer  facility in
Lakeland,  Florida  at  an  annual  rent  of  $99,876.  The  facility  is  under
construction  and is expected to be in operation by mid October 2000.  The lease
is for a period of five years and will commence three days after the issuance of
the certificate of occupancy.

      The Company leases a 576 square foot office in Boca Raton, Florida with an
annual  rent of  $10,992.  This lease was for a term of one year and  expires on
March 31, 2001.

      The Company  leases a 5,906 square foot office in Islandia,  New York with
an annual rent of $104,389. This lease expires March 31, 2008.

      The Company occupies  approximately  11,000 square feet of office space in
Brno, Czech Republic and  approximately  800 square feet of the space in Prague,
Czech Republic under leases that are cancelable with ninety days notice.  Annual
rent under these  leases is  2,974,000  Czech crowns (CZK) or US $79,410 at June
30, 2000 conversion rates.

Stock Splits

     Share data in this report have been adjusted to reflect the following stock
splits relating to the Company's common stock: June 1995: 2-for-1 forward split,
February 1996: 1-for-10 reverse split, February 1998: 1-for-4 reverse split.

ITEM  2. DESCRIPTION OF PROPERTIES

     See Item 1 of this report.

ITEM 3.  LEGAL PROCEEDINGS.
--------------------------

      On  December  21,  1998 Albert  Levenberg  filed a  complaint  against the
Company in the Fifteenth Judicial Circuit Court, Palm Beach County, Florida. The
complaint seeks $250,000,  plus interest and legal costs,  related to loans made
by Mr.  Levenberg  to the  Company in 1994.  The Company  believes  the claim is
without merit as the loans had either been repaid or converted  into  franchises
for sale of ACDC  units.  This case has had  little  action  since  its  initial
filing.

      On May 11, 1999 Arthur Fried, a former employee, filed a complaint against
the Company in the Orange  County,  California  Superior  Court  seeking  actual
damages of $269,000,  and an unspecified amount of general and punitive damages.
Mr. Fried claims that the Company  breached a written  employment  agreement and
made certain  misrepresentations  to him. The Company  believes these claims are
without  merit  and has  filed a  counterclaim  against  Mr.  Fried  to  recover
equipment  and other  items the  Company  alleges  the Mr.  Fried  took from the
Company.  This matter is in the discovery  stage and trial is scheduled to being
on December 4, 2000.

<PAGE>


      Prior to July 29, 1999,  Richard Niemerow,  a former employee and an owner
of One Medical Services,  LLC prior to acquisition by the Company, filed a legal
action  against an unrelated  party  attempting to collect moneys he alleged was
owed to him. On July 29, 1999,  Fitsum Worrede,  Samuel Petros and Westside Home
Medical Equipment, Inc. filed a cross complaint against Richard Niemerow and the
Company in Los Angeles Superior Court seeking recovery of $300,000 plus interest
from August 1998 and  attorney  fees.  The Company was served with a summons for
this matter on March 2, 2000.  The Company was not a party to the original claim
filed by Mr. Niemerow.  This issue is in the preliminary  discovery state and it
is anticipated that the trial will not occur until 2001. The Company believes it
should not be a party to this litigation and is actively working to be dismissed
from the  claim.  If the  Company  is not  successful  with the  dismissal,  Mr.
Niemerow  has agreed to  indemnify  the  Company  for all costs it incurs in any
future proceedings.

      On January 29, 2000, Penzijni fond Ceske pojistouny,  a.s.  (Penzijni),  a
customer of DCB Actuaries and Consults,  s.r.o., filed in "Krajsky Obchodni Soud
U Brne (regional  commercial court in Brno, Czech Republic) an action seeking to
recover  2,787,000  CZK (US  $74,417  at June 30,  2000) plus  interest  at nine
percent (9%) from September 20, 1999 and administrative costs of 136,100 CZK (US
$3,634).  This action pertains to the  development of an information  system for
Penzijni. The system was delivered and is in use by Penzijni. The total contract
price was 5,150,000 CZK  (excluding  VAT), but Penzijni paid only 2,787,000 CZK.
DCB  cancelled  the  contract  for the  information  system  because  of lack of
payment.  Penzijni  filed its claim seeking to recover the amounts it originally
paid.

      The  Company  believes  that the full  amount of the  contract  is due and
payable and intends to file an action to collect the remaining  balance due. The
uncollected  portion  of the  contract  was fully  reserved  by DCB prior to the
acquisition  by the Company.  The Company  believes it will prevail in the claim
filed by Penzijni, although the court issued a Payment order on May 4, 2000. The
Company filed a Resistance  Against  Payment Order on May 18, 2000,  effectively
canceling the Payment Order.

      On or about March 14, 2000,  Compass Point Group,  Inc. filed a demand for
arbitration with the American Arbitration  Association in San Diego,  California
seeking  payment of 200,000  shares of the  Company's  common  stock and $12,000
related to amounts that it alleged were due to Compass Point Group,  Inc.  under
an agreement  dated October 5, 1999.  This matter was settled on August 10, 2000
between the two parties. The Company issued 25,000 shares of "restricted" stock,
as defined in Rule 144 of the Securities and Exchange Commission. The settlement
was valued at $42,970 and is reflected in the Company's financial  statements as
of June 30, 2000.

      On March 21, 2000,  George  Pursglove,  a former  director of the Company,
filed a complaint against the Company in the Seventeenth Judicial Circuit Court,
Broward County, Florida. The complaint seeks the issuance of options to purchase
the Company's common stock in the following  increments:  50,000 shares at $1.50
per  share;  50,000  shares at $2.20 per share;  and 25,000  shares at $0.01 per
share. Mr. Pursglove is also seeking the issuance of 25,000  "restricted" shares
of common stock.  Except for the first option to purchase 50,000 shares at $1.50
per share,  which is reflected as outstanding  options in the Company's  records

<PAGE>

and financial  statements,  the Company is vigorously  disputing the claim as it
believes it is without  merit.  This matter is currently in the discovery  stage
and a trial date has been set for January 2001.

      Other than the foregoing there are no material legal  proceedings to which
the Company is a party or to which its properties are subject.

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

      Not Applicable

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      As of September 18, 2000, there were  approximately  370 beneficial owners
of the  Company's  common  stock.  The  Company's  common stock is traded on the
National  Association  of  Securities  Dealers  Automatic  Quotation  ("NASDAQ")
System.  Set forth  below are the range of high and low bid  quotations  for the
periods  indicated  as  reported  by  NASDAQ.   The  market  quotations  reflect
interdealer prices, without retail mark-up, mark-down or commissions and may not
necessarily represent actual transactions.

               Quarter
                Ended            High              Low

              9/30/98           $2.88            $1.38
             12/31/98           $2.44            $0.56
              3/31/99           $2.25            $0.44
              6/30/99           $1.69            $0.88
              9/30/99           $1.50            $0.63
              12/31/99          $1.13            $0.50
              3/31/00           $9.00            $0.75
              6/30/00           $6.69            $1.31

      Holders of Common Stock are  entitled to receive such  dividends as may be
declared by the Board of Directors  and, in the event of  liquidation,  to share
pro  rata  in  any  distribution  of  the  Company's  assets  after  payment  of
liabilities.  The Board of Directors is not obligated to declare a dividend. The
Company has not paid any  dividends on its Common Stock and the Company does not
have any current plans to pay any Common Stock dividends.

      The provisions in the Company's Articles of Incorporation  relating to the
Company's Preferred Stock would allow the Company's directors to issue Preferred
Stock with rights to multiple  votes per share and dividends  rights which would
have  priority  over any  dividends  paid with respect to the  Company's  Common
Stock.  The issuance of Preferred Stock with such rights may make the removal of
management more difficult even if such removal would be considered beneficial to
shareholders  generally,  and  will  have the  effect  of  limiting  shareholder
participation in certain  transactions  such as mergers or tender offers if such

<PAGE>

transactions are not favored by incumbent management.  The holders of the Series
D preferred stock have "as if converted" voting rights.  The 2,850 shares of the
Series D preferred stock are convertible into 576,923 shares of common stock.

Issuance of Common Stock

      During the two years ended June 30, 2000 the Company issued:

o    29,000 shares upon the  conversion  of the Company's  series A and Series B
     preferred stock,

o    3,490,000  shares upon the  conversion of the Company's  Series C preferred
     stock,

o    60,000 shares as payment of accrued  dividends and other amounts related to
     the Series C preferred stock,

o    2,697,521 shares in settlement of notes payable and accrued interest,

o    1,120,250  shares  pursuant to the  Company's  stock bonus plans  including
     36,571 for settlement of an outstanding liability,

o    237,129 shares in connection  with the acquisition of the DCB Actuaries and
     Consultants,  s.r.o.,  technology from DSM, LLC and the direct ownership of
     the MedCard system,

o  370,968 shares in payment of outstanding liabilities,

o  3,554,669 shares for services rendered and equipment received,

o    533,331  shares as penalties  related to  obligations  arising from private
     placement agreements,

o  1,869,541 shares upon the exercise of options and warrants, and

o  9,899,524 shares for cash in private offerings.

      The shares  issued upon the  conversion of the Series A, B and C preferred
stock and in  settlement  of the notes  payable were issued in reliance upon the
exemption provided by Section 3(a)(9) of the Securities Act of 1933.

      The shares  issued  pursuant  to the Stock Bonus Plan were  registered  by
means of a registration statement on Form S-8.

      The  remaining  shares  issued or sold during the two years ended June 30,
2000 were issued or sold in reliance upon the exemption provided by Section 4(2)
of the Act. The persons who  acquired  these  shares were either  accredited  or
sophisticated investors. The shares of common stock were acquired for investment

<PAGE>

purposes only and without a view to distribution. The persons who acquired these
shares were fully  informed and advised  about matters  concerning  the Company,
including the  Company's  business,  financial  affairs and other  matters.  The
persons  acquired  these  shares  for  their  own  accounts.   The  certificates
representing the shares of common stock bear legends stating that the shares may
not be  offered,  sold  or  transferred  other  than  pursuant  to an  effective
registration  statement  under the  Securities  Act of 1933,  or  pursuant to an
applicable exemption from registration.  The shares are "restricted"  securities
as defined in Rule 144 of the Securities and Exchange Commission.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS/ PLAN OF OPERATIONS

      The following  selected  financial data should be read in conjunction with
the more  detailed  financial  statements,  related  notes and  other  financial
information included herein.

Statement of Operations Data:
----------------------------
                                                 Years Ended June 30,
                                         -----------------------------------

                                              2000                1999
                                              ----                ----

Revenues                                 $3,253,489            $2,212,376
Cost of Services                         (1,559,548)           (1,095,054)
Operating and other
     Expenses                            (9,045,842)           (7,725,674)
Loss from Discontinued Operations          (879,128)             (480,608)
                                        ------------         -------------
Net Loss                                $(8,231,029)          $(7,088,960)
                                         ===========          ============

Balance Sheet Data:
------------------
                                                     June 30,
                                         ---------------------------------
                                            2000                   1999
                                            ----                   ----

Current Assets                           $4,170,290            $1,168,055
Total Assets                            $15,149,273            $6,374,862
Current Liabilities                      $1,775,029            $2,142,550
Non-Current Liabilities                  $2,224,048              $125,706
Total Liabilities                        $3,999,077            $2,268,256
Working Capital (Deficit)                $2,395,261             $(974,495)
Shareholders' Equity                    $11,501,196            $4,106,606

The Company has declared no Common Stock dividends since its inception.

Results of Operations

      The following  table shows the percentage of the Company's  gross revenues
by  category  for the  periods  indicated,  as well as the  anticipated  revenue
percentage from each category for the year ending June 30, 2001.

<PAGE>

                                               Percent of Gross Revenues
                                         ---------------------------------------

                                         Years Ending June 30,    Year Ending
                                         ---------------------   June 30, 2001
                                         1999         2000      (Projected) (1)
                                         ----         ----      ---------------

Sale of prepaid calling cards.             4%          1%             --
Revenues from script terminals            28%          1%             --

Revenues from Movie Vision                40%         22%             3%
Revenues from One Medical Service          7%         27%             --
Revenues from MedCard                     19%         31%            40%
Revenues from DCB                          --         18%            55%
Revenues from MedStore                     --          --             2%
Miscellaneous Income                       2%          --             --

  (l) There  can  be  no  assurance  that  these  percentages  will  not  change
      significantly  based  upon  events  that may not be within  the  Company's
      control. Projected revenues for the year ending June 30, 2001 constitute a
      forward-looking  statement  which is  subject  to risks and  uncertainties
      which  could  cause  actual  results  to  differ   materially  from  those
      projected.  Factors  that could cause or  contribute  to such  differences
      include lack of adequate funding, loss of major customers and inability to
      meet sales projections.

      In  December  1996 the  Company  acquired  all the issued and  outstanding
shares of Link International, Inc. (see Item 1 of this report). In June 1999 the
Company sold 520 of Link's script  terminals to the employee who was responsible
for overseeing this aspect of the Company's  business.  Although the Company did
not  receive  any  material  cash  payment in  connection  with this  sale,  the
purchaser  of the  assets  agreed to assume  $70,000  in  accounts  payable  and
approximately  $600,000 in capitalized  lease  obligations  associated  with the
script  terminals.  The  assets  sold  had a net  book  value  of  approximately
$635,000.  The Company  recognized as income previously  recorded deferred gross
profit related to the sale and lease back of script terminals totaling $212,805,
as well as an  immaterial  gain from the sale of the assets and the release from
the related obligations. During the year ended, June 30, 2000, the Company wrote
off the remaining  script terminals as described in Item 1. The Company does not
anticipate  earning  significant  revenues  with respect to script  terminals in
future years.

      In January  1998 the  Company  acquired  its Movie  Vision  division  from
Moviebar  Company  USA  and  Vectorvision,   Incorporated.  Movie  Vision  rents
videocassettes,   primarily   containing  motion  pictures,   through  automated
dispensing units in hotels and time-share facilities.

      In May 1998 the Company acquired One Medical Services, Inc. (see Item 1 of
this  report).  In July 1999 the Company  licensed its rights to the One Medical
Service Network to an unrelated third party (Licensee) for $1,377,000,  of which
$567,000 was paid by February  2000,  and the  remainder of which  ($810,000) is
being paid in accordance with the terms an unsecured  promissory note that bears
interest at 8% per year.  The  Licensee is  required to make  monthly  principal
payments equal to $8 per platform using the One Medical Services Network, with a
minimum of $1,000 and a maximum  of $6,000  per  month,  plus  $3,000 of prepaid

<PAGE>

phone card credits. The initial cash payment was recognized as income during the
year ended June 30, 2000. The note  receivable was recorded as deferred  revenue
and is being recognized as income as the amounts are earned and determined to be
realizable.  The total revenue  recorded during the year related to license fees
was $613,000,  leaving a balance of deferred  revenue of $764,000 as of June 30,
2000.

      The  Licensee  also  agreed  to  purchase  approximately  $200,000  of the
Company's  inventory  on an as  needed  basis  and to pay the  related  accounts
payable.  The inventory was released to the Licensee as requested.  The Licensee
hired the full time employees involved with this operation. The Company retained
as  employees  those  persons who devoted less than full time to the One Medical
Services  Network.   These  employees   primarily  provide  technical   support,
installations,  repairs,  maintenance  or the  underlying  software  and billing
support.  The Company  charges  the  Licensee  for these  services on a time and
materials  basis.  The Licensee also assumed other overhead  associated with the
One Medical  operation.  This  transaction  improved the Company's  cash flow by
eliminating overhead, recovering amounts for services provided and providing for
current and future licensing fee income.

      Revenue related to the licensing,  sale of inventory and providing support
services  totaled  approximately  $887,000  during the year ended June 30, 2000.
Revenues  related to the operation of the One Medical  Services  Network totaled
approximately  $156,712 during the year ended June 30, 1999. Revenues related to
the One Medical  Services  Network  (licensing  fees and support  services)  are
expected to produce less than $100,000 during the year ending June 30, 2001.

      In November 1998 the Company  acquired the  worldwide  license to software
programs and related  technology  known as the MedCard system.  The Company then
acquired direct ownership of the MedCard system technology and name in May 2000.
The  MedCard  system  is  an  electronic  processing  system  that  consolidates
insurance eligibility verification and processes medical claims and approvals of
credit card and debit card payments in under 30 seconds through a single,  small
terminal or a personal computer.  The MedCard system is the primary component of
the Company's medical transaction processing segment on a prospective basis.

      Revenues from the MedCard System are generated from the sale of terminals,
for  verifying  insurance  eligibility  and  for  processing  insurance  claims.
Potential  revenue sources include fees for credit card  transactions  processed
through the terminal, fees for collection of receivables if the Company provides
billing  services,  reimbursement  by insurance  carriers for submitting  claims
electronically,  fees for  using  the  system's  referral  program  and fees for
processing  encounter data. The Company anticipates that the MedCard System will
begin  generating  significant  revenues  during the year ending June 30,  2001.
Revenues for the MedCard  System are expected to generate  approximately  40% of
the Company's revenues during the year ending June 30, 2001.

      The Company acquired DCB Actuaries and Consultants, s.r.o., in April 2000.
DCB  developed  and  operated  a  Health   Information   Gateway,   which  is  a
state-of-the-art,  web based  infrastructure,  featuring  advanced  data  mining
capabilities, designed to meet the information needs in the worldwide healthcare
industry in a real time basis. The Health Information  Gateway is being marketed

<PAGE>

to hospitals and other healthcare provider organizations and insurance companies
and plans.

      Revenue  from  the  Health  Information  Gateway  and  other  products  is
generated  for the sale or licensing  of the  software and software  development
services.  Potential revenue sources include the sale of computer  equipment and
the operation of the Application  Service  Provider and Storage Service Provider
data  warehouse.  Revenues for the  operation  of DCB, in the United  States and
Europe  combined,  are expected to generate  over 50% of the  Company's  revenue
during the year ending June 30, 2001.

Year Ended June 30, 2000

      The Company continued its shift towards the healthcare industry during the
year ended June 30, 2000. The medical  transaction-processing  segment accounted
for  $1,881,417,  which  represented  58% of total revenues during the year then
ended.  This  represents  an increase  of  $1,297,640  over the prior year.  The
increase is primarily  attributable  to the  recognition  of revenue of $613,000
related to the  licensing  of the rights to the One  Medical  System and MedCard
revenue, which increased from $427,065 to $994,661.

      The current year includes $593,379 of revenue earned by the newly acquired
subsidiary,  DCB. All of these revenues were  generated in Europe.  The domestic
operations  related to DCB did not  generate  any revenue  during the year ended
June 30, 2000.

      Revenues from intelligent vending machines declined from $1,628,599 during
the year ended June 30, 1999 to $778,693 for the year ended June 30,  2000.  The
decline was the result of several factors:  First, financial processing revenues
decreased  from  $625,801 to $46,769  because of the sale of the majority of the
script  machines in June 1999.  Second,  revenues  from phone card  machines and
other  telecommunication  services declined from approximately  $140,000 to less
than $20,000 as the Company is no longer pursuing  opportunities  in this field.
Lastly,  revenues  from  Movie  Vision  operations  declined  from  $860,126  to
$713,664,  as a result of the Company  focusing its efforts and resources on the
medical/healthcare business operations.

      Revenue from the sale of goods  increased  from $775,967 to $848,434.  The
decrease in sales related to the sale of script machines and phone cards coupled
with the 1999 recognition of approximately  $210,000 of deferred gross profit on
the script  terminals sold to the former employee units sold and leased back was
more than offset by the increase in sales of MedCard equipment,  which increased
from $285,164 to $610,982.

      Rental  income  declined  from  $830,153 to $680,331  related to a gradual
decline in the video  vending  industry  and the lack of  resources  the Company
dedicated to this aspect of the business.

      Service revenue increased from $606,256 to $1,158,137. The increase is the
result of higher  services  revenues  earned by MedCard  ($141,901  compared  to
$383,679), the inclusion of $613,000 licensing revenue and a decline in revenues
related to the script  machines and the ongoing  revenues  from the operation of

<PAGE>

One Medical Service Network, which was licensed to a third party in July 1999.

      Software   development   revenues  were  generated  entirely  by  the  DCB
subsidiary subsequent to the date of acquisition.

      Cost of sales and  services  as a  percentage  of total  revenues  did not
change significantly from year to year. However, cost of sales and services as a
percentage  of  revenue  for each type of revenue  did  change  for the  reasons
described below:

1.    Cost of sales for sales  increased from 32% to 76% of sales revenue.  This
      is the result of higher  sales of phone cards in 1999 (with a higher gross
      profit  percentage),  sales of script and other  processing  equipment  in
      1999,  the  recognition  of deferred gross profit in 1999 from the sale of
      520 script  terminals to the former  employee and the sale of inventory to
      the  licensee  of the One  Medical  Services  Network at a very low profit
      margin in 2000.

2.    Cost of  revenues  for  the  rental  business  increased  from  47% to 51%
      primarily  because of the lower  revenues  were not offset by a comparable
      decline in costs, as certain costs were  relatively  fixed in nature (i.e.
      salaries  and  rent)  and did  not  decline  in  proportion  to the  lower
      revenues.

3.    The  costs of  sales  percentage  for  services  declined  from 76% to 37%
      primarily  related to the recognition of $613,000 of licensing  revenue in
      2000.  Exclusive of this amount cost of sales as a percentage  of revenues
      was comparable to that of the prior year.

4.   Cost of software  development  as a  percentage  of revenue  was 24%.  This
     amount may  fluctuate  in future years as more revenue is generated in this
     area.

      General  and   administrative   expenses   increased  from  $5,844,024  to
$6,369,709. This increase was the result of several factors, including:

1.    The Company acquired the rights to the MedCard System in November 1998 and
      as a result,  only incurred  expenses  related to its operations for 6-1/2
      months  during  1999  and  a  full  year  in  2000.   This  accounted  for
      approximately $283,302 of the increase.

2.    The Company had 2-1/2 months of expenses related to the operations of both
      DCB in Europe and  operations  in the United  States.  This  accounted for
      approximately $220,000 of the increase in expenses.

3.    The Company  recorded a reserve  against a $150,000 note  receivable  plus
      accrued interest of $9,750 in 2000.

4.   A  total  of  $42,970  is  included  in the  current  year  related  to the
     settlement of the matter in arbitration.

<PAGE>


5.    The  above   items  were  offset  by  the   elimination   of  general  and
      administrative  salaries  related to the One Medical  Services  and script
      machines in July and June 1999, respectively.

      Depreciation  and  amortization  increased by $615,155  resulting from the
following:

1.    A full year of  amortization  was  recorded in fiscal year 2000 related to
      the MedCard  System,  while only a partial  year was recorded in the prior
      year since the initial transaction was consummated in November 1998.

2.   An additional  $18,975 of amortization was recorded related to the May 2000
     direct acquisition of the MedCard System.

3.    The Company  recorded  approximately  $135,000 related to the depreciation
      and  amortization  related to the DCB acquisition.  Additionally,  DCB had
      approximately  $100,000 of  depreciation  subsequent to its acquisition by
      the Company.

4.    Amortization totaling $332,090 was recorded related to the goodwill of the
      One Medical  Service,  which was an  increase  of $213,877  over the prior
      year. The goodwill related to 81% of the One Medical Services  business is
      being amortized in proportion to the revenue  recognized under the license
      agreement.  The remainder is being amortized on a straight-line basis over
      seven years.

5.    Depreciation on current year fixed asset additions, as well as a full year
      depreciation  being taken on assets  acquired in the prior year was offset
      by the  reduction of  depreciation  resulting  from the sale of the script
      machines.

      Selling and marketing expenses  decreased by $10,167 primarily  attributed
to the sale of the script terminals and the icensing of the One Medical Services
Network,  as moneys were no longer spent for these  operations and  expenditures
for sales and marketing related to MedCard, which increased by $367,913.

      Total equity based compensation  included in the current year expenses was
comparable to that of the prior year.

      Research and development  expenses  relate  primarily to costs incurred by
DCB in the Czech Republic.

      Interest  expense  decreased  from  $337,153  to  $128,980  because of the
reduction in the  Company's  long-term  debt and the release from capital  lease
obligations  resulting from the sale of the script  terminals.  Interest in 2000
included  $42,799  related to  penalties  pursuant  to a note  payable  that was
converted to common stock in June 2000.

<PAGE>


      Interest  income  increased to $115,227 from $28,772  because of the large
cash  infusion  realized by the Company  during the quarter ended March 31, 2000
and because of the interest  recorded on the note  receivable from the licensing
of its One Medical Services Network.

      During the current year, the Company made the determination that the value
of its patents had been impaired, since the patents were not generating adequate
cash flow to support the recorded  value of the patents,  because the underlying
technology was not being used to a significant  degree.  Accordingly,  a loss on
impairment of $255,229 was recognized. This amount was the net book value of the
patents at the time the determination was made.

      The Company  determined  through the legal discovery and mediation process
that 117 of its script terminals will most likely not be returned to the Company
and other  financial  recovery is  unlikely.  The Company  recognized  a loss of
$80,018 representing the net book value of the assets.

      The  Company  did not incur any  impairment  of  patents  or loss from the
write-off of script machines in the prior year.

      Income  taxes  recorded in the  current  year  primarily  pertain to state
minimum franchise and income tax for the current and prior years.

      During the year ended June 30, 2000,  the Company  decided to  discontinue
its ACDC operations. The Company had no revenue from ACDC operations during 1999
and  2000.  The only  activity  was  depreciation  on  existing  assets  and the
reduction in estimated net realizable value of a note receivable that arose from
a prior sale of ACDC units.  The decision to discontinue the operations was made
because of the lack of revenue  during the most recent two years and the minimal
likelihood that any revenue would be earned in the foreseeable future.

      The Company has  approximately 90 ACDC units in storage that it owned plus
an additional 30 units that were being held as collateral on a note  receivable,
for which  collectability is considered  unlikely.  The Company intends to strip
the computer  components  from the ACDC units and use these parts as replacement
parts in its Movie Vision vending machines.  The Company anticipates  performing
this work and  disposing  of the units  during the quarter  ending  December 31,
2000.  The Company is also in the process of  disposing  of the phones that were
held in the ACDC  machines.  These  phones  have no  salvage  value  and will be
completely  disposed of. The loss on disposal is equal to the difference between
the net book  value of all of the ACDC  units in  storage  (those  held as fixed
assets and those held as collateral on a note receivable) and the lesser of fair
market value or net book value of the components  parts that will be retained by
the Company.

      The net loss from the prior  year of  discontinued  operations  was higher
because certain of the assets were fully depreciated in the prior year.

<PAGE>


Year Ended June 30, 1999

      During the year ended June 30, 1999, the Company's  revenue increased as a
result of the Company's financial  processing (Link debit and script terminals),
medical  transaction   processing  (One  Medical  and  MedCard  operations)  and
automated motion picture rentals (Movie Vision  division).  These business lines
produced revenues of $625,801, $583,777 and $860,126,  respectively for the year
ended June 30, 1999.  Comparable revenues from these segments for the year ended
June 30, 1998 were substantially  less since the full-scale  distribution of the
Link debit and script  terminals  did not begin until April 1998,  and the Movie
Vision,  One Medical and MedCard  operations did not commence  operations  until
January 1998,  May 1998 and November 1998,  respectively.  During the year ended
June 30,  1999 the  Company  began  directing  its  efforts  toward its  medical
operations.  As a result of this change in focus,  and as discussed  above,  the
Company sold a major portion of its script terminals in June 1999. In connection
with the sale of the  script  terminals,  the  Company  recognized  $210,000  of
deferred gross profit.

      Selling,  Marketing  and General and  Administration  expenses  (including
depreciation) increased to nearly $7,400,000 during the year ended June 30, 1999
compared to $5,900,000 in the prior year  primarily due to the following  (after
adjusting for the expenses related to the discontinued operations):

1)    One Medical and Movie Vision were  operating  during all twelve  months of
      fiscal 1999, compared to shorter periods in the prior year.

2)    The Company acquired its MedCard  operation in November 1998. As a result,
      only  operations  for the  twelve-month  period  ending June 30, 1999 were
      affected by the expenses of this division.

3)    Depreciation and amortization  expense was $693,083 in the year ended June
      30, 1999 compared to $474,372 in the prior period.

4)    As a result of the sale of a portion of its script terminals,  the Company
      incurred approximately $140,000 of commission expense in the quarter ended
      June 30, 1999.

5)    The Company incurred  one-time  expenses related to the closing of offices
      in New Jersey and Modesto,  California  offices and in the  termination of
      offices leases Florida.

6)    The Company expensed approximately $120,000 in additional reserves against
      note receivables deemed uncollectible at June 30, 1999.

      During the year ended June 30, 1999 equity-based compensation increased to
$2,540,338,  which was 50% greater  than the prior  period.  The Company  issued
shares of its common  stock to pay for the services  provided by  employees  and
outside consultants retained for a number of projects.

<PAGE>


Liquidity and Sources of Capital

      During  the  year  ended  June  30,  2000 the  Company's  operations  used
approximately  $3,713,028 of cash. In order to fund its  operating  losses,  the
Company  sold shares of its common  stock in private  placements.  Approximately
$6,200,000  was raised from the sale of 6,262,645  shares of common  stock.  The
6,262,645  shares of common stock were sold at the then prevailing  prices or at
discounts  ranging  from no  discount  from the market  price to 23% of the then
prevailing  market  price of the  Company's  common  stock since the shares were
restricted securities, as that term is defined in Rule 144 of the Securities and
Exchange  Commission.  None of these  shares  were  issued to  employees  of the
Company.  The Company also received  $2,183,150 from the exercise of options and
warrants for the  purchase  1,332,873  shares of common stock at prices  ranging
from $0.44 to $5.00 per share.  The Company  also issued  536,668  shares of its
common  stock upon the  exercise  of warrants  and  options for the  purchase of
660,000  shares of its common  stock and the  delivery of 123,332  shares of its
common stock that had an aggregate fair market value equal to the exercise price
under cashless exercise provisions.  The Company also issued 1,895,629 shares of
common stock in exchange for services and equipment  valued at  $1,759,173  that
included 163,129 shares (valued at $471,442)  issued to employees,  officers and
directors.   Additionally,  844,385  shares  of  common  stock  were  issued  as
settlement of outstanding liabilities totaling $681,497.

      During fiscal year 2000,  the Company also issued shares for the following
reasons:

      Acquisition of DCB                                          12,880
      Acquisition of intellectual property from DSM               24,249
      Acquisition of MedCard                                     100,000
      Conversion of Series A and C Preferred Stock             3,490,800
      Shares issued as partial payment of dividends
         on Series C Preferred Stock                              60,000
      Shares issued as penalties                                 533,331

      The total of all shares  issued  during  the year ended June 30,  2000 was
15,093,460.

      The Company  focused much of its attention  during the year ended June 30,
2000 on building its corporate and operational  organization  and  reconfiguring
its  operations to meet the needs of the current and future  healthcare  market.
Some of the  areas of focus  included  1)  building  an  infrastructure  for its
MedCard  operations,  2) consummating the DCB  transaction,  3) establishing the
data warehouse  facility for DCB in Florida,  4) gaining an understanding of the
needs of the healthcare  market in the United States for the Health  Information
Gateway,  5) marketing the Health  Information  Gateway in the United States, 6)
building  relationships  with key entities in the healthcare  market,  7) hiring
experienced  management to oversee  different  aspects of the  business,  and 8)
building a cohesive team to form a single  Company out of the  different  parts,
including MedCard, DCB Czech and DCB United States.

      Additionally,  the Company also  completed  several other  accomplishments
that will allow it to focus on operations  during the year ending June 30, 2001.
These  included the  retirement of the Series C stock,  increasing the number of
authorized shares and the settlement of various claims and liabilities.


<PAGE>

      During the year ended June 30,  2000,  the  Company  granted  options  and
warrants  for the  purchase of  7,817,391  shares of common  stock to  officers,
employees,  consultants  and other third  parties.  The  exercise  prices of the
warrants  relating  to  139,667  shares  of  common  stock  were  below the then
prevailing  market price of the Company's  common stock on the date the warrants
were  granted  because  the  exercise  price  was  determined  pursuant  to  the
underlying  document (loan or private placement  document).  The shares issuable
upon the exercise of the warrants  were  restricted  securities  as that term is
defined in Rule 144 of the Securities and Exchange Commission.

      Proceeds  of  $567,000  from the  licensing  of the One  Medical  Services
Network were also used to fund the Company's operations.

      Because of the funds  received from the private  placement and exercise of
options and warrants,  the Company's working capital increased from a deficit of
$974,495 to a positive $2,395,261. Stockholders equity increased from $4,106,606
to  $11,150,196  and net tangible  equity  (stockholders  equity less  goodwill)
increased from $3,787,307 to $9,125,223 during the same period.

      Non-current  liabilities  increased from $125,706 to $2,224,048.  However,
$2,110,382  pertains  to  deferred  revenue,   which  will  not  result  in  the
utilization of the Company's cash. This amount will be recognized as income over
the applicable contract period, without the Company expending any cash.

     During  September  and October  2000,  the Company  received  approximately
$1,600,000  from the  exercise of warrants to purchase  1,909,923  shares of its
common stock at prices ranging from $0.56 to $1.00 per share. The Company issued
five-year  warrants  to  purchase  3,364,885  shares of its  common  stock at an
exercise price of $5.00 per share to warrant holders exercising their warrants.

     The Company has received a lease commitment from an unrelated entity.  This
lease facility will provide the Company with up to $1,000,000 for equipment. The
Company has  already  purchased  approximately  $300,000  of  equipment  that is
expected to be covered  under this facility and the amounts paid refunded to the
Company.  The  Company  anticipates  it will  utilize  the balance by the end of
calendar 2000.

     In September  2000, the Company  signed an agreement  with EMC  Corporation
whereby the Company obtained  equipment under a three-year lease through EMC and
issued a warrant to purchase 106,756 shares of the Company's common stock to EMC
as part of the transaction. The equipment acquired will be used in the Company's
storage service provider operations.

 The Company believes that both its MedCard and DCB operations will provide
positive  cash  flow from  operations  during  the year  ending  June 30,  2001,
although both will operate  under  different  strategies.  MedCard will focus on
generating a large number of small dollar  transactions.  While the sale of each
MedCard unit will generate cash flow,  residual  processing fees are expected to
generate  the  greatest  cash flow.  The Company  believes  the  foundation  and
infrastructure are in place and the Company expects the MedCard revenue and cash
flow will undergo rapid growth during the year ending June 30, 2001.

<PAGE>

      DCB's cash flow will come from a comparatively small number of high dollar
transactions.  An  outright  sale or  license  of the  software  will  yield the
greatest  upfront  cash  flow  to the  Company,  plus  cash  in the  future  for
maintenance and support.  Transactions under the ASP alternative are expected to

yield a long-term,  continuous cash flow to the Company. However, because of the
relative newness of the market,  it is difficult to predict when the revenue and
cash will be realized.

      The Company  believes  that with the funds  received  from the exercise of
warrants in  September  and the lease  facility it has adequate  cash  resources
available  until such time as positive cash flow is generated  from  operations.
However, if the Company does need additional cash in the future, the Company may
need to sell additional  shares of its common stock or borrow funds from private
lenders. There can be no assurance, however, that the Company will be successful
in obtaining additional funding if is determined to be necessary. If the Company
is unsuccessful in obtaining additional funding for its operations,  the Company
will,  if  necessary,  either  sell  certain  assets or  divisions,  reduce  its
operations or otherwise reorganize its operations so that its operating expenses
would be less than its revenues.  Other than the above mentioned lease facility,
the Company does not have any available credit, bank financing or other external
sources of liquidity.

      The  Company's  long-term  debt  consists  entirely of  obligations  under
capital leases.  As of June 30, 2000 and 1999, the Company is in compliance with
the covenants and provisions of these leases.

      In January  2000 the holders of the  Company's  Series C preferred  shares
converted the preferred  shares into  3,490,000  shares of the Company's  common
stock.  In payment of accrued  dividends  and other costs the Company  made cash
payments of $160,567 and issued  60,000 shares of its common stock plus warrants
to the holders of the Series C preferred  shares.  The warrants allow the holder
to purchase 132,000 shares of the Company's common stock at a price of $0.75 per
share at any time prior to December 22,  2002.  For  assisting in arranging  the
conversion of the preferred shares,  the Company issued 175,000 shares of common
stock to a financial consultant.

ITEM 7.  FINANCIAL STATEMENTS

      See the financial statements attached to this report.

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

      Not applicable.

<PAGE>


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

      The Company's officers and directors are as follows:

Name                Age         Position

Mark Bennett           41           President and a Director
Michael Malet          52           Executive Vice President and a Director
Alan Ruben             43           Chief Accounting and Financial Officer
David Robinson         37           Vice President and Chief Technology Officer
Jeffrey Yablon         39           Vice President of Sales
Vladimir Havlena       44           Managing Director - DCB Actuaries and
                                     Consultants, s.r.o.
David Breslow          56           Director
Julio Curra            42           Director

      Each  director  holds  office  until his  successor is duly elected by the
stockholders.  Executive  officers  serve  at  the  pleasure  of  the  Board  of
Directors.

      The  following  sets forth  certain  information  concerning  the past and
present principal  occupations of the Company's officers and directors and other
key employees.

      Mark Bennett has been the Company's  President since November 1997 and has
been a Director of the Company since  September  1997.  Mr. Bennett has been the
President,  Chief  Executive  Officer  and  a  Director  of  Link  International
Technologies,  Inc., a subsidiary of the Company,  since January 1996. From 1985
to 1987 Mr.  Bennett  was the  General  Manager for  MovieBar,  a video  vending
company servicing the hotel and hospitality industry, with installations in over
35,000  hotel rooms  worldwide.  In 1987 Mr.  Bennett  became Vice  President of
International  Operations and General  Manager of MovieBar and was  subsequently
named as  President  of  MovieBar  Company  USA. In  December  1995 Mr.  Bennett
resigned his position with MovieBar to co-found Link.

     Michael Malet has been the Company's Vice President since November 1997 and
has been a director of the Company since  September 1997. Mr. Malet has been the
President of New View  Technologies,  Inc., a wholly  owned  subsidiary  of Link
International  Technologies,  Inc., since July 1995. From 1986 to 1987 Mr. Malet
was the President of Vending  Control  Systems,  a manufacturer of video vending
machines.  Mr.  Malet  was a  Sales  Manager  (1987-1990)  and  later  President
(1991-1995) of Keyosk  Corporation,  a Company  involved on the  development and
sale of intelligent on-line vending machines.

     Alan Ruben joined the Company as Chief Accounting and Financial  Officer in
October 1999. Prior to joining the Company,  he was the Chief Financial  Officer
for Direct Container Line, Inc., an international  shipping company.  Previously
Mr.  Ruben  was the  Vice-President  and  Chief  Financial  Officer  for  Relsys
International,  Inc., a medical  software  development  company.  Mr. Ruben is a
certified public accountant,  licensed in the state of California.  He began his
career with Coopers & Lybrand and was in public  accounting for eighteen  years.
He holds a Masters  degree in  Business  Administration  from  California  State
University,  Long  Beach,  as well as a Bachelors  degree in  business  from the
University of Southern California.

<PAGE>

     David Robinson  joined the Company as Vice  President and Chief  Technology
Officer in April  2000.  Prior to joining  the  Company,  Mr.  Robinson  was the
President  of DCB  Actuaries &  Consultants,  s.r.o.,  since 1991.  In 1986,  he
founded DSM.net, a systems network  integration  company,  and has served as its

President since  inception.  In 1998, Mr. Robinson was appointed to the Board of
Directors of Woodrow Milliman, a worldwide actuarial and consulting firm.

     Jeffrey  Yablon  joined the Company as its Vice  President of Sales in June
2000.  Mr. Yablon was the Vice  President of Sales for Olsten Health  Service in
New York.  Previously,  Mr. Yablon was employed by Abbott  Laboratories  for six
years, in various  capacities,  including Director of Managed Care,  Director of
Marketing and Director of Alternate  Site National  Accounts.  He is a Certified
Healthcare Executive (CHE) of the American College of Health Care Executives and
a member of the American Association of Health Plans. Mr. Yablon was a member of
the Executive Board of the Metropolitan Healthcare  Administrators  Association.
In  addition  to a  bachelor's  degree,  he holds an MBA degree  from  Fairleigh
Dickinson University.

     Vladimir Havlena became the Managing Director of the Company's wholly owned
subsidiary, DCB Actuaries & Consultants, s.r.o. in April 2000. Mr. Havlena was a
founder and had worked as the Managing  Director of DCB Actuaries & Consultants,
s.r.o.   since  1991.  Between  1987  and  1990  Mr.  Havlena  received  several
post-graduate  degrees at the University of Brno,  Czech  Republic.  Mr. Havlena
graduated  in  1981  from  the  Czech  Technical  University  with a  degree  in
engineering.

     David  Breslow has been a director of the Company  since March 1999.  Since
1996 Mr. Breslow has been the Executive Director of United Pharmacists  Network,
Inc., a corporation  involved in  purchasing,  management  and  providing  other
services to  pharmacies.  Between  1976 and 1995 Mr.  Breslow  owned and managed
various pharmacies in the Los Angeles, California metropolitan area.

     Julio Curra has been a director of the Company since March 1999. Since 1996
Mr. Curra has been the president of All-Line Communications, Inc., a corporation
involved in  telecommunication  sales.  Between  1987 and 1996 Mr. Curra was the
president of Julio Curra & Associates, a firm also involved in telecommunication
sales.

      Key Employees

      Robert Stevens is the Company's  Director of Development  and  Information
Technology.  He has been with the Company or its subsidiaries  since 1994. Prior
to joining the Company,  Mr. Stevens was the Vice  President of Development  for
three different companies. He was involved with a ten-year development effort on
EZ-Fax,  the first network fax server developed in 1984. He also spent seventeen
years at IBM, primarily in their complex systems group.

     Julie  Signorille  became the  Director  of  Operations  for the  Company's
MedCard  Division  in June  2000.  Ms.  Signorille  was the Vice-  President  of
Operations  for  Citibank,  serving as the  Director  of Banking  Operations  of

<PAGE>


Citibank's  Internet Bank.  Ms.  Signorille has over fifteen years of management
experience,  primarily in  operations.  Prior to her tenure with  Citibank,  she
managed the day to day operations of a 36 branch banking  network with assets in
excess of 6 billion dollars.


      Ron Pizzolo became the president of the Company's MedCard division in June
2000. Previously,  he had been providing services to the Company on a consulting
basis under the terms of the original license  agreement for the MedCard System.
Mr. Pizzolo  developed and managed many of the features of the MedCard System as
the founder and  president  of MedCard  Management  Systems,  Inc.  Prior to his
involvement  with  MedCard,  he spent over  twenty  years with a major  national
insurance company supervising the settlement of personal injury claims.

      Tony Pizzolo  became  Executive  Vice  President of the Company's  MedCard
division in June 2000. Previously, he had been providing services to the Company
on a consulting basis under the terms of the original license  agreement for the
MedCard  System.  Prior to joining MedCard in 1997, Mr. Pizzolo was an executive
in a variety of service related businesses in the New York area.

     All of the Company's officers devote substantially all of their time on the
Company's  business.  Mr.  Breslow and Mr. Curra,  as  directors,  devote only a
minimal amount of time to the Company.

      Mr. Breslow and Mr. Curra are members of the Company's audit committee.

Change in Management

     In  September  1998  Cornelia  Eldridge  was  appointed  a director  of the
Company.  In  February  1999 Chet  Howard,  George  Pursglove  and Ms.  Eldridge
resigned as  directors  of the  Company.  In March 1999 David  Breslow and Julio
Curra were appointed  directors of the Company.  In October 1999, Alan Ruben was
appointed  Chief  Accounting and Financial  Officer after Ian Hart's  employment
contract as chief financial officer expired.  In January 2000, Mr. Marvin Berger
resigned as the Company's  Vice  President of Sales & Marketing.  In April 2000,
Mr.  David  Robinson  and  Mr.  Vladimir  Havlena  joined  the  Company  as  its
Vice-President  and  Chief  Technology  Officer  and  Managing  Director  of DCB
Actuaries and  Consultants,  s.r.o.,  respectively.  Mr.  Jeffrey Yablon and Ms.
Julie Signorille joined the Company in June 2000 as the Corporate Vice President
of Sales and Director of Operations for the MedCard division,  respectively. Mr.
Ronald Pizzolo and Mr. Anthony  Pizzolo also joined the Company as the President
and Executive Vice President of the Company's MedCard division in June 2000.


<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION

      The following table sets forth in summary form the  compensation  received
by (i) the  Chief  Executive  Officer  of the  Company  and  (ii) by each  other
executive  officer of the Company who received in excess of $100,000  during the
fiscal years ended June 30, 2000 and 1999.

                                                         Other Annual
                                          Other Annual   Compensation  Options
    Name and       Fiscal Salary   Bonus  Compensation   Stock Awards  Granted
Principal Position  Year   (1)      (2)       (3)             (4)        (5)
------------------ ------ ------   -----  ------------   ------------  -------

Mark Bennett,       2000 $129,462 $112,350  $15,990        $136,648    800,000
 President and      1999 $128,482       --   $8,400              --  1,015,000
 Chief Executive
 Officer

Michael Malet,      2000 $104,942 $102,766   $9,200        $136,648    770,000
 Vice President     1999 $112,462       --   $8,400              --    925,000
 and Chief Operating
 Officer

Alan Ruben          2000  $77,539  $33,266       --         $98,535    500,000
  Chief Accounting  1999       --       --       --              --         --
  and Financial Officer

Robert Stevens      2000 $107,385   $3,044       --          $4,969    100,000
Director of         1999  $94,333       --       --              --     20,000
 Development
 and Information
 Technology

(1)  The dollar value of base salary (cash and non-cash) received.

(2)  The dollar value of bonus (cash and non-cash) received.

(3)  Any other annual  compensation  not properly  categorized as salary or
     bonus, including perquisites and other personal benefits,  securities or
     property. Amounts in the table represent automobile allowances.

(4)  Amounts  reflect  the value of the  shares of the  Company's  common  stock
     issued as compensation  for services.  No restricted  awards were issued to
     any of the above individuals .

      The table below shows the number of shares of the  Company's  Common Stock
owned by the officers listed above,  and the value of such shares as of June 30,
2000.
         Name                       Shares                  Value

      Mark Bennett                 262,400                $595,648
      Michael Malet                154,900                $351,623
      Alan Ruben                    51,679                $117,311
      Robert Stevens                 8,000                 $18,160

(5)   The shares of Common  Stock to be received  upon the exercise of all stock
      options granted during the fiscal years shown in the table.

<PAGE>

Employment Contracts

      In March 1999 the Company  entered into  employment  agreements  with Mark
Bennett and Michael Malet. Each employment agreement provides for the following:

1. Term of three years.

2.   Annual  salary of $137,500 in the case of Mr.  Bennett and  $120,000 in the
     case of Mr. Malet. In January,  2000, the annual compensation being paid to
     Mr.  Bennett  and  Mr.  Malet  was  increased  to  $152,776  and  $127,296,
     respectively.

3.   Automobile  allowance of $700 per month. Mr. Bennett is currently receiving
     an  automobile  allowance  of $1,599 per month and Mr.  Malet is  currently
     receiving $1,000 per month.

4.    Four weeks of paid  vacations  and the right to  participate  in any group
      medical,  group life insurance or any other employee benefit plan that the
      Company may, from time to time, maintain.

5.    Reimbursement  for any medical,  dental or optical expenses not covered by
      any Company group healthcare plan. No amounts have been reimbursed in this
      regard.

6.   Disability  benefits equal to the employee's salary payable to the employee
     for the remaining term of the employment agreement.

7.   Premium  payments  for a  $1,000,000  term life  insurance  policy with the
     beneficiary to be designated by the employee.

      In the event that there is a change in the  control of the Company and the
employee is terminated  without cause or the employee resigns for cause then the
Company  is  required  to pay  the  employee  a  lump-sum  amount  equal  to the
employee's  annual salary  multiplied by 2.99. The term  "resignation for cause"
means  there  is  a  material  change  in  the  employee's  authority,   duties,
compensation or activities.

      For  purposes of the  employment  agreement a change in the control of the
Company  means:  (1) the  acquisition  by any  person  of more  than  15% of the
Company's  common stock;  (2) the acquisition by any person more than 50% of the
voting  capital stock of any  subsidiary  of the Company;  (3) the merger of the
Company with another entity if after such merger the shareholders of the Company
do not own at least 85% of voting  capital stock of the  surviving  corporation;
(4) the  approval by the  shareholders  of the Company of a plan to liquidate or
dissolve the  Company;  (5) the sale of  substantially  all of the assets of the
Company;  or (6) a change in a majority of the Company's directors which has not
been approved by at least two-thirds of the incumbent directors.

<PAGE>


      If following a change in control the employee is terminated  without cause
or the employee  resigns for cause,  all options granted to the employee will be
fully vested.

      In October 1999,  the Company  entered into an employment  agreement  with
Alan Ruben. The agreement provides for the following:

1. Term of two years.

2.   Annual  salary of  $144,000  to be  payable  in cash  and/or  shares of the
     Company's common stock.

3.    Three weeks of paid  vacation  and the right to  participate  in any group
      medical, group life insurance, or any other employee benefit plan that the
      Company may, from time to time, maintain.

4.   Disability  benefits equal to the employee's salary payable to the employee
     for a period of twelve months.

5.    Options to purchase  100,000 shares of the Company's common stock at $1.00
      per share under the Company's  Incentive  Stock Option Plan,  with monthly
      vesting over two years.

6.    A bonus of up to fifty percent (50%) of the employee's annual salary based
      upon criteria to be determined by the Board of Directors.

      In the event that the employee is terminated without cause or the employee
resigns for cause,  then the Company is required to pay the  employee the lesser
of the employee's  annual salary or the salary to be paid to the employee during
the remaining term of the employee's  contract,  with such payments payable on a
monthly basis. The term "resignation for cause" means there is a material change
in the employee's authority, duties, compensation or activities.

      If following a change in control the employee is terminated  without cause
or the employee resigns for cause, the employee shall receive the full remaining
amount  of the  employee's  compensation  through  the  end  of  the  employment
agreement period.

      For purposes of the employment  agreement,  a change in the control of the
Company  means:  (1) the  acquisition  by any  person  of more  than  15% of the
Company's  common stock;  (2) the acquisition by any person more than 50% of the
voting  capital stock of any  subsidiary  of the Company;  (3) the merger of the
Company with another entity if after such merger the shareholders of the Company
do not own at least 85% of voting  capital stock of the  surviving  corporation;
(4) the  approval by the  shareholders  of the Company of a plan to liquidate or
dissolve the  Company;  (5) the sale of  substantially  all of the assets of the
Company;  or (6) a change in a majority of the Company's directors which has not
been approved by at least two-thirds of the incumbent directors.


<PAGE>

      In the event the  employee is  terminated  without  cause or the  employee
resigns  for  cause,  then all  options  granted to the  employee  will be fully
vested.

      In March 2000,  the Company  entered  into an  employment  agreement  with
Robert Stevens. The agreement provides for the following:

1. Term of three years.

2. Annual salary of $115,000.

3.    Three weeks of paid  vacation  and the right to  participate  in any group
      medical,  group life  insurance or any of the employee  benefit plans that
      the company may, from time to time, maintain.

4.   Disability  benefits equal to the employee's salary payable to the employee
     for a period of twelve months.

5.    Options to purchase  100,000 shares of the Company's common stock at $5.00
      per share,  with 40,000 under the Company  Incentive Stock Option Plan and
      60,000 under the  Non-Qualified  Stock Option Plan,  with monthly  vesting
      over two years.

6.    A Bonus of up to fifty percent (50%) of the employee's annual salary based
      upon criteria to be determined by the Board of Directors.

      In the event that the employee is terminated without cause or the employee
resigns for cause,  then the Company is required to pay the  employee the lesser
of the employee's  annual salary or the salary to be paid to the employee during
the remaining term of the employee's  contract,  with such payments payable on a
monthly basis. The term "resignation for cause" means there is a material change
in the employee's authority,  duties, compensation or activities, or if there is
a change in control of the Company.

      For purposes of the employment  agreement,  a change in the control of the
Company  means:  (1) the  acquisition  by any  person  of more  than  15% of the
Company's  common stock;  (2) the acquisition by any person more than 50% of the
voting  capital stock of any  subsidiary  of the Company;  (3) the merger of the
Company with another entity if after such merger the shareholders of the Company
do not own at least 85% of voting  capital stock of the  surviving  corporation;
(4) the  approval by the  shareholders  of the Company of a plan to liquidate or
dissolve the  Company;  (5) the sale of  substantially  all of the assets of the
Company;  or (6) a change in a majority of the Company's directors which has not
been approved by at least two-thirds of the incumbent directors.

      In the event the  employee is  terminated  without  cause or the  employee
resigns  for  cause,  then all  options  granted to the  employee  will be fully
vested.

<PAGE>


Options Granted During Fiscal Year Ending June 30, 2000

     The following tables set forth information  concerning the options granted,
during the fiscal year ended June 30, 2000, to the persons named below,  and the
fiscal  year-end value of all unexercised  options  (regardless of when granted)
held by these persons.

            Number of Shares          % of Total Options    Exercise
             Granted under   Type    Granted to Employees  Price Per  Expiration
Name            Option      of Plan      in Fiscal Year      Share       Date
--------------------------------------------------------------------------------

Mark Bennett   500,000     Non-Qualified       13%           $0.56      11/17/04
                20,000     Incentive           --%           $5.00      03/01/05
               280,000     Not under plan       7%           $5.00      03/01/05
               -------                          -
               800,000                         20%
               =======                         ==

Michael Malet  470,000     Non-Qualified       12%           $0.56      11/17/04
                20,000     Incentive           --%           $5.00      03/01/05
               280,000     Not under plan       7%           $5.00      03/01/05
               -------                          -
               770,000                         19%
               =======                         ==

Alan Ruben     100,000     Incentive            2%           $1.00      10/18/02
               300,000     Non-Qualified        8%           $0.56      11/17/04
                10,000     Incentive           --%           $5.00      03/01/05
                90,000     Not under plan       2%           $5.00      03/01/05
                ------                          -
               500,000                         12%
               =======                         ==

Robert Stevens  40,000     Incentive            1%           $5.00      03/01/05
                60,000     Non-Qualified        1%           $5.00      03/01/05
                ------                          -
               100,000                          2%
               =======                          =

     All  options  issued to Mr.  Bennett and Mr.  Malet were fully  vested upon
granting of the option.

     The options  issued to Mr. Ruben that expire in 2002 and all options issued
to Mr. Stevens vest monthly over two years. The options issued to Mr. Ruben that
expire in 2005 vest  monthly over one year and the other  options  issued to Mr.
Ruben are fully vested.

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

                                                Number of       Value of Unexer-
                                           Securities Underlying  cised In-the-
                                            Unexercised Options   Money Options
                                             at June 30, 2000   at June 30, 2000
                 Shares                     ------------------  ----------------
                Acquired         Value         Exercisable/       Exercisable/
Name          on Exercise (1)  Realized (2) Unexercisable (3)  Unexercisable (4)
-----------------------------  ------------ -----------------  -----------------

Mark Bennett       --             --           2,375,500/--      $2,764,698/--
Michael Malet      --             --           2,152,000/--      $2,502,603/--
Alan Ruben         --             --        358,333/141,667   $554,583/$84,667
Robert Stevens     --             --          32,500/87,500     $8,467/$16,933

<PAGE>


   (1)The number of shares  received upon exercise of options  during the fiscal
      year ended June 30, 2000.

   (2)With respect to options  exercised  during the Company's fiscal year ended
      June 30,  2000,  the dollar  value of the  difference  between  the option
      exercise price and the market value of the option shares  purchased on the
      date of the exercise of the options.

   (3)The  total  number  of  unexercised  options  held  as of June  30,  2000,
      separated  between those options that were  exercisable  and those options
      that were not exercisable.

   (4)For all in the money  unexercised  options held as of June 30,  2000,  the
      excess of the market value of the stock  underlying  those  options (as of
      June 30, 2000) and the exercise price of the option

Long Term Incentive Plans - Awards in Last Fiscal Year

      None.

Employee Pension, Profit Sharing or Other Retirement Plans

      The Company  reactivated  its 401(k) Plan  (originally  established by New
View Technologies) in June 2000. All United States based full-time employees are
eligible  to  participate  on the  first  day of a  calendar  quarter  after the
employee completes ninety days of employment with the Company.  Participants can
contribute the lesser of fifteen percent of their  compensation or the federally
mandated maximum amount (currently $10,500).  The Company matches the employees'
contributions  fifty  percent  of the first six  percent,  or a maximum of three
percent of salary.  Employees  are fully vested in amounts they  contribute  and
vest twenty percent per year over five years on Company contributions

      Except  as  noted  above  and  as  provided  in the  Company's  employment
agreements with its executive officers and other personnel, the Company does not
have a defined benefit,  pension plan,  profit sharing or other retirement plan,
although the Company may adopt one or more of such plans in the future.

Compensation of Directors

      Effective July 1, 2000, the Company agreed to pay each member of the Board
of  Directors  $50,000  per year,  payable in  semi-annual  installments  at the
beginning  of each six month  period.  Prior to this time,  the  Company  had no
standard arrangement pursuant to which directors of the Company were compensated
for any  services  provided  as a director  or for  committee  participation  or
special assignments.

      During the year  ending June 30,  2000,  Mr.  Breslow  and Mr.  Curra each
received  12,500  shares of the  Company's  common  stock  valued at $29,069 and
options to purchase  162,500 shares of the Company's  common stock.  The options
granted to each director were as follows:

<PAGE>


    Options         Type of       Exercise               Expiration
    Granted          Plan          Price      Date         Vesting
--------------------------------------------------------------------------------

    112,500      Non-Qualified    $0.56     11/17/04      Fully vested

     20,000      Non-Qualified    $5.00     03/01/05      Vested monthly
                                                          over one year
     30,000      Not under plan   $5.00     03/01/05      Vested monthly
                                                          over one year

      Except as  disclosed  elsewhere  in this report no director of the Company
received any form of  compensation  from the Company  during the year ended June
30, 2000.

Stock Option and Bonus Plans

      The Company has Incentive Stock Option Plans,  Non-Qualified  Stock Option
Plans and Stock Bonus Plans. A summary description of each Plan follows. In some
cases these three Plans are collectively referred to as the "Plans".

Incentive Stock Option Plans

      The  Incentive  Stock  Option Plans  authorize  the issuance of options to
purchase up to 2,500,000 shares of the Company's Common Stock (including  shares
from the year 2000 Incentive  Stock Option Plan, as discussed  below),  less the
number of shares already  optioned under this Plan.  Only officers and employees
of the Company may be granted  options  pursuant to the  Incentive  Stock Option
Plans.

      In order to  qualify  for  incentive  stock  option  treatment  under  the
Internal Revenue Code, the following requirements must be complied with:

      1.   Options granted pursuant to the Plan must be exercised no later than:

            (a)  The  expiration  of thirty (30) days after the date on which an
                 option holder's employment by the Company is terminated.

            (b)  The  expiration  of one year  after the date on which an option
                 holder's  employment  by the  Company  is  terminated,  if such
                 termination is due to the Employee's disability or death.

      2. In the event of an option  holder's  death  while in the  employ of the
Company,  his  legatees  or  distributes  may  exercise  (prior to the  option's
expiration) the option as to any of the shares not previously exercised.

<PAGE>


      3. The total fair market value of the shares of Common  Stock  (determined
at the time of the grant of the  option) for which any  employee  may be granted
options  which  are  first  exercisable  in any  calendar  year  may not  exceed
$100,000.

      4.  Options  may not be  exercised  until one year  following  the date of
grant.  Options  granted to an employee  then owning more than 10% of the Common
Stock of the Company may not be  exercisable  by its terms after five years from
the date of grant.

      5. The  purchase  price  per share of Common  Stock  purchasable  under an
option is determined by the Board of Directors, but cannot be less than the fair
market value of the Common Stock on the date of the grant of the option (or 110%
of the fair  market  value in the case of a person  owning the  Company's  stock
which represents more than 10% of the total combined voting power of all classes
of stock).

      In June 2000, the Company's  shareholders ratified the Company's year 2000
Incentive  Stock  Option Plan,  which  provides  that up to 1,000,000  shares of
common stock may be issued upon the exercise of options granted  pursuant to the
year 2000  Incentive  Stock Option Plan. No options have been granted under this
Plan as of June 30, 2000.

      During the year ended June 30, 2000, the Company  granted both Mr. Bennett
and Mr. Malet options to purchase  20,000 shares of the Company's  common stock.
The options may be  exercised  at any time prior to March 1, 2005 at an exercise
price of $5.00 per share.  The Company  granted Mr.  Ruben an option to purchase
100,000  shares at $1.00 per share with monthly  vesting over two years expiring
October 18,  2002,  and another  option to purchase  10,000  shares at $5.00 per
share with monthly vesting over one year and expiring March 1, 2005. The Company
also  granted an option to Mr.  Stevens to purchase  40,000  shares at $5.00 per
share with monthly  vesting over two years and expiring on March 1, 2005.  These
options were granted pursuant to the Company's Incentive Stock Option Plans.

Non-Qualified Stock Option Plans.
--------------------------------

      The Non-Qualified  Stock Option Plans authorize the issuance of options to
purchase up to 5,000,000 shares of the Company's Common Stock (including  shares
for the year 2000 Non-Qualified  Stock Option Plan as discussed below), less the
number of shares  already  optioned  under this Plan.  The Company's  employees,
directors, officers, consultants and advisors are eligible to be granted options
pursuant to the Plan,  provided however that bona fide services must be rendered
by such consultants or advisors and such services must not be in connection with
the offer or sale of securities  in a  capital-raising  transaction.  The option
exercise  price is  determined by the Board of Directors but cannot be less than
the  market  price of the  Company's  Common  Stock on the  date the  option  is
granted.

      Options granted  pursuant to the Plan not previously  exercised  terminate
upon the expiration of the option, which must occur no later than five (5) years
from the date the option was granted.

<PAGE>


      In the  event of an  option  holder's  death  while in the  employ  of the
Company,  his legatees or distributees  may exercise the option as to any of the
shares not previously exercised prior to the option's expiration.

      In June 2000, the Company's  shareholders ratified the Company's year 2000
Non-Qualified  Stock Option Plan,  which provides that up to 2,000,000 shares of
common stock may be issued upon the exercise of options granted  pursuant to the
year 2000  Non-Qualified  Stock Option Plan.  No options have been granted under
this plan as of June 30, 2000.

      During the year ended June 30, 2000, the Company granted Mr. Bennett,  Mr.
Malet and Mr. Ruben options to purchase 500,000,  470,000 and 300,000 shares, of
the Company's  common stock,  respectively.  The options may be exercised at any
time prior to November  17, 2004 at an  exercise  price of $0.56 per share.  The
Company  granted Mr. Stevens an option to purchase 60,000 shares of common stock
at $5.00 per share with monthly  vesting over two years and expiring March 2005.
These options were granted pursuant to the Company's  Non-Qualified Stock Option
Plans.

Stock Bonus Plans.
-----------------

      Up to 2,400,000 shares of Common Stock (including shares authorized by the
2000 Stock Bonus Plan as discussed  below) may be granted  under the Stock Bonus
Plans. Such shares may consist,  in whole or in part, of authorized but unissued
shares or treasury shares. Under the Stock Bonus Plans, the Company's employees,
directors, officers, consultants and advisors are eligible to receive a grant of
the  Company's  shares;  provided,  however,  that  bona fide  services  must be
rendered by  consultants or advisors and such services must not be in connection
with the offer or sale of securities in a capital-raising transaction.

      In June 2000, the Company's  shareholders ratified the Company's year 2000
Stock Bonus Plan,  which  provides that up to 500,000 shares of common stock may
be issued as bonuses  pursuant to the year 2000 Stock Bonus Plan. No Shares have
been issued under this plan as of June 30, 2000.

Other Options

      During the year ended June 30, 2000, the Company  granted both Mr. Bennett
and Mr. Malet options to purchase  280,000 shares of the Company's common stock.
The options may be  exercised  at any time prior to March 1, 2005 at an exercise
price of $5.00 per share.  The Company also granted an option to purchase 90,000
shares to Mr.  Ruben at $5.00 per share with  monthly  vesting  and  expiring on
March  1,  2005.  These  options  were not  granted  pursuant  to the  Company's
Incentive or Non-Qualified Stock Option plans.

Other Information Regarding the Plans.
-------------------------------------

      The Plans are administered by the Company's Board of Directors.  The Board
of Directors  has the  authority to interpret  the  provisions  of the Plans and
supervise the  administration of the Plans. In addition,  the Board of Directors

<PAGE>

is  empowered  to select  those  persons  to whom  shares or  options  are to be
granted,  to  determine  the  number of shares  subject to each grant of a stock
bonus or an option and to determine  when, and upon what  conditions,  shares or
options  granted under the Plans will vest or otherwise be subject to forfeiture
and cancellation.

      In the discretion of the Board of Directors,  any option granted  pursuant
to the Plans may include installment exercise terms such that the option becomes
fully exercisable in a series of cumulating portions. The Board of Directors may
also  accelerate  the date upon which any option (or any part of any options) is
first  exercisable.  Any shares issued  pursuant to the Stock Bonus Plan and any
options granted pursuant to the Incentive Stock Option Plan or the Non-Qualified
Stock Option Plan will be forfeited if the "vesting" schedule established by the
Board of  Directors  at the time of the  grant  is not  met.  For this  purpose,
vesting  means the period  during which the employee  must remain an employee of
the Company or the period of time a  non-employee  must provide  services to the
Company,  unless  specifically  covered  by an act  addressed  in an  employee's
employment agreement. At the time an employee ceases working for the Company (or
at the time a  non-employee  ceases to perform  services for the  Company),  any
shares or options  not fully  vested will be  forfeited  and  cancelled.  In the
discretion  of the Board of  Directors  payment  for the shares of Common  Stock
underlying  options may be paid through the delivery of shares of the  Company's
Common Stock having an aggregate  fair market value equal to the option price. A
combination  of cash and  shares of Common  Stock may also be  permitted  at the
discretion of the Board of Directors.

      Options  are  generally  non-transferable  except upon death of the option
holder.  Shares  issued  pursuant to the Stock Bonus Plan will  generally not be
transferable  until the  person  receiving  the  shares  satisfies  the  vesting
requirements imposed by the Board of Directors when the shares were issued.

      The Board of  Directors  of the Company may at any time,  and from time to
time,  amend,  terminate,  or suspend  one or more of the Plans in any manner it
deems  appropriate,  provided  that such  amendment,  termination  or suspension
cannot  adversely affect rights or obligations with respect to shares or options
previously  granted.  The  Board  of  Directors  may  not,  without  shareholder
approval:  make any  amendment  which would  materially  modify the  eligibility
requirements  for the Plans;  increase or decrease the total number of shares of
Common  Stock which may be issued  pursuant to the Plans except in the case of a
reclassification  of the Company's capital stock or a consolidation or merger of
the Company;  reduce the minimum  option price per share;  extend the period for
granting options;  or materially increase in any other way the benefits accruing
to employees who are eligible to participate in the Plans.

      The Plans are not qualified  under Section 401(a) of the Internal  Revenue
Code, nor are they subject to any provisions of the Employee  Retirement  Income
Security Act of 1974.



<PAGE>


Summary.
-------

      The  following  sets forth certain  information  as of September 15, 2000,
concerning the stock options and stock bonuses  granted by the Company  pursuant
to its Plans.  Each option  represents  the right to  purchase  one share of the
Company's Common Stock.

                       Total Shares  Shares Reserved    Shares      Remaining
                         Reserved    for Outstanding   Issued As  Options/Shares
Name of Plan            Under Plan       Options      Stock Bonus   Under Plan
------------            ----------    --------------  -----------  -------------

1998 Incentive Stock
   Option Plan          1,500,000       1,171,833          N/A        328,167
2000 Incentive Stock
   Option Plan          1,000,000              --          N/A      1,000,000
1996 Non-Qualified
   Stock Option Plan    1,500,000       1,500,000          N/A              0
1998 Non-Qualified
   Stock Option Plan    1,500,000       1,462,000          N/A         38,000
2000 Non-Qualified
   Stock Option Plan    2,000,000              --          N/A      2,000,000
1996 and 1998 Stock
   Bonus Plans          1,500,000             N/A    1,497,625          2,375
1999 Stock Bonus Plan     900,000             N/A      409,750        490,250
2000 Stock Bonus Plan     500,000             N/A           --        500,000

Stock Bonuses

      The Company,  in accordance  with the terms of its Stock Bonus Plans,  has
issued shares of Common Stock to certain Company officers, employees,  directors
and consultants. The following persons (including former officers and directors)
received shares of the Company's common stock as stock bonuses:

                                    Shares Issued as Stock Bonus
                          ------------------------------------------------------
    Name                  1996       1997       1998      1999       2000
    ----                  ----       ----       ----      ----       ----

Mark Bennett                                    18,750              37,500
Michael Malet                        5,000      16,250              37,500
Alan Ruben                                                          51,679
Robert Stevens                                                       1,000
Other employees and
 consultants as a group  461,250   111,875     174,000  710,500    282,071
                         -------   -------     -------  -------    -------
                         461,250   116,875     209,000  710,500    409,750
                         =======   =======     =======  =======    =======

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
-------------------------------------------------------------------------

     The following table sets forth, as of September 15, 2000,  information with
respect to the only persons owning  beneficially  5% or more of the  outstanding
Common Stock and the number and percentage of  outstanding  shares owned by each

<PAGE>

director  and officer  and by the  officers  and  directors  as a group.  Unless
otherwise  indicated,  each owner has sole voting and investment powers over his
shares of Common Stock.

                                                             Percent of
Name and Address                     Shares Owned (1)         Class (2)
----------------                     -----------------      -------------

Mark Bennett                             262,400                  1%
18001 Cowan, Suite C&D
Irvine, CA 92614

Michael Malet                            154,900                  *
18001 Cowan, Suite C&D
Irvine, CA 92614

Alan Ruben                                51,679                  *
18001 Cowan, Suite C&D
Irvine, CA 92614

David Robinson                                --                  *
6810 New Tampa Highway, #600
Lakeland, FL  33815

Jeffrey Yablon                             1,000                  *
1767 Veterans Memorial Hwy. #6
Islandia, NY  11722

David Breslow                             17,000                  *
701 N. Brand, #380
Glendale, CA  91203

Julio Curra                               12,500                 --
1767 Veterans Memorial Hwy. #6
Islandia, NY  11722                      _______               ____

Officers and Directors as a
Group (7 persons)                        499,479                 2%
                                         =======              =====

*  Less than 1%

(1) Excludes  shares  issuable  prior to December  31, 2000 upon the exercise of
    options or warrants granted to the following persons:




<PAGE>


      Name                   Options exercisable prior to December 31, 2000
      ----                   ----------------------------------------------

      Mark Bennett                        2,375,500
      Michael Malet                       2,152,000
      Alan Ruben                            433,333
      David Robinson                        149,556
      Jeffrey Yablon                             --
      David Breslow                         160,000
      Julio Curra                           150,000

(2) Excludes any shares issuable upon the exercise of any warrants or options or
    upon the conversion of any promissory notes or other convertible securities.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
--------------------------------------------------------

      During the year ended June 30, 2000,  the Company  purchased  $218,936 and
$23,106 of equipment and services,  respectively,  from DSM.net, a company owned
by David  Robinson,  an officer of the  Company.  The Company  believes  that it
purchased such goods and services at prices equal to or below what it could have
purchased such amounts from an unrelated party

      As described in Item 1, the Company may issue to the former  owners of One
Medical Services,  LLC up to 1,485,000  additional shares of common stock. David
Breslow, a member of the Company's Board of Directors, is the Executive Director
of an entity that owned forty percent (40%) of One Medical  Services,  LLC. This
transaction was consummated  before Mr. Breslow became a Member of the Company's
Board of Directors.

      See  "Stock  Option  and  Bonus  Plans"  in  Item 10 of  this  report  for
information  concerning stock options and stock bonuses granted to the Company's
present officers and directors.

ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K
-------------------------------------------

         Exhibits                                          Page Number

1        Underwriting Agreement                                 N/A
                                                      ----------------------

3.1      Certificate of Incorporation,                           (1)
                                                      ------------------------
          as amended

3.1.1    Amendment to Articles of Incorporation                  (1)
                                                      ------------------------

3.2      Bylaws                                                  (1)
                                                      ------------------------

4.1      Incentive Stock Option Plan                             (3)
                                                      ----------------------

4.2      Non-Qualified Stock Option Plans                        (3)
                                                      ----------------------


<PAGE>

4.3      Stock Bonus Plans                                       (3)
                                                      ----------------------

4.4      Designation of Series C Preferred Stock                 (2)
                                                      ----------------------

4.5      Certificate of Designation of the Powers,               (4)
         Preferences and Relative, Participating,     ----------------------
         Optional and Other Special Rights of
         Preferred  Stock  and  Qualifications,
         Limitations  and  Restrictions thereof,
         relating to Series D Cumulative Convertible
         Preferred Stock.

10.      Series C Preferred Stock Purchase Agreement,
         Escrow Agreement, Registration Rights Agreement         (2)
                                                         -------------------
         and Form of Warrant

10.1     Agreement relating to acquisition
         of Medcard System                                       (5)
                                                          ------------------

10.2     Agreement relating to sale of assets of Link
         International                                           (5)
                                                         -------------------

10.3     Employment Agreement with Mark Bennett                  (5)
                                                         -------------------

10.4     Employment Agreement with Michael Malet                 (5)
                                                         -------------------

10.5     July 1999 Licensing Agreement relating                  (3)
         to One Medical System.                          -------------------


10.6     Shareholder Agreement dated March 31,                   (4)
         2000 between Medcom USA, Inc. and               -------------------
         Vladimir Havlena.

10.7     Shareholder Agreement dated March 31,                   (4)
         2000 between Medcom USA, Inc. and               -------------------
         Vladimir Kanovsky.

10.8     Shareholder Agreement dated March 31,                   (4)
         2000 between Medcom USA, Inc. and Petr Hamza.   -------------------

10.9     Shareholder Agreement dated March 31, 2000              (4)
         between Medcom USA, Inc. and Martin Chvatal.    -------------------

10.10    Shareholder Agreement dated March 31, 2000              (4)
         between Medcom USA, Inc. and Pavel Juranek.     -------------------


<PAGE>

10.11    Shareholder Agreement dated March 31, 2000              (4)
         between Medcom USA, Inc. and Karel Barak.       ------------------

10.12    Supplement to Shareholder Agreement, dated              (4)
         April 13, 2000, between Medcom USA, Inc. and    ------------------
         Vladimir Kanovsky.

10.13    Supplement to Shareholder Agreement, dated              (4)
        April 13, 2000, between Medcom USA, Inc. and     ------------------
         Petr Hamza.

10.14    Supplement to Shareholder Agreement, dated              (4)
         April 13, 2000, between Medcom USA, Inc. and    ------------------
         Martin Chvatal.

10.15    Supplement to Shareholder Agreement, dated              (4)
         April 13, 2000, between Medcom USA, Inc. and    ------------------
         Pavel Juranek.

10.16    Supplement to Shareholder Agreement, dated              (4)
         April 13, 2000, between Medcom USA, Inc. and    ------------------
         Karel Barak.

10.17    Share Purchase Agreement dated as of April 15,          (4)
         2000 by and among DCB Actuaries and             ------------------
         Consultants, SRO, David Robinson, Vladimir
         Havlena and Medcom USA, Inc.

10.18    Technology Purchase Agreement dated as of               (4)
         April 15, 2000 by and between DSM, LLC and      ------------------
         Medcom USA, Inc.

10.19    Amendment to License Agreement between                  (6)
         Dream Technologies, LLC, MedCard Management     ------------------
         Systems, Inc. and MedCom USA, Incorporated.

23       Consent of Ehrhardt Keefe Steiner
         & Hottman, PC                                to be filed by amendment

(1)  Incorporated  by reference  to the same  exhibit  filed as part of Medcom's
     Registration Statement on Form SB-2 (Commission File No. 33-70546-A).

(2)  Incorporated by reference,  and as same exhibit number,  from the Company's
report on 8-K dated December 14, 1998.

<PAGE>


(3)Incorporated by reference to the same exhibit filed with the Company's Annual
     Report on Form 10-KSB/A for the year ending June 30, 1999.

(4)  Incorporated  by reference to the same exhibit filed with the Company's 8-K
Report dated April 15, 2000.

(5)  Incorporated by reference to the same exhibit filed with Amendment No. 2 to
     Company's   Registration   Statement  on  Form  S-3  (Commission  File  No.
     333-71179).

(6)  Incorporated by reference to the same exhibit filed with Amendment No. 5 to
     the  Company's  Registration  Statement  on Form S-3  (Commission  File No.
     333-71179)


8-K Reports

      During the quarter  ending  June 30, 2000 the Company  filed an 8-K Report
(dated  April 15,  2000) which  disclosed  the  acquisition  of DCB  Actuaries &
Consultants.

      The Company  filed a  subsequent  8-K report which  contained  the audited
financial statements of DCB Actuaries & Consultants.




<PAGE>














                              FINANCIAL STATEMENTS




<PAGE>


                    Medcom USA Incorporated AND SUBSIDIARIES


                                Table of Contents


                                                                        Page

Independent Auditors' Report..................................... ......F - 1

Financial Statements

   Consolidated Balance Sheet...........................................F - 2

   Consolidated Statements of Operations................................F - 3

   Consolidated Statement of Stockholders' Equity.. ....................F - 4

   Consolidated Statements of Cash Flows................................F - 7

Notes to Consolidated Financial Statements..............................F - 8


<PAGE>



                          INDEPENDENT AUDITORS' REPORT



Board of Directors and Stockholders
MedCom USA, Incorporated and Subsidiaries
Irvine, California


We have  audited  the  accompanying  consolidated  balance  sheet of MedCom USA,
Incorporated and  Subsidiaries as of June 30, 2000 and the related  consolidated
statements of  operations,  stockholders'  equity,  and cash flows for the years
ended June 30, 2000 and 1999. These financial  statements are the responsibility
of the  Company's  management.  Our  responsibility  is to express an opinion on
these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the 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.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of  MedCom  USA,
Incorporated  and  Subsidiaries  as of June 30,  2000 and the  results  of their
operations  and  cash  flows  for the  years  ended  June  30,  2000 and 1999 in
conformity with generally accepted accounting principles.





                                           Ehrhardt Keefe Steiner & Hottman PC
September 6, 2000
Denver, Colorado






<PAGE>


                           Consolidated Balance Sheet
                                  June 30, 2000

                                     Assets
Current assets
   Cash and cash equivalents                             $2,043,603
   Accounts receivables, less allowance for doubtful        919,805
    accounts of $269,810
   Inventories                                              219,953
   Prepaid expenses                                         262,576
   Royalty advances (Notes 4 and 14)                        676,353
   Notes receivable, current portion (Note 2)                48,000
                                                         ----------
         Total current assets                             4,170,290

Property and equipment, net (Note 3)                      4,163,830
                                                         ----------

Other assets
   Notes receivable less allowance of $150,000
         (Note 2)                                           718,500
   DSM intellectual property, net of accumulated
       amortization of $ 136,997 (Note 4)                 3,150,934

   Goodwill, net of accumulated amortization of
         $469,278 (Note 4)                                2,024,973
   Contracts, net of accumulated amortization of
        $92,241 (Note 4)                                    821,550
   Other                                                     99,196
                                                         ----------
         Total other assets                               6,815,153
                                                         ----------

Total assets                                             $15,149,273
                                                         ===========

                      Liabilities and Stockholders' Equity
Current liabilities
   Accounts payable (Note 17)                            $  592,306
   Other current liabilities (Note 5)                       818,085
   Note payable (Note 8)                                     25,000
   Current obligations under capital leases (Note 8)         59,616
   Dividends payable                                         23,750
   Deferred revenue (Note 6)                                256,272
                                                        -----------
         Total current liabilities                        1,775,029

Long-term liabilities
   Obligations under capital lease (Note 8)                 113,666
   Non-current portion of deferred revenue (Note 6)       2,110,382
                                                        -----------
         Total liabilities                                3,999,077
                                                         ----------
Commitments and Contingencies (Notes 9 and 14)

Stockholders' equity (Notes  11 and 12)
   Convertible preferred stock, Series A  $.001 par
    value, and Series D, $.01 par value, 52,900
    shares authorized 50,000 (A), 2,900 (D), 7,100               33
    shares issued and outstanding (A) 4,250 and (D)
    2,850 at June 30, 2000
    (liquidation preference of $2,935,000)
   Common stock $.0001 par value 80,000,000 shares
    authorized, 31,820,966 issued and outstanding             3,182
   Additional paid in capital                            47,448,976
   Accumulated deficit                                  (36,300,132)
       Currency translation (loss)                           (1,863)
                                                        ------------
         Total stockholders' equity                      11,150,196
                                                         ----------
Total liabilities and stockholders' equity              $15,149,273
                                                         ===========


                 See notes to consolidated financial statements

<PAGE>


                      Consolidated Statements of Operations

                                                       Year  Ended June 30,
                                                      2000              1999
Revenue (Note 13)
   Sales                                        $    848,434       $   775,967
   Rental                                            680,331           830,153
   Service                                         1,158,137           606,256
   Software Development                              566,587                --
                                                 -----------       -----------
        Total revenue                              3,253,489         2,212,376
                                                  -----------       -----------

Cost  of   sales   and   services,   exclusive   of
depreciation  and  amortization   shown  separately
below (Note 13)
   Sales                                             647,262           249,249
   Rental                                            347,743           385,919
   Service                                           425,982           459,886
   Software Development                              138,561                --
                                                ------------      ------------
            Total cost of sales and services       1,559,548         1,095,054
                                                ------------      ------------
Gross profit                                       1,693,941         1,117,322
                                                ------------      ------------

Operating expenses
   General and administrative (Note 11)            6,369,709         5,844,024
   Depreciation and amortization                   1,312,238           697,083
   Selling and marketing                             873,519           883,686
   Research and development                           95,263                --
   Loss on impairment of patents (Note 1)            255,229                --
   Loss on write-off of script machines (Note 8)      80,018                --
                                                ------------      ------------
        Total expenses                             8,985,976         7,424,793
                                                ------------      ------------

Operating loss                                    (7,292,035)       (6,307,471)
                                                -------------     -------------
Other income (expense)
   Interest expense                                 (128,980)         (337,153)
   Interest income                                   115,227            28,772
   Other income                                         (823)            7,500
                                                 -------------     ------------
        Total Other income (expense)                (14,576)         (300,881)
                                                -------------     -------------

Loss from continuing operations before
      income taxes                                 (7,306,611)       (6,608,352)
Income tax provision (Note 10)                         45,290                --
                                                 ------------      ------------
Net loss from continuing operations                (7,351,901)       (6,608,352)
Discontinued operations (Note 16):
   Net loss from discontinued operations             (427,979)         (480,608)

   Loss from disposal of discontinued operations     (451,149)               --
                                                  -------------    ------------
Total loss from discontinued operations              (879,128)         (480,608)
                                                  -------------   -------------

Net loss                                            (8,231,029)     (7,088,960)
Preferred stock dividend                               (80,174)       (483,025)
                                                  -------------     ------------

Net loss applicable to common shareholders          (8,311,203)     (7,571,985)

Other comprehensive loss
   Currency translation loss                            (1,863)              --
                                                  --------------   -------------
Comprehensive loss applicable to common        $    (8,313,066)      (7,571,985)
   shareholders                                   ==============================
Basic  and  diluted loss per common share from
      continuing operations                               (.30)       $  (0.66)
Basic and diluted loss per common share from
  discontinued operations                                 (.04)            .05
                                                           ---             ---

Basic and diluted net loss per common share           $   (.34)        $ (0.71)
                                                          ====           ======

Weighted average common shares  outstanding
  (Notes 11 and 12)                                  24,431,551      10,667,142
                                                    ===========    ============

                 See notes to consolidated financial statements

<PAGE>


Consolidated  Statement of Stockholders' Equity - Years Ended June 30, 2000 and
1999

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

                                       Preferred Stock
                        ---------------------------------------------
                        Series A & B       Series C        Series D         Common Stock
                                                                                            Additional  Accumu-   Currency
                            # of            # of            # of             # of            Paid-in    lated    Translation
                           Shares  Amount  Shares  Amount  Shares  Amount   Shares  Amount   Capital    Deficit   Gain/Loss   Total


Balance - June 30,
  1998                    125,250   $125       --      --      --      --  7,959,033  $796 $22,646,232 $(20,416,944)   -- $2,230,209

Issuance of common
 stock for cash
 ranging from $.44
 to $1.00 per share,
 net of $307,925 of
 offering costs                --      --      --      --      --      --  3,636,879   364   2,552,748         --      --  2,553,112

Issuance of preferred
 stock at $1,000 per
 share, net of $253,154
 and issuance of common
 stock for offering costs      --      --   1,745      $2      --      --    134,769    13   1,871,830   (425,000)     --  1,446,845

Issuance of common stock
  for services and equipment   --      --      --      --      --      --  2,607,950   261   2,340,162         --          2,340,423

Issuance of common stock
  for accounts payable--       --      --      --      --      --      --    150,700    15     123,415         --      --    123,430

Imputed value of stock
 option grants in exchange
 for consulting and other
 services                      --      --      --      --      --      --         --    --     424,671         --      --    424,671

Issuance of common stock
 for conversion of notes
 payable, franchise
 deposits and accrued
 interest                      --      --      --      --      --      --  2,109,975   211   1,672,786         --      --  1,672,997

Issuance of common stock
 and warrants in connection
 with MedCard license
 acquisition                   --      --      --      --      --      --    100,000    10     461,894         --      --    461,904

Conversion of Preferred
  Stock                  (116,000)   (116)     --      --      --      --     28,200     3         113         --      --         --

Dividend on Series C
  Preferred Stock              --      --      --      --      --      --         --    --          --    (58,025)     --   (58,025)

Net loss for the year ended
  June 30, 1999                --      --      --      --      --      --         --    --          --  (7,088,960)   -- (7,088,960)
 ----------             ------------------------------------------------------------------------------------------------------------

Balance - June 30, 1999     9,250     $ 9  1,745      $ 2     --     --   16,727,506 $1,673 $32,093,851 $(27,988,929) --  $4,106,606
                        ============================================================================================================
</TABLE>



<PAGE>




Consolidated  Statement of Stockholders' Equity - Years Ended June 30, 2000 and
1999

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

                                       Preferred Stock
                        ---------------------------------------------
                        Series A & B       Series C        Series D         Common Stock
                                                                                            Additional  Accumu-   Currency
                            # of            # of            # of             # of            Paid-in    lated    Translation
                           Shares  Amount  Shares  Amount  Shares  Amount   Shares  Amount   Capital    Deficit   Gain/Loss   Total


Balance - June 30, 1999    9,250   $    9    1,745  $   2      --      -- 16,727,506 $1,673 $32,093,851 $(27,988,929)  -- $4,106,606


Issuance of common
 stock for cash ranging
 from $.45 to $4.00 per
 share, net of $590,075
 of expenses                  --       --       --     --      --      --  6,262,645    626   6,161,247           --   --  6,161,873

Acquisition of MedCard
  System                      --       --       --     --      --      --    100,000     10     758,988           --   --    758,998

Acquisition of DCB Actuaries
  and Consultants, s.r.o.     --       --       --     --     494       $5    12,880      1     535,621           --   --    535,627

Acquisition of intellectual
  property from DSM, LLC      --       --       --     --   2,356       24    24,249      2   2,434,346           --   --  2,434,372

Issuance of common stock
  and warrants as required by
  existing agreements         --       --       --     --      --       --   533,331     53     103,264           --   --    103,317

  Conversion of series C
     stock                    --       --   (1,745)    (2)     --       -- 3,490,000   349    (137,622)           --   -- (137,275)

Stock dividends related to
  Series C                    --       --       --     --      --       --    60,000      6      19,270           --   --     19,276

Issuance of common stock in
  exchange for preferred
  stock                   (5,000)      (5)      --     --      --       --       800      0         152           --   --        147

Issuance of common stock
  for services and equipment  --       --       --     --      --       -- 1,732,500   174   1,287,557            --   -- 1,287,731

Issuance of common stock
  for accounts payable and
  lease payments              --       --       --     --      --       --   256,839     26     185,587           --   --    185,613

Imputed value of stock warrant
  grants in exchange for consulting
  services and other items    --       --       --     --      --       --        --     --     856,501           --   --    856,501

</TABLE>



<PAGE>

Consolidated  Statement of Stockholders' Equity - Years Ended June 30, 2000 and
1999

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

                                       Preferred Stock
                        ---------------------------------------------
                        Series A & B       Series C        Series D         Common Stock
                                                                                            Additional  Accumu-   Currency
                            # of            # of            # of             # of            Paid-in    lated    Translation
                           Shares  Amount  Shares  Amount  Shares  Amount   Shares  Amount   Capital    Deficit   Gain/Loss   Total


Issuance of common stock
  to employees and directors  --       --      --      --      --      --    163,129    16    471,426                        471,442

Exercise of warrants and
  options                     --       --      --      --      --      --   1,869,541  187   2,182,963       --       --   2,183,150

Dividend on Series C and
  D Preferred stock           --       --      --      --      --      --          --   --          --  (80,174)      --    (80,174)

Issuance of common stock
  for conversion of notes
  payable and accrued
  interest                    --       --      --      --      --      --    587,546    59     495,825       --       --     495,884

Net loss for the year ended
  June 30, 2000               --       --      --      --      --      --         --    --         --  (8,231,029)    -- (8,231,029)

Currency translation (loss)   --       --      --      --      --      --         --    --         --         --  $(1,863)   (1,863)
                          ----------------------------------------------------------------------------------------------------------
Balance  - June 30, 2000   4,250   $4     0       $0  2,850  $29  31,820,966  $3,182  $47,448,976 ($36,300,132) $(1,863) $11,150,196
                         ===========================================================================================================


                See notes to consolidated financial statements.

</TABLE>








<PAGE>


                    MEDCOM USA, INCORPORATED AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows


                                                          Year Ended June 30,
                                                   -----------------------------

                                                      2000             1999
                                                   -----------      ----------
Cash flows from operating activities
   Net loss                                        $(8,231,029)     $(7,088,960)

   Adjustments to reconcile net loss to net
    cash used in operating activities
     Depreciation and amortization                   1,312,238          697,083
     Loss from discounted operations                   879,128          480,608
     Imputed value of options granted for              718,733          424,671
      services and other intems
     Impairment of patents                             255,229               --
     Loss on write-off of script machines               80,018               --
     Provision for uncollectible accounts              311,980          100,567
     Stock issued for services and other
      items                                          1,691,967        2,425,072
     Recognition of deferred revenue                   (92,147)              --
     Loss on disposal of fixed assets                   94,682               --
     Other                                              35,822               --
    Changes in assets and liabilities
       Accounts receivables                           (624,127)        (126,156)
       Inventories                                      46,437          (53,564)
       Prepaid expenses                                (56,707)          (7,670)
       Royalty advances                               (160,446)        (515,907)
       Other assets                                    (78,295)           5,851
       Accounts payable                               (122,416)         229,526
       Accrued expenses                                225,905           40,425
                                                      --------         --------
                                                     4,518,001        3,700,506
                                                     ---------       ----------
         Net cash used in operating activities      (3,713,028)      (3,388,454)
                                                    ----------       ----------

Cash flows from investing activities
   Collection of notes receivable                       39,000               --
   Acquisition costs paid,
      net of cash acquired                          (1,436,500)        (462,154)
   Acquisition costs paid for DSM
      intellectual property                           (853,560)              --
   Capital expenditures                               (339,787)         (57,398)
                                                     ----------       ----------
         Net cash used in investing activities      (2,590,847)        (519,552)
                                                    -----------       ----------

Cash flows from financing activities
   Proceeds from issuance of long-term debt                 --          537,892
   Payments under capital lease obligation             (45,257)        (127,216)
   Proceeds from issuance of common and
      preferred stock, net                           6,162,020        3,999,957
   Proceeds from exercise of warrants and options    2,286,467               --
   Fees related to retirement of Series C Stock       (137,275)              --
   Dividends paid                                      (95,173)              --
   Payments on long-term debt and line of credit      (261,213)        (326,733)
   Increase in currency translation loss                (1,863)              --
                                                      ---------      ----------
         Net cash provided by financing              7,907,706        4,083,900
   activities                                        ----------      ----------


Net increase in cash                                 1,603,831          175,894
Cash and cash equivalents at beginning of year         439,772          263,878
                                                     ---------       ----------

Cash and cash equivalents at end of year            $2,043,603       $  439,772
                                                    ==========       ==========

Supplemental  disclosure of cash flows information (Note 15):

                                                  Year Ended June 30,
                                                 2000            1999

Cash paid during the year for interest:        $126,742        $164,167
Cash paid  during the year for taxes:           $28,877              --

                See notes to consolidated financial statements.

<PAGE>


Note 1 - Organization and Significant Accounting Policies

Organization

MedCom USA, Incorporated was incorporated in the state of Delaware on August 15,
1991 under the name of Sims Communications, Inc. The Company changed its name to
MedCom USA, Incorporated in October 1999. The Company provides  technology-based
solutions  primarily  for the  medical  industry.  Solutions  include 1) MedCard
point-of-sale  (POS)  transaction  terminals and PC software to provide  medical
insurance  eligibility  verification,  claims  processing  and  credit  card/ATM
charges and payments, 2) Health Information Gateway, a web-based infrastructure,
featuring  advanced data mining  capabilities,  designed to meet the information
needs of  healthcare  entities,  both payers and  insurance  entities,  and 3) a
comprehensive   network  of  transaction   processing   applications  using  its
intelligent  debit cash POS terminals with custom  software and is operated by a
third party under a License Agreement (Note 6). The Company also operates in the
intelligent   vending  area,   using  its  previously   acquired  and  developed
technology.  The  operations in this area include the rental of  videocassettes,
the sale of prepaid phone cards and the utilization of script machines, of which
the Company is only actively involved with the rental of videocassettes.

Principles of Consolidation

The  consolidated  financial  statements  include  the  accounts  of MedCom USA,
Incorporated and its wholly owned subsidiaries,  Sims Franchise Group Inc., Sims
Communications International, Inc., JustMed.com, Inc., One Medical Service, Inc.
and Link International  Technologies,  Inc., and its wholly owned subsidiary New
View  Technologies,  Inc.  The  Consolidated  Financial  Statements  include the
accounts  of DCB  Actuaries  and  Consultants,  s.r.o.  (DCB),  a  wholly  owned
subsidiary  from  the date of  acquisition,  April  15,  2000.  All  significant
intercompany  balances and transactions  have been eliminated in  consolidation.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting   principles  requires  management  to  make  certain  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses during the reporting  period.  Management  believes that such estimates
have been based on reasonable  assumptions and that such estimates are adequate,
however, actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with a maturity of
three months or less to be cash equivalents.



<PAGE>


Note 1 - Organization and Significant Accounting Policies (cont'd)

Inventories

Inventories  consist primarily of movie  videocassettes,  terminals and computer
spare parts that are held for sale, other associated  miscellaneous parts and CD
ROM and magnetic cassette software that is held for sale and are recorded at the
lower  of cost or  market  determined  by the  first-in,  first-out  method  and
weighted average methods.

Property and Equipment

Property and equipment  are stated at cost.  Equipment  under capital  leases is
valued at the lower of fair  market  value or net  present  value of the minimum
lease  payments at inception of the lease.  Depreciation  and  amortization  are
recognized  utilizing the  straight-line  method over the estimated useful lives
for owned  assets,  ranging from 3 to 15 years,  and the related  lease term for
leasehold  improvements  and equipment  under capital leases.  Expenditures  for
maintenance and repairs are charged to expense as incurred.

Net loss Per Common Share

Basic  earnings per share are  calculated by dividing net loss  attributable  to
common shareholders by the weighted average number of common shares outstanding.
Dilutive earnings per common share is computed similarly,  but also gives effect
to the impact  convertible  securities,  such as convertible debt, stock options
and warrants,  if dilutive,  would have on net income and average  common shares
outstanding  if converted at the beginning of the year. The Company has incurred
losses in each of the periods  covered in these  financial  statements,  thereby
making the inclusion of convertible securities and stock options in the 2000 and
1999  dilutive  earnings  per  share  computations  antidilutive.   Accordingly,
convertible securities and stock options have been excluded from the calculation
of dilutive  earnings per share.  Basic and dilutive  earnings per share are the
same for each period presented.

Antidilutive securities excluded from dilutive earnings per share.

  Security                        Price           Shares      Expiration Date

Stock options and warrants    $0.53 - $10.00    15,004,905     7/2000-12/2006
Convertible Preferred Stock       N/A              577,773          N/A

MedCard Licensing Rights

Licensing rights  capitalized in connection with the original MedCard  licensing
agreement  were  being  amortized  over the length of the  agreement  of fifteen
years.  As a result of the direct  acquisition  of all  aspects  of the  MedCard
System (Note 4) that occurred in May 2000,  the

<PAGE>


licensing  rights were  converted to software and continue to be amortized  over
the same life as the original license.

Contracts

The value allocated to contracts related to One Medical  Services,  LLC, and DCB
acquisitions are being amortized over the shorter of the respective terms of the
contracts or the period during which benefits are expected to be received by the
Company on a straight-line basis.

DSM Intellectual Property

The cost of the intellectual  property acquired from DSM, LLC is being amortized
over five years on a straight-line basis.

Goodwill

The excess of the cost of the net tangible and identifiable intangible assets of
acquired  businesses is stated at cost and is being amortized over five to seven
years.

Revenue Recognition

Sales Income: Revenue from the sale of inventory, which includes videocassettes,
prepaid phone cards through dispensing  machines (PCD's),  MedCard terminals and
other items are recognized  upon shipment.  Revenue from the license of software
is recognized upon acceptance by the customer if the license agreement  includes
such an acceptance  provision,  otherwise it is recognized upon shipment.  Sales
revenue also includes the  recognition of deferred gross profit that was related
to  terminals  that were sold and leased  back,  over the term of the  resulting
lease agreement (Note 8).

Rental Income:  Revenue from the rental of  videocassettes  is recognized at the
time of rental  for the  rental of single  videocassettes  and upon the usage of
prepaid  movie cards upon the issuance of such cards.  A movie card entitles the
user to rent an unlimited number of movies during the prescribed time frame.

Service  Income:   Revenue  related  to  processing  of  medical  and  financial
transactions  are recorded at the time the  transaction  is  completed.  Medical
transactions  include the use of the MedCard System and the One Medical  Service
Network.  Financial  transactions  pertain  to the use of the  script  machines.
Revenue  related to the providing of technical and other support  related to the
One Medical  Services  Network is  recognized at the time services are rendered.
Revenue from the billing  services  using the MedCard  System is recorded at the
time the billing service is rendered at the expected net reasonable value of the
Company's share of the moneys to be collected. The

<PAGE>


Company  performs  these  services in exchange  for a  percentage  of the moneys
collected by the billing party (medical group or hospital). Service revenue also
includes  licensing  fees related to the One Medical  Service  program (Note 6).
Revenue from  maintenance  agreements on software  previously sold is recognized
ratably over the maintenance period.

Software  Development Income:  Revenue related to time and material contracts is
recognized  as the service is provided.  Revenue  related to long-term  software
development  contracts is recognized on the  percentage of completion  method if
the  contract  does  not  include  a  customer  acceptance  provision  or  other
contingencies. If the contract provides for customer acceptance or other similar
contingencies, development revenues and expenses are deferred until the customer
accepts the software,  or other  contingencies  are resolved upon which time all
the revenue and  expenses  related to the contract  are  recognized.  During the
years ended June 30, 2000 and 1999, the Company had no such contracts.

Foreign Currency Translation

The financial statements of the Company's foreign subsidiary,  DCB, are measured
using the local currency, Czech crowns (CZK) as the functional currency.  Assets
and  liabilities  of this  subsidiary is translated at exchange  rates as of the
balance  sheet date.  Revenues and expenses are  translated  at average rates of
exchange  in effect  during the period.  The  resulting  cumulative  translation
adjustments have been recorded as a separate component of stockholders'  equity.
Foreign  currency  transaction  gains and losses,  which were not material,  are
included  in  other  income  and  expense  in  the  consolidated  statements  of
operations.  The  Company  does  not  believe  there  are any  foreign  exchange
restrictions  or political,  economic or other currency  restrictions  that will
impact its operations in the Czech Republic.

Patents

Patent  costs are  those  costs  related  to filing  for  patents  and the value
allocated to patents based upon the  acquisition  of Link  Technologies  and its
subsidiaries.  They are amortized on the straight-line basis over their expected
economic life of seven years (see Impairment of Long-Lived Assets below).

Fair Value of Financial Instruments

The  carrying  amounts  of  financial   instruments   including  cash  and  cash
equivalents,  receivables,  accounts payable, and accrued expenses  approximates
fair value at June 30, 2000 because of the  relatively  short  maturity of these
instruments.

The carrying  amounts of debt issued  approximates  fair value because  interest
rates  on  these  instruments  approximate  market  interest  rates  and all are
classified as current maturities.


<PAGE>

Income Taxes

The Company uses the asset and liability  method of accounting for income taxes.
Under the asset and liability  method,  deferred tax assets and  liabilities are
recognized for the future tax consequences  attributable to differences  between
the financial  statement carrying amounts of existing assets and liabilities and
their  respective tax basis.  Deferred tax assets and  liabilities  are measured
using  enacted tax rates  expected  to be  recovered  or settled.  The effect on
deferred tax assets and  liabilities  of a change in tax rates is  recognized in
the statement of operations in the period that includes the enactment date.

Impairment of Long-Lived Assets

The Company  follows the Statement of Financial  Accounting  Standards (SFAS No.
121) "Accounting for the Impairment of Long-Lived  Assets." Under the provisions
of this statement, the Company has evaluated its long-lived assets for financial
impairment  and  will  continue  to  evaluate  them  as  events  or  changes  in
circumstances  indicate that the carrying amount of such assets may not be fully
recoverable.

The Company evaluates the  recoverability of long-lived assets not held for sale
by measuring the carrying  amount of the assets against  estimated  undiscounted
cash flows associated with them. At the time such evaluations  indicate that the
future  undiscounted cash flows of certain  long-lived assets are not sufficient
to recover the carrying value of such assets,  assets are adjusted to their fair
values.

During the quarter  ended June 30, 2000,  the Company  reviewed the value of the
patents   acquired  as  part  of  the  acquisition  of  Link   Technologies  and
subsidiaries  and determined that their value exceeded the net realizable  value
as a result of changes in the Company's  focus.  Although the Company still owns
the patents, the related technology is no longer being used by the Company as it
primarily related to the Company's intelligent vending segment, most notably the
script machines,  automated  communication  distribution centers (ACDC machines)
and phone card dispensing machines (PCD's). The Company is not generating enough
revenue from their  machines to support the remaining book value of the patents.
Accordingly,  the Company has  recognized an expense of $255,229  related to the
impairment of patents.

Research and Development

Research  and  development  costs  consist  primarily  of costs  related  to the
conceptual  formation,  design,  tooling and  development  of prototypes and are
expensed as incurred.

Concentration of Credit Risks

Financial  instruments that potentially  subject the Company to concentration of
credit risk consist primarily of temporary cash investments and receivables. The


<PAGE>

Company  places  its  cash  investments  with  high  credit  quality   financial
institutions.  At June 30, 2000,  the Company had  $1,633,678  on deposit with a
single financial institution, which exceeds the amount covered by FDIC limits of
$100,000.  The Company  also had  $336,176  and  1,762,731  CZK (US  $47,068) on
deposit with a single financial  institution in the Czech Republic of which only
400,000 CZK are insured under Czech banking laws.  The Company  grants credit to
hotels and time share facilities in which the Company has placed automated movie
rental units. The Company also extends credit to users of the MedCard System and
certain  independent sales organizations that purchase the MedCard terminals and
resell them to the end users. The Company periodically  performs credit analysis
and  monitors  the  financial  condition  of its  customers in order to minimize
credit risk.

Reclassifications

Certain   accounts  in  the  June  30,  1999  financial   statements  have  been
reclassified to conform to the June 30, 2000 presentation.

Note 2 - Notes Receivable

The  Company  made a loan to and entered  into a joint  venture  agreement  with
Commonwealth Group International, Inc. and Frederick C. Sayle. The $150,000 note
receivable  bears  interest  at a rate  of 10% per  annum,  with  principal  and
interest  originally payable by February 1, 1998.  Additionally,  the Company is
entitled to 16.7% of the gross revenues from agreements with Commonwealth  Group
International, Inc., which includes cable television and cellular communications
licenses owned by CGI-UKRAINE Ltd and ASWEST,  Commonwealth Group International,
Inc. joint venture partners.  The Company has not received any such revenues and
management  believes  that it is  unlikely  the  Company  will  receive any such
revenues in the  future.  The  Company  did not  receive  principal  or interest
payments  on the note  during  the year  ended June 30,  2000 and,  as such,  is
commencing  legal action  against the borrowers.  However,  the Company has been
unable to locate Mr.  Sayle and it believes  Commonwealth  Group  International,
Inc. is now  inactive and has no assets.  Therefore,  the Company has recorded a
reserve for the full  amount of the note  receivable,  since it is unlikely  the
Company will be able to collect these amounts. The Company does intend to pursue
this matter if the whereabouts of Mr. Sayle can be determined.

The Company had an unsecured note receivable for $30,000, which was collected in
October 1999.

The  Company  had a note  receivable  from an entity  owned  entirely  by former
officers of the  Company,  with a balance of $122,262.  This  amount,  which was
fully reserved for at June 30, 1999, has been written off because  collection is
considered to be unlikely and the Company does not have any  collateral for this
note.

The other note receivable  with a balance of $766,500 at June 30, 2000,  relates
to the licensing of the One Medical Service Network (Note 6).

<PAGE>


Note 3 - Property and Equipment

Property and equipment consist of the following:
                                                          June 30,
                                                            2000
                                                       --------------
   Property and equipment
      Vehicles                                            $101,968
      Furniture and fixtures                               148,992
      Machinery and equipment                            2,401,969
      Software                                           3,504,038
        Leasehold improvements                               2,729
                                                         ---------
         Total                                           6,159,696
      Less accumulated depreciation and amortization    (1,995,866)
                                                        ----------
         Net                                            $4,163,830
                                                         =========

The above amounts  exclude assets with a cost and  accumulated  depreciation  of
$1,559,151 related to the discontinued ACDC operations.


<PAGE>

Note 4 - Acquisitions

MedCard Systems

In November,  1998, the Company purchased certain assets of Dream  Technologies,
LLC and MedCard Management Systems, Inc. of Islandia,  New York , along with the
licensing rights to the MedCard name and the MedCard System software and network
for fifteen years. The MedCard System is a comprehensive  electronic  processing
system  that  consolidates  insurance  eligibility  verification  and  processes
medical  claims  and  approval  of credit  card/debit  card  payments  within 30
seconds.  Consideration for the transaction  included cash of $450,000,  100,000
shares of restricted common stock valued at $1.28 per share,  which approximated
market,  and  warrants to purchase  350,000  shares of common stock at $1.34 per
share with an imputed value of $333,904  using the Black Scholes  option pricing
model.  At June 30, 1999,  licensing  rights  related to the  agreement  totaled
$885,558 net of $38,500 of accumulated amortization.

In May 2000 the Company acquired from MedCard Management Systems, Inc. and Dream
Technologies,  LLC all rights to the  MedCard  System  including  all  programs,
intellectual  property,  trade names and existing  contracts.  This  acquisition
effectively  terminated the original license agreement,  except that the royalty
provisions  of the  original  license  agreement  remain in effect  for the same
period of time. In consideration  for this  acquisition,  the Licensor  received
100,000  shares of the Company's  restricted  stock and a three-year  warrant to
purchase 400,000 shares of the Company's common stock at $2.86 per share, with a
cost of $449,446  based upon an imputed  value of $1.12 per share.  The value of
the warrant was determined  using the Black Scholes  option  pricing model.  The
total  consideration  paid was  valued at  $758,998  and has been  allocated  to
goodwill,  since the  primary  purpose of the  acquisition  was to  protect  the
Company's exclusivity with respect to the MedCard System.

In connection with the acquisition of the licensing rights,  the Company entered
into a royalty agreement  requiring future royalty payments based on sales (Note
14).

As a result  of the May 2000  acquisition,  all  amounts  that  were  previously
recorded as a license have been reclassified to software.

The Company has provided  additional  funding related to the MedCard  operations
that are  recorded as royalty  advances.  As of June 30, 2000 and 1999,  royalty
advances totaled $676,353 and $515,907,  respectively.  Royalty advances will be
offset against royalties owing to the original Licensor.

DCB Actuaries & Consultants

In April  2000,  the  Company  acquired  100% of the  stock of DCB  Actuaries  &
Consultants,  s.r.o.  (DCB), a Czech  Republic based company.  DCB developed and
currently operates a health insurance decision support system with advanced data
structures. The purchase price of DCB was at $2,095,270 and was comprised of the
following:


<PAGE>

      Purchase price - preferred stock - Series D            $494,000
      Purchase price - cash                                 1,403,847
      Direct costs of acquisition - including 12,880
           shares of common stock                             197,423
                                                              -------
      Total acquisition cost                              $ 2,095,270
                                                          ===========

The aggregate  purchase price has been allocated based on the fair market values
at the date of acquisition as follows:

      Current assets                             $   421,715
      Fixed assets                                 1,910,313
      Other assets                                     1,322
      Contracts                                      813,791
      Goodwill                                       813,791
      Liabilities                                 (1,865,662)
                                                   ---------
                                                 $ 2,095,270
                                                 ===========


Intellectual Property from DSM

The Company  acquired  certain  intellectual  property  from DSM,  LLC (DSM),  a
Florida  limited  liability  company.  The purchase  price for the  intellectual
property acquired from DSM was $3,287,930 and was comprised of the following:

      Purchase price - preferred stock - Series D          $2,356,000
      Purchase price - cash                                   746,153
      Direct costs of acquisition - including 24,249
           shares of common stock                             185,777
                                                         ------------
      Total acquisition value                            $  3,287,930
                                                          ===========

The aggregate  purchase price has been attributed  entirely to the  intellectual
property based on the fair market value at the date of acquisition.

Pro Forma Statement of Operations

As the accompanying  consolidated  financial statements include MedCard activity
from November 1998, pro forma results of operations for the years ended June 30,
1999 and 2000 are not  included  as the effect on 1999 would be  immaterial  and
there would be no effect on fiscal year 2000.

<PAGE>


The  unaudited  pro forma  results of  operations  had the Company  acquired DCB
Actuaries & Consultants,  s.r.o. as of July 1, 1998 are as follows for the years
ended June 30, 2000 and 1999:

                                            Year Ended June 30,
                                         2000                1999

        Revenues                     $ 4,049,176         $ 3,567,234
        Net loss                     $(8,681,623)        $(7,545,141)
        Comprehensive net loss
        applicable to common
        shareholders                 $(8,763,660)        $(8,028,166)
        Basic and diluted Net
        loss per common share              $(.36)              $(.75)
        -------------------------------------------------------------

Note 5 - Other Current Liabilities

At June 30, 2000, other current liabilities consist of the following:

          Payroll and related costs               $536,198
          Arbitration settlement                    42,970
          Acquisition costs not paid                67,395
          Other taxes payable                       90,741
          Other                                     80,781
                                                  --------
          Total                                   $818,085
                                                  ========

Note 6 - License Agreement and Deferred Revenue

On July 20, 1999,  the Company  licensed the exclusive  rights to market the One
Medical  Service  Network to an unrelated  corporation  (Licensee).  The Company
received  initial  payments  totaling  $567,000 , which is  included  in service
revenue in the  accompanying  consolidated  statement of operations for the year
ended June 30, 2000.  The Company  also  received a 7-year,  8%  unsecured  note
receivable in the amount of $810,000 as part of the  transaction.  The note will
be paid by monthly  payments  equaling  $8.00 per platform using the One Medical
Service  network,  with a minimum  of $1,000  and a maximum of $6,000 per month,
plus $3,000 of prepaid  phone card credits  amounts over its term.  The deferred
revenue  related to this note is being  recognized as revenue as the amounts are
earned and considered to be realizable.  A total of $613,000 of revenue has been
recognized during the year ended June 30, 2000,  including the initial $567,000,
leaving a balance of  deferred  revenue of  $764,000  as of June 30,  2000.  The
Licensee  can convert the total  moneys paid into an  eighty-one  percent  (81%)
ownership interest in One Medical Service. It can acquire the remaining nineteen
percent  (19%) for the  greater of  $132,000  or the fair  market  value of such
interest.  However,  if the  Licensee  does not acquire the  remaining  nineteen
percent, no money will be refunded to the Licensee.


<PAGE>

The Licensee  also agreed to purchase  approximately  $200,000 of the  Company's
inventory  on an as needed  basis and pay the  related  accounts  payable.  Such
inventory  was released to the  Licensee as  requested.  The  Licensee  acquired
approximately  $186,000 of this  inventory  during the year ended June 30, 2000.
The Licensee hired the full time  employees  involved with this  operation.  The
Company  retained as employees  those persons who devoted less than full time to
the One Medical  Services  Network.  These people  primarily  provide  technical
support,  installation,  repairs,  maintenance  of the  underlying  software and
billing  support.  The Company charges the Licensee for these services on a time
and materials  basis.  The Licensee also assumed other overhead  associated with
the One Medical operation.

In 1998, DCB entered into a ten-year contract with an insurance  company.  Under
the  contract,  DCB is  responsible  for  building,  maintaining  and updating a
specialized  data  warehouse  in the health care  insurance  sector of the Czech
Republic and providing the insurance  company with access to the data warehouse.
The insurance company paid $2,353,000 for services to be provided by the Company
over the ten-year period  beginning in the year 1998.  Despite the fact that the
project was stopped in 1999,  the contract is still valid and DCB  fulfilled all
conditions  defined by the  contract.  The project may be  re-launched  any time
during the ten-year period. DCB recorded the payment as deferred revenue, and is
amortizing  it to revenue over ten years on a  straight-line  basis.  Except for
ongoing  maintenance  of the  system,  DCB does not expect to incur  significant
additional costs related to the contract.

The total  balance  of the  deferred  revenue  related to the DCB  contract  was
$1,602,654 at June 30, 2000. Revenue recognized during the period ended June 30,
2000  was  $50,457  and  is  included  in  software  development  income  in the
accompanying  consolidated  statement of operations  for the year ended June 30,
2000.

Note 7 - Bank Line of Credit

The  Company  had a  secured  revolving  line of  credit  with a bank  for up to
$250,000 with interest at 5.77%  payable  monthly.  The balance at June 30, 1999
was $250,000.  The  line-of-credit  was secured by a restricted  certificate  of
deposit  with a  balance  at  June  30,  1999  of  approximately  $250,000.  The
line-of-credit  expired  June  5,  1999  and  on  July  13,  1999,  the  Company
voluntarily  redeemed the certificate of deposit and applied the proceeds toward
repayment  of the credit  line  principal  and  accrued  interest  in full.  The
line-of-credit was then terminated.

Note 8 - Note Payable and Capital Leases

  Note payable is comprised of the following at June 30, 2000:

 8.0% convertible note payable - individual,
  interest payable quarterly, principal due
  at maturity date of February 1998. Debt
  includes conversion to common stock
  feature with conversion rate of $1.25 per
  share. Currently in default.                                     $25,000
                                                                   -------
   Total current maturities                                        $25,000
                                                                   =======



<PAGE>

Notes  totaling  $482,906  were  converted to common stock during the year ended
June 30, 2000.

Capital Leases

The Company leases various office and other equipment under  capitalize  leases.
The following is a schedule of future minimum  capital lease  payments  together
with the net present value of the minimum lease obligation as of June 30, 2000.


         Year Ending June 30,
               2001                                     $  84,372
               2002                                        80,849
               2003                                        27,213
               2004                                        16,586
                                                        ---------
               Total                                      209,020
               Less interest                               35,738
                                                        ---------
               Total                                      173,282
               Less current portion                        59,616
                                                        ---------
               Total                                   $  113,666
                                                       ----------

The assets recorded under capital leases are as follows:

        Furniture, fixtures and equipment                  $  94,937
        Less accumulated depreciation                        (25,369)
                                                           -----------
                                                           $  69,568
                                                           ===========

Depreciation  expense for equipment  under capital lease was $39,682 and $70,418
for the years ended June 30, 2000 and 1999, respectively.

Subsequent to June 30, 2000,  the Company  learned  through legal  discovery and
mediation that the script machines under capital lease, with a net book value of
$80,018 were no longer in the  possession of the former  employee (see Note 14).
That individual claims he no longer has the machines and cannot locate them. The
Company is still obligated  under the capital leases.  Recovery of the assets or
the funds equal to their value from the former employee  appears to be unlikely.
These  assets were written off as of June 30, 2000,  and the  resulting  loss of
$80,018 is included in other income (expense) in the  accompanying  consolidated
statements of operations.

Note 9 - Retirement Benefits and 401(K) Plan

During June 2000, the Company reactivated a 401(k) plan that had been previously
established by one of the Company's  subsidiaries,  but had been inactive.  Each
United States based  full-time  employee is eligible to participate in that plan

<PAGE>

on the  first  day of the  calendar  quarter  after  completing  ninety  days of
employment  with the Company.  A  participating  employee can  contribute  up to
fifteen  percent  (15%) of their  annual  compensation,  up to a maximum  of the
federally  mandated limit ($10,500 at June 30, 2000). The Company matches 50% of
the  contributions on the first six percent (6%) of the employee's  contribution
up to a maximum of three percent  (3%).  Employees are fully vested on their own
contributions and vest in the Company's  contributions  twenty percent (20%) per
year over five years.

Note 10 - Income Taxes

Deferred  tax  liabilities  and assets are  determined  based on the  difference
between the financial  statement and tax basis of assets and  liabilities  using
enacted tax rates in effect for the year in which the  differences  are expected
to reverse. The measurement of deferred tax assets is reduced, if necessary,  by
the  amount of any tax  benefits  that,  based on  available  evidence,  are not
expected to be realized.

The principal temporary  differences that will result in deferred tax assets and
liabilities  are certain  expenses and losses  accrued for  financial  reporting
purposes not  deductible for tax purposes  until paid and  depreciation  for tax
purposes in excess of depreciation for financial reporting purposes.  The effect
of the differences outlined above and the benefit of the Company's net operating
loss  carryforward   generated  a  long-term  deferred  tax  asset  that  totals
approximately  $11,119,000  and has been reduced  100% by a valuation  allowance
because of a lack of profitable operating history. Accordingly,  there is no net
deferred  tax  asset  reflected  in  the  accompanying   consolidated  financial
statements.  The Company will continue to assess the valuation  allowance and to
the  extent  it is  determined  that it is more  likely  than  not  that the tax
benefits will be realized,  the tax benefit of the remaining net deferred assets
will be recognized at that time.

The differences between the federal income tax rate and the effective income tax
rate as reflected in the accompanying consolidated statements of operations are:

                                                             Year Ended
                                                               June 30,
                                                      -------------------------
                                                          2000            1999
                                                      -----------     ----------

Statutory federal income tax rate (benefit)              (34%)            (34%)
Valuation allowance for net operating loss                34%              34%
State franchise and income taxes                           1%              --
                                                      -----------      --------
Effective tax rate (benefit)                               1%              -- %
                                                      ===========      ========


The deferred tax asset consists of the following:
                                                               June 30,
                                                                 2000

      Total long-term deferred tax asset                   $   11,119,373
      Valuation allowance                                     (11,119,373)
                                                              ------------
                                                            $          --
                                                             =============

Income tax  provision  consists  entirely of state minimum taxes for the current
and prior years. At June 30, 2000, the Company had approximately  $32,000,000 of
net operating  loss  carryforwards  for federal  income tax reporting  purposes,
which  expire in 2007  through  2015.  DCB also has a tax loss  carryforward  of
9,658,000 CZK (US$ 258,000 at June 30, 2000) that expires in 2006.

Note 11 - Stock Option and Bonus Plans

The Company's Incentive Stock Option Plans, Non-Qualified Stock Option Plans and
Stock Bonus Plans are  collectively  referred to as the "Plans".  The  following
sets forth certain  information as of June 30, 2000 concerning the stock options
and stock  bonuses  granted by the Company  pursuant  to the Plans.  Each option
represents the right to purchase one share of the Company's Common Stock.



<PAGE>



                                 Total       Shares      Shares
                                 Shares    Reserved for  Issued      Remaining
                                Reserved   Outstanding  as Stock  Shares/Options
                               Under Plan    Options      Bonus     Under Plans

1998 Incentive Stock
     Option Plan               1,500,000    1,171,833       N/A        328,167
2000 Incentive Stock
     Option Plan               1,000,000           --       N/A      1,000,000
1996 Non-Qualified Stock
   Option Plan                 1,500,000    1,500,000       N/A             --
1998 Non-Qualified Stock
   Option Plan                 1,500,000    1,462,000       N/A         38,000
2000 Non-Qualified Stock
   Option Plan                 2,000,000           --       N/A      2,000,000
1996 and 1998 Stock Bonus
   Plans                       1,500,000          N/A   1,497,625        2,375
1999 Stock Bonus Plan            900,000          N/A     409,750      490,250
2000 Stock Bonus Plan            500,000          N/A          --      500,000

Incentive Stock Option Plans

The Incentive Stock Option Plans  authorizes the issuance of options to purchase
up to 2,500,000 shares of the Company's Common Stock. The Incentive Stock Option
Plans will remain in effect  until 2008 unless  terminated  earlier by action of
the Board.  Only  officers and  employees of the Company may be granted  options
pursuant to the Incentive Stock Option Plans.

Non-Qualified Stock Option Plans

The  Non-Qualified  Stock Option Plans  collectively  authorize  the issuance of
options to purchase up to 5,000,000  shares of the Company's  Common Stock.  The
Company's employees,  directors, officers, consultants and advisors are eligible
to be granted  options  pursuant to the Plans,  provided  however that bona fide
services must be rendered by such consultants or advisors and such services must
not be in connection  with the offer or sale of securities in a  capital-raising
transaction. The option exercise price and expiration date are determined by the
Board of Directors.



<PAGE>


Note 11 - Stock Option and Bonus Plans (cont'd)
Non-Qualified Stock Option Plans (cont'd)

The following is a summary of options granted:

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

                                           Non-Qualified    Options and                                                 Weighted
                              Incentive    Stock Options   Warrants Issued     Weighted                                  Average
                                Stock          and         Not Related to a     Average      Weighted                 Exercise Price
                               Options      Warrants             Plan          Exercise    Average Fair   Currently    - Currently
                                                                                Price          Value     Exercisable    Exercisable


Outstanding June 30, 1998            -       607,500           2,612,765        2.56                      3,220,265        2.56

   Options and warrants
   expired or forfeited          (3,000)           -                   -       (1.00)-
   Options and warrants
   granted                      691,000            -           6,080,164        1.04            .69       _________
                                -------      -------           ---------       -----        --------

Outstanding June 30, 1999       688,000      607,500           8,692,929        1.53                      8,840,429        1.61

   Options and warrants
    expired or cancelled       (181,667)                        (593,875)
   Options and warrants        (161,000)     (32,500)                          (2.14)
    exercised                    (3,333)    (275,000)         (1,714,540)      (1.42)
   Options and warrants
    granted                     665,500    2,387,000           4,764,891        2.61            .77       _________
                               --------    ---------          ----------       -----           -----
Outstanding June 30, 2000     1,168,500    2,687,000          11,149,405        2.08                      12,858,794       1.83
                             ==========    =========          ==========       =====           =====      ==========       ====



</TABLE>

                                                                   June 30, 2000

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

                                         Options and Warrants Outstanding             Options and Warrants Exercisable

                                                    Weighted     Weighted Average                    Weighted
                                                    Average         Remaining                        Average
                                     Number         Exercise       Contractual        Number         Exercise
Range of Exercise Price           Outstanding        Price            Life          Exercisable       Price
                                  -----------       --------      ------------      -----------      --------


  $53 - $2.00                     10,479,765        $ 1.01            2.92          10,077,765       $  1.01
$2.01 - $4.00                      1,412,900          3.25            3.57           1,085,400          3.33

$4.01 - $6.00                      2,655,190          4.54            4.27           1,263,579          4.83
$6.01 - $10.00                       457,050          8.39            4.49             432,050          8.52
                                   ---------          ----            ----          ----------          ----
                                  15,004,905        $ 2.07            3.27          12,858,794       $  1.83
                                 =============     ============    =============    ===========         ====

</TABLE>

<PAGE>


Note 11 - Stock Option and Bonus Plans (cont'd)

Non-Qualified Stock Option Plans (cont'd)

The Company  accounts for stock based  compensation in accordance with Financial
Accounting  Standards  Board  Statement  No.  123,  "Accounting  for Stock Based
Compensation," ("FAS 123"), which encourages, but does not require, companies to
recognize  compensation  expense  for grants of stock,  stock  options and other
equity instruments to employees. FAS 123 requires the recognition of expense for
such  grants,   described   above,  to  acquire  goods  and  services  from  all
nonemployees.  Additionally,  although expense  recognition is not mandatory for
issuances to employees,  FAS 123 requires companies that choose not to adopt the
new fair value  accounting  rules to disclose  pro forma net income and earnings
per share information using the new method.

The Company has adopted the disclosure-only  provisions of FAS 123. Accordingly,
no  compensation  cost has been recognized for the issuances of stock options to
employees.  For the years ended June 30, 2000 and 1999, employees of the Company
were issued options to purchase a total of 4,062,500 and 3,271,000 shares of the
Company's  common stock,  respectively,  at rates ranging from $.56 to $5.00 per
share,  which  equaled or exceeded  market value at the time of grant,  expiring
from September 2001 to November 2004.

Had  compensation  cost for the Company's  issuances of stock options during the
years  ended June 30, 2000 and 1999 been  determined  based on the fair value at
the date of grant  consistent with the provisions of FAS 123, the Company's 2000
and 1999 net loss and loss per share would have been  increased to the pro forma
amounts indicated below:

                                                      June 30,
                                            -----------------------------
                                               2000               1999
                                            -----------         ---------

       Net loss - as reported               $(8,231,029)      $(7,088,960)
       Net loss - pro forma                $(12,359,495)      $(9,469,523)
       Basic and diluted Net loss
         per common share - as reported     $      (.34)     $       (.67)
       Basic and diluted Net loss
         per common share - pro forma       $      (.51)     $       (.89)

Stock Bonus Plans

Up to  2,900,000  shares of Common  Stock may be granted  under the Stock  Bonus
Plan.  Such shares may consist,  in whole or in part, of authorized but unissued
shares,  or  treasury  shares.  Under  the  Stock  Bonus  Plans,  the  Company's
employees, directors, officers, consultants and advisors are eligible to receive
a grant of the Company's shares; provided, however, that bona fide services must
be  rendered  by  consultants  or  advisors  and  such  services  must not be in
connection   with  the  offer  or  sale  of  securities  in  a   capital-raising
transaction. As of June 30, 2000, 1,907,375 shares of the Company's common stock
have been issued under the Stock Bonus Plans.


<PAGE>



Note 12 - Stockholders' Equity

Preferred Stock

The  Company  is  authorized  to issue up to  300,000  shares of $.001 par value
Preferred  Stock.  The  Board of  Directors  has the  authority  to  divide  the
Preferred  Stock into series and,  within the  certain  limitations,  to set the
relevant terms of such series created.

In April  1995,  the  Company  established  the  Series A  Preferred  Stock  and
authorized the issuance of up to 50,000 shares. Each share of series A Preferred
Stock is entitled  to a dividend at the rate of $1.60 per share when,  as and if
declared by the Board of Directors.  Dividends not declared are not  cumulative.
Additionally,  each share of Series A Preferred  Stock is  convertible  into .20
shares of the Company's  Common Stock at any time after July 1, 1999. A total of
850 shares of common  stock may be issued upon the  conversion  of the shares of
Series A preferred  stock  outstanding as of June 30, 2000. Upon any liquidation
or  dissolution  of the Company,  each  outstanding  share of Series A Preferred
Stock is entitled to distribution of $20 per share prior to any  distribution to
the holders of the Company's  common stock. As of June 30, 2000, the Company has
4,250 shares of Series A Preferred Stock issued and outstanding.

In March  1996,  the  Company  established  the  Series B  Preferred  Stock  and
authorized  the  issuance  of up to  100,000  shares.  Each  share  of  series B
Preferred Stock is entitled to a dividend at the rate of $.15 per share when, as
and if  declared  by the Board of  Directors.  Dividends  not  declared  are not
cumulative.  Additionally, each share of Series B Preferred Stock is convertible
into  one  share  of  the  Company's  Common  Stock.  Upon  any  liquidation  or
dissolution of the Company,  each outstanding  share of Series B Preferred Stock
is entitled to distribution of $1.00 per share prior to any  distribution to the
holders  of the  Company's  common  stock.  As of June 30,  2000,  all  Series B
Preferred shares had been converted and there were no shares outstanding.

In  November,  1998,  the  Company's  Board of  Directors  amended the  original
certificate  of  designation  for its Series C Preferred  Stock ("Series C") and
authorized  the  issuance  of up to 2,060  shares.  Each  share of the  Series C
Preferred  Stock is entitled to a dividend at the rate of $.06 per share and has
a stated  value of $ 1,000 per  share.  Dividends  on all shares of the Series C
Preferred  Stock  begin to  accrue  and  accumulate  from the date of  issuance.
Additionally,  each share of Series C Preferred Stock is convertible into shares
of the  Company's  Common  Stock  at an  adjustable  conversion  rate.  Upon any
liquidation or dissolution of the Company,  each  outstanding  share of Series C

<PAGE>


Preferred Stock is entitled to distribution of the stated amount per share prior
to any distribution to the holders of the Company's common stock. From November,
1998 to  January,  1999,  the  Company  sold  1,700  shares  of its 6%  Series C
Preferred  Stock to a group of  institutional  investors for  $1,446,846  net of
$253,154 in offering costs. The Company recognized  $425,000 as the value of the
guaranteed  embedded  beneficial  conversion  feature  related  to the  Series C
Preferred  Stock.  For each  preferred  share,  the Company  issued  warrants on
certain  dates.  The  warrants  entitle the holder to purchase  common  stock at
prices ranging from $1.27 to $1.50 per share. While the Company has the right to
redeem the preferred  shares at any time; the redemption  price varies from 110%
to 125% of face value  depending on the redemption  date. In connection with the
Preferred  Stock sales,  the Company  issued 45 shares of the Series C Preferred
Stock,  14,769  shares of common  stock and 37,500  warrants to purchase  common
shares at prices  ranging from $1.27 to $1.50 per share to the placement  agent.
In addition, the Company issued 120,000 shares of common stock to the investment
banking group and 200,000  warrants to purchase  common stock at prices of $2.50
to $5.00 per share.

The Company  retired all of its  outstanding  Series C  preferred  stock  during
January 2000. Outside investors purchased 1,445 shares of the Series C preferred
stock and converted  them into 2,890,000  shares of the Company's  common stock.
The Company paid  $160,567 to the  converting  former Series C  stockholders  as
payment in full of all dividends  ($95,173) and other amounts to which they were
entitled.  The owner of 300 shares of the Series C preferred stock converted its
Series C preferred stock into 600,000 shares of the Company's  common stock. The
Company issued an additional  60,000 shares of its common stock and a warrant to
purchase  132,000 of the Company's common stock at a price of $0.75 per share at
any time prior to December 22, 2002 (imputed value of $81,393 or $0.62 per share
using the Black Scholes pricing model) to this stockholder as payment in full of
all  dividends  ($19,276)  and  other  amounts  to  which it was  entitled.  For
assisting in arranging  the  conversion  of the  preferred  shares,  the Company
issued 175,000 shares of common stock to a financial  consultant and $26,400 was
paid to another  consultant.  The  Company  also  incurred  legal fees  totaling
$45,478 related to this transaction. As of June 30, 2000, all Series C Preferred
Stock had been converted and there were no shares outstanding.

In April  2000,  the  Company  established  the  Series D  Preferred  stock  and
authorized  the issuance of up to 2,900  shares.  The Company  issued 494 shares
related to the  acquisition  of DCB and 2,356 shares for the  acquisition of the
intellectual  property from DSM (Note 3). Each share of Series D preferred stock
is entitled to a dividend at the rate of $0.04 per share and has a stated  value
of $1,000 per share.  Dividends on all Series D preferred  stock begin to accrue
and accumulate from the date of issuance.  Additionally,  each share of Series D
preferred stock is convertible into 202.43 shares of common stock for a total of
576,923  shares  at  the  option  of  the  stockholders.   Upon  liquidation  or
dissolution of the Company,  each outstanding  share of Series D preferred stock
is  entitled  to a  distribution  of the stated  amount  per share  prior to any
distribution to the  shareholders of the Company's common stock. The Company can
convert the Series D preferred  stock into shares of common stock using the same
conversion  ratio at any time after  April 15,  2001 so long as the bid price of
the  Company's  common  stock  exceeds  $4.94 per share and the shares of common
stock  issuable upon the  conversion of the Series D preferred  stock are either
covered by an effective registration statement or are eligible for sale pursuant
to rule 144 of the  Securities and Exchange  Commission.  Each share of Series D
preferred  stock is entitled to vote in all matters  submitted to the  Company's
shareholders on an "as converted"  basis.  Total accrued,  but unpaid  dividends
related to the Series D preferred stock was $23,750 at June 30, 2000.


<PAGE>

Common Stock

The Company is authorized to issue 80,000,000  shares of $.0001 par value Common
Stock.  The  authorized  number of  shares  was  increased  from  40,000,000  to
80,000,000 by a vote of the shareholders on June 27, 2000.

For the years  ended June 30,  2000 and 1999,  the  Company  did not declare any
dividends.

Equity Transactions

During the year ended June 30, 2000, the following equity transactions occurred:

The Company sold 6,262,645 shares of common stock at prices ranging from $.45 to
$4.00 per share in private  placements  raising  $6,161,873  net of  $590,075 in
offering costs,  at discounts  ranging from no discount from the market price to
23% of the then prevailing  market price of the Company's common stock since the
shares were  restricted  securities,  as that term is defined in Rule 144 of the
Securities  and  Exchange  Commission.  None of  these  shares  were  issued  to
employees  of the  Company.  As part of these  offerings,  the  Company  issued
primarily  three year warrants to purchase  1,230,307  shares of common stock at
prices  ranging from $0.50 to $4.69 per share with an imputed  value of $602,983
(imputed values ranging from $0.20 to $1.34 per share).

The  Company  issued  1,895,629  shares of its common  stock for  $1,759,173  in
exchange for services and equipment, which included 163,129 shares of its common
stock valued at $471,442 that were issued to its employees and directors.

The Company  issued  256,839 shares of its common stock for $185,613 of existing
accounts payable and lease obligations.

The Company  issued  587,546 shares of its common stock in exchange for $495,884
of long-term debt, notes payable, and accrued interest.

The Company  issued  100,000  shares of its common  stock  valued at $302,400 in
connection with the  acquisition of all rights to the MedCard System,  including
all  programs,  intellectual  property,  trade  names  and  existing  contracts.
Additionally,  the  Company  issued  options to purchase  400,000  shares of the
common  stock at $3.57 per share.  The options  expire in May,  2003 and have an
imputed value of $456,598  ($1.14 per share),  which was included as part of the
purchase price of the assets acquired (Note 3).

The  Company  issued  12,880  shares of its  common  stock  valued at $41,630 in
connection with the acquisition of DCB.

The  Company  issued  24,249  shares of its  common  stock  valued at $78,370 in
connection with the acquisition of intellectual property from DSM.

<PAGE>


The Company  issued  1,332,873  shares of its common  stock upon the exercise of
warrants  and  options at prices  ranging  from  $0.44 to $5.00 per  share,  and
received $2,183,150 upon such exercise.

The  Company  issued  536,668  shares of its common  stock upon the  exercise of
warrants and options for the purchase of 660,000  shares of its common stock and
the delivery of 123,332  shares of its common  stock that had an aggregate  fair
market  value  equal  to  the  total  exercise  price  under  cashless  exercise
provisions.

The Company issued  533,331 shares of its common stock to existing  stockholders
as penalties for not having its  registration  statement become effective within
the required time frame pursuant to the underlying private placement agreements.

The Company  issued 800 shares of its common stock upon the  conversion of 5,000
shares of its Series A preferred stock.

The Company issued  3,490,000  shares of its common stock upon the conversion of
1,745 shares of its Series C preferred stock.

The Company issued 60,000 shares of its common stock and a three year warrant to
purchase  132,000  shares  of its  stock at a price at $0.75  (imputed  value of
$81,393 or $0.62 per share) to a former  holder of Series C  preferred  stock as
payment in full of all dividends and other amounts to which it was entitled.

The Company issued warrants to purchase  1,416,250 shares of its common stock at
prices  ranging  from $0.78 to $5.00 with a total  value of  $635,253  (based on
imputed  values  ranging  from  $0.19 to  $2.96  per  share)  for  services  and
equipment.  Warrants to purchase  100,000 shares expire in 2004 and the warrants
to purchase the remaining 1,316,250 expire during the year ending June 30, 2003.
Approximately  $56,000 of the total  value of these  shares was for  capitalized
software  development  costs and the  balance  was  charged  to  expense  on the
accompanying consolidated statements of operations.

The Company  issued  warrants to purchase  176,334 shares of its common stock at
prices  ranging from $0.59 to $1.00 to the former  shareholders  of the Series C
preferred  stock and a certain  note  holder as  penalties  for not  having  its
registration  statement  become effective in the required time frame pursuant to
the underlying agreements. Warrants to purchase 60,000 shares expire in 2002 and
warrants to purchase the balance,  116,334  expire in 2004. An expense  totaling
$103,317 has been  recognized  related to the issuance of these warrants  (based
upon imputed values  ranging from $0.52 to $0.81 per share) on the  accompanying
consolidated statement of operations.

The Company  issued  warrants to purchase  550,000 shares of common stock of its
wholly owned  subsidiary,  JustMed.com,  Inc. at $5.00 per share in exchange for
services and  capitalized  software  development  costs.  The warrants expire in
three years. Warrants for the purchase of 450,000 of the JustMed.com shares may,
at the option of the warrant  holder,  be converted  into 650,000  shares of the

<PAGE>

Company's  common stock at an exercise  price equal to 125% of the closing price
of the  Company's  common  stock at the date of  conversion.  The value of these
warrants,  which  was  based  upon the  value of the  underlying  services,  was
determined to be $221,248, based upon imputed values ranging from $0.19 to $0.58
per share, of which $137,768  represents  capitalized assets and the balance was
recorded as an expense.  During March 2000,  two holders of warrants to purchase
200,000 of the  JustMed.com  shares  converted  them into  warrants  to purchase
400,000 shares of the Company's common stock at $8.56 per share, pursuant to the
terms of the original  agreement.  The Company also issued to an unrelated party
(the originator of the JustMed.com  concept) an additional  four-year warrant to
purchase  1,000,000 shares of JustMed.com's  common stock at $2.00 per share. No
value was ascribed to this warrant as the fair value was determined to be $0.

The total value of the above  mentioned  stock and warrants  that is included in
expenses in the accompanying consolidated statement of operations was $2,621,594
during the year ended June 30, 2000.

During the year ended June 30, 1999, the following equity transactions occurred:

The Company sold  3,636,879  shares of common stock at prices ranging from $0.44
to $1.00 per share in private  placements  raising $2,553,112 net of $307,925 in
offering costs. As part of these offerings,  the Company issued one to five year
warrants to purchase  1,271,658  shares of common  stock at prices  ranging from
$0.44 to $1.20 per share  with an  imputed  value of  $634,952  (imputed  values
ranging  from $0.25 to $1.34 per  share).  The  Company  also  issued a two-year
warrant  to  purchase  342,853  shares of common  stock at $0.80 per share and a
three-year  warrant to purchase  342,853  shares at $1.20 per share to an entity
that arranged certain of the private placements.

The  Company  issued  2,742,719  shares of its common  stock for  $2,340,423  of
services and equipment  received,  which  included  222,500 shares of its common
stock valued at $204,590 that were issued to its employees and directors.

The Company  issued 150,700 shares of its common stock for $123,430 for services
previously rendered.

The Company issued 2,109,975 shares of its common stock and warrants to purchase
115,300  shares of its common  stock at prices  ranging  from $0.62 to $2.00 per
share to convert  $1,672,997 worth of long-term debt, notes payable,  franchisee
deposits and accrued interest into stockholders' equity.

The Company  issued  100,000  shares of its common  stock  valued at $128,000 in
connection  with the  acquisition  of certain  assets of MedCard  including  the
exclusive  licensing  rights to the MedCard name and the MedCard System software
and network. Additionally, the Company issued options to purchase 350,000 shares
of the common stock at $1.34 per share. The options expire in November, 2001 and
have an imputed value of $333,904 which was included as part of the value of the


<PAGE>

licensing rights acquired (Note 3). These options were subsequently exercised in
March, 2000, under a cashless exercise  provision,  resulting in the issuance of
258,932 shares of common stock.

The Company  issued  28,200  shares of its common stock upon the  conversion  of
116,000 shares of its Series A and Series B preferred stock.

The Company  issued  warrants to purchase  150,000 shares of its common stock at
$.59 per share to a company retained as its investment banker in connection with
any future  offerings.  As no such offering took place, the imputed value of the
warrants, $77,730, has been charged to expense at June 30, 1999.

The Company  issued  warrants to purchase  50,000  shares of its common stock at
$1.50  per  share  in  connection  with a loan  advanced  to the  Company  by an
individual.  The imputed value of the warrants,  $40,101 ($0.80 per share),  has
been charged to interest expense during the year ended June 30, 1999.

The Company  issued  warrants to purchase  640,000 shares of its common stock at
rates  ranging  from $0.59 to $2.50 per share.  These  warrants  expire  between
August 2001 and April 2004.  $346,941  of expense has been  recognized  based on
imputed values ranging from $0.45 to $1.50 per option.

The total value of the above  mentioned  stock and warrants  that is included in
the accompanying  consolidated statement of operations was $2,540,338 during the
year ended June 30, 1999.

The Company uses the Black Scholes option pricing model to determine the imputed
value of all options and warrants issued using the following assumptions:

--------------------------------------------------------------------------------
                                    Year Ended                Year Ended
                                  June 30, 2000              June 30, 1999

Expected life                     2 to 3 years               2 to 3 years
Volatility                         41% to 96%                     134%
Risk free interest rate            6% to 6.5%                   5% to 6%
Dividend rate                          0%                          0%
--------------------------------------------------------------------------------

<PAGE>


Note 13 - Business Segments

The  Company  has  three  reportable  segments:  intelligent  vending  machines,
healthcare  management software development and medical transaction  processing.
The  intelligent  vending  machine  segment is comprised of the sales of prepaid
phone cards, the processing of monetary transactions  utilizing a script machine
that  are  used   primarily  in  major  fast  food  chains  and  the  rental  of
videocassettes  through  automated  dispensing  units in hotels  and time  share
facilities, primarily located in the states of Florida and California.

The medical  transaction  processing  segment  includes revenue from the MedCard
System,  including the sale of terminals,  processing  fees and billing  service
revenue and the  licensing,  sales and  services  related to the  Company's  One
Medical  Services  Network.  The One Medical Services Network was licensed to an
unrelated  third  party  in July  1999,  and as such,  approximately  70% of the
revenue ($613,000) was in the form of licensing revenue during 2000.

The healthcare management software development segment includes the licensing of
the Health Information Gateway and related  developmental  services,  as well as
the licensing of other software and hardware products and services.  It operates
under the name of the DCB division in the United  States and DCB  Actuaries  and
Consultants, s.r.o., in Europe.

The accounting  policies of the segments are the same as those  described in the
summary of significant  accounting  policies.  The Company's reportable segments
are strategic business units that offer different products and services.

Operating  results  and  other  financial  data  are  presented  for  the  three
reportable  segments  of the Company for the years ended June 30, 2000 and 1999.
The healthcare  management software  development did not exist in the year ended
June 30, 1999; it arose  because of the  acquisition  of DCB in April 2000.  The
Company has restated the segment information for the year ended June 30, 1999 by
combining the previously segregated telecommunications, financial processing and
automated  movie  rental  segments  into a single  segment  intelligent  vending
machine  segment,  to align with the change in the  Company's  structure  of its
internal  organization  and to reflect  the  Company's  growing  emphasis on the
medical and healthcare aspects of its business. The 1999 segment information has
been further restated to exclude the results of operations from the discontinued
operations related to the ACDC line of machines (note 16).

Net  revenue  includes  sales and  services to  external  customers  within that
segment  and  related  licensing  revenue.  There are no  significant  transfers
between segments.  Cost of sales and services includes costs associated with net
revenue within the segments.  Depreciation  and amortization  includes  expenses
related to  depreciation  and  amortization  directly  allocated to the segment.
Segment  income  (loss) does not include  general and  administrative  expenses,
selling and marketing, other operating expenses, other income (expense) items or
income taxes.  Identifiable  assets are those assets used in segment operations,
which consist primarily of receivables,  inventory, prepaid expenses, machinery,
equipment, licensing rights, technology,  goodwill and cash maintained at DCB in
the  Czech  republic.   Corporate  assets  are  principally  patents,  all  cash
maintained in the United States and assets used at the corporate office.




<PAGE>


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


                                                      Healthcare
                         Intelligent     Medical     Management
                            Vending     Transaction    Software    Corporate
                            Machines    Processing   Development   And Other  Consolidated
June 30, 2000:

Net revenues                $ 778,693    $1,881,417     $593,379    $   --      $3,253,489

Cost of sales and           $ 428,192    $ 973,871      $157,485    $   --      $1,559,548
 services

Depreciation and            $ 405,179    $ 487,252      $326,032    $93,775     $1,312,238
 amortization

Selling, General &
 Administrative             $      --    $      --      $  --       $7,688,314  $7,688,314

Income (loss)  from
 continuing operations      $ (54,678)   $ 420,294      $109,862   $(7,782,089) $(7,306,611)
 before income taxes

Identifiable assets         $1,116,109   $4,499,056     $7,715,548  $1,818,560   $15,149,273

June 30, 1999:

Net revenues               $1,628,599    $ 583,777       $     -      $ -        $ 2,212,376

Cost of sales and          $  761,190    $ 333,864       $     -      $ -        $ 1,095,054
 services

Depreciation and          $   485,468    $ 136,458       $     -      $75,157        697,083
 amortization

Selling, General &
 Administrative            $       --    $      --       $     -   $7,028,591    $ 7,028,591

Income (loss) from
 continuing operations     $  381,941    $ 113,455     $      -   $(7,103,748)   $(6,608,352)
 before income taxes

Identifiable assets        $2,255,255   $2,473,409     $      -      $767,071    $ 5,495,735

</TABLE>

<PAGE>


Identifiable  assets as of the June 30, 1999 exclude  assets  totaling  $879,128
related to the discontinued ACDC operations (Note 16). There were no such assets
as of June 30,  2000.  1999  expenses  have been  restated  to exclude  expenses
related to the discontinued operations.

The following presents revenues by type:

                                  Year Ended          Year Ended
Product or Service Type          June 30, 2000       June 30, 1999
-----------------------         --------------       -------------

Sale of prepaid calling cards   $   18,260          $    89,635
Script terminal revenue             46,769              625,801
Movie Vision revenues              713,664              860,126
One Medical revenues               886,756              156,712
MedCard system revenues            994,661              427,065
DCB revenues                       593,379                   --
Other                                   --               53,037
                                ----------          -----------
Total                           $3,253,489          $ 2,212,376
                                 =========           ==========


The Company's  healthcare  management  software  development segment operates in
both Europe and the United States, although the Company only began marketing the
software and related  services in the United States after April 15, 2000. All of
the revenue  earned  during the period from the  acquisition  of DCB,  April 15,
2000,  through  June 30, 2000 was  generated in Europe,  in the Czech  Republic,
England and France, which totaled $293,193, $249,739 and $50,447,  respectively.
The revenues  from France  relate solely to the  recognition  of deferred  gross
profit  from the  ten-year  contract  (Note  6).  All of the  revenues  from the
Company's other segments were generated in the United States.

One  customer  in the  medical  transaction  processing  segment  accounted  for
$302,500 of revenue in this segment.  Another customer, EIS, Inc., accounted for
$886,756 of revenue in that  segment,  all of which was related to the licensing
of the One Medical  Services system and  corresponding  sales and services.  One
customer accounted for $249,739 of revenue in the healthcare management software
development segment.

Note 14 - Commitments and Contingencies

Operating Leases

The  Company  leases  administrative  offices,  a computer  operations  and data
warehouse center and warehouse locations under noncancelable operating leases in
California,  New York and Florida.  The minimum annual rent generally  increases
each  year by an  amount  based on the  Consumer  Price  Index or  predetermined
amounts. The Company is also generally responsible for paying its portion of the
common area maintenance, real estate taxes and insurance expenses. Additionally,
the Company also leases various office equipment under  noncancelable  operating

<PAGE>

leases  with terms up to 5 years.  Rental  expense  for the years ended June 30,
2000 and 1999 was $237,719 and $279,550, respectively. The Company has an option
to lease additional space adjacent to its leased office and computer  operations
and data  warehouse  facility in Lakeland,  Florida under the same general terms
and conditions as its existing lease.

Note 14 - Commitments and Contingencies (cont'd)

Future minimum lease commitments at June 30, 2000 are as follows:

           Year Ending June 30,

                 2001                                      $320,265
                 2002                                       334,396
                 2003                                       338,890
                 2004                                       280,703
                 2005                                       269,483
                 Thereafter                                 401,894
                                                            -------
                                                         $1,945,631
                                                         ==========

Employment Agreements

The Company  entered into  three-year  employment  agreements  with its two most
senior officers in March 1999. The agreements  entitle the officers to an annual
salary of $137,500  and  $120,000,  respectively.  The  compensation  amount was
increased to $152,776 and $127,296,  in 2000. As additional  compensation,  each
officer is entitled to receive an incentive  bonus computed based upon Company's
operations and they are both entitled to other benefits, including such items as
an  automobile  allowance,  health  and life  insurance,  vacation  and sick pay
benefits.

The Company entered into a two-year employment  agreement with an officer of the
Company  commencing on October 19, 1999.  The officer is entitled to a salary of
$144,000 per year,  payable in cash or common stock.  The officer is entitled to
receive an incentive bonus based upon annual  performance  criteria.  He is also
entitled to other benefits,  including health  insurance,  disability  coverage,
vacation  and sick pay  benefits.  The  officer  received  an option to purchase
100,000 shares of the Company's common stock at $1.00 per share, vesting monthly
over a two-year period.

During March 2000, the Company entered into a two-year  employment contract with
an  individual.  Annual  compensation  under this  agreement  is  $115,000.  The
individual may receive other benefits  including health insurance,  vacation and
sick pay and may be  entitled  to  receive  incentive  bonuses.  The  individual
received a three-year option to purchase 100,000 shares at $5.00 per share, with
vesting on a monthly basis over two years.

During  the  quarter  ended  June 30,  2000,  the  Company  entered  into  three
three-year  employment  contracts  with an officer of the Company,  the managing
director  of DCB in the Czech  Republic  and another  individual  related to the


<PAGE>

operation  of DCB in the United  States.  The total  annual  salary  under these
agreements is $276,000.  The  individuals  may be entitled to receive  incentive
bonuses and other benefits  including health  insurance,  vacation and sick pay.
Five-year  options to  purchase  a total of  1,096,000  shares of the  Company's
common stock at $4.04 per share were issued to the individuals with vesting on a
monthly basis over three years.

In June 2000,  the Company  entered  into a two-year  employment  contract  with
another  officer of the Company  with a total  annual  salary of  $145,000.  The
individual  may be entitled  to receive  incentive  bonuses  and other  benefits
including  health  insurance,  disability  coverage,  vacation and sick pay. The
individual  received  a  five-year  option  to  purchase  150,000  shares of the
Company's common stock at $3.00 per share,  with vesting on an annual basis over
two years.

In June 2000, the Company entered into four two-year employment  agreements with
various personnel in the MedCard division. Total annual compensation under these
agreements is $403,000.  These  individuals may be entitled to receive incentive
bonuses and other benefits  including  health  insurance,  disability  coverage,
vacation and sick pay. These individuals  received five-year options to purchase
a total of 175,000 shares of the Company's  common stock at $3.00 per share with
vesting on an annual basis over two years.

In prior years, the Company had entered into a three-year  employment  agreement
with another employee with a total annual compensation of $60,000. As additional
compensation,  the individual is entitled to receive an incentive bonus computed
based upon annual  performance  criteria  and he is  entitled  to certain  other
benefits, including health insurance, vacation and sick pay benefits.

Royalty Agreement

In connection with the original licensing and subsequent  acquisition of MedCard
(Note 3),  the  Company  entered  into a  royalty  agreement  with the  original
Licensor. The royalty provisions of the license agreement remain in effect after
the  purchase.  The  Company  will pay the  Licensor  25% of  qualified  monthly
revenues,  less direct costs,  generated by the licensed software.  Royalties on
net qualified  revenues in excess of $1,000,000  per month shall be paid at 10%.
The agreement  required the Company to advance  $550,000 of royalty fees payable
to the  Licensor and then retain as a credit 40% of the future  monthly  royalty
payments  until the  advance  is offset in full.  During the year ended June 30,
2000,  the  Company  paid  $6,000 of  royalties  to the  original  Licensor.  No
royalties were paid during the year ended June 30, 1999.

Consulting Agreements

The  Company  has  entered  into  various  consulting  agreements  with  outside
consultants.  These  agreements  entitle the  consultant  to issuances of common
stock and  options  as well as cash  compensation  in  exchange  for  consulting
services relating to such things as raising  additional debt and equity capital,
software  development,  sales  development,  investor and public  relations  and
general strategic business consulting.  During the year ended June 30, 2000, the
Company issued 1,732,500 shares of common stock and options to acquire 1,416,250


<PAGE>

shares  of  common  stock at rates  ranging  from  $0.78 to $5.00  per  share in
exchange for consulting  services  valued at  $1,922,984.  During the year ended
June 30, 1999, the Company issued  2,520,219  shares of common stock and options
to acquire  1,027,500 shares of common stock at rates ranging from $.45 to $2.00
per  share  in  exchange  for  consulting  services  valued  at  $2,134,296.  No
outstanding obligations existed as of June 30, 2000 pursuant to the terms of the
remaining consulting agreements.

Litigation

A suit has been filed  against  the  Company by a former  employee  for  damages
totaling $269,000.  Management believes the claim is without merit and has filed
a counterclaim against the plaintiff alleging that the employee  misappropriated
equipment and other Company assets.

In March 2000, a  consultant  filed a demand for  arbitration  with the American
Arbitration  Association  seeking  payment  of 200,000  shares of the  Company's
common  stock and  $12,000  related to an  agreement  executed  October 5, 1999.
Although the Company believed the claim was without merit, it settled the matter
by issuing  25,000  shares of stock,  valued at $42,970,  in August  2000.  This
amount is included in accrued expenses and general and  administrative  expenses
in the accompanying consolidated financial statements.

An individual  filed a complaint  against the Company in December 1998,  seeking
$250,000 plus interest and legal costs related to loans the  individual  made to
the Company in 1994.  The  Company  believes  the claim is without  merit as the
loans had either been repaid or otherwise converted into other assets.

DCB contracted to develop an information  system for a customer.  The system was
delivered  and is in use  by the  customer.  However,  the  customer  paid  only
2,787,000 CZK (US $74,417 at June 30, 2000) of total contract price of 5,150,000
CZK (US $137,513 at June 30, 2000)  (excluding  VAT).  DCB canceled the contract
for the  information  system because the customer  refused to accept and pay for
the system even though the system was physically  installed and delivered to the
customer.  The customer filed a claim in the amount of 2,787,000 CZK (US $74,417
at June 30,  2000) for refund of its  payments  made under the  contract,  which
claim has been  appealed by DCB. The customer  filed their claim in January 2000
and the matter is in the  preliminary  discovery  stage.  DCB  intends to file a
counter  claim to collect the  remainder of the contract  amount.  The remaining
amount of the unpaid  contract  2,363,000  CZK (US $63,096 at June 30, 2000) was
fully reserved prior to the date of acquisition  and is fully reserved for as of
June 30, 2000.

In March  2000,  the  Company  was  served  with a summons  naming it as a cross
defendant in an action between a former owner of One Medical Services, LLC and a
third party. The former One Medical Services,  LLC owner had originally sued the
third  party for  collection  of amounts he alleges he was due.  The third party
then filed a counter claim for $300,000 plus costs against this individual, also
naming the Company as a co-defendant. The Company believes that it should not be

<PAGE>

a party to this matter as it had no involvement  with the issue.  The former One
Medical  Services,  LLC owner has  indemnified the Company against any losses it
may incur as a result of this entire  matter,  other than the Company's  initial
legal costs incurred in its attempt to be removed from the claim.

In March,  2000, a former director of the Company filed a complaint  against the
Company  seeking the issuance of options to purchase the Company's  common stock
in the following increments:  50,000 shares at $1.50 per share; 50,000 shares at
$2.20 per share;  and 25,000 shares at $0.01 per share.  The former  director is
also seeking the issuance of 25,000  "restricted" shares of common stock. Except
for the first  option to  purchase  50,000  shares at $1.50 per share,  which is
reflected  as  outstanding  options  in  the  Company's  records  and  financial
statements,  the Company is vigorously  disputing the claim as it believes it is
without merit.  This matter is currently in the discovery stage and a trial date
has been set for January 2001.

The Company is also involved in various claims and legal actions  arising in the
ordinary  course of  business.  In the  opinion  of  management,  except for the
arbitration  matter  settled in August 2000,  the ultimate  disposition of these
matters  will not have a  material  adverse  effect on the  Company's  financial
position, results of operations, or liquidity.

Purchase Commitment

The  Company has a purchase  commitment  with a vendor to acquire  2000  MedCard
terminals prior to January 31, 2001. In consideration  of this  commitment,  the
Company has received preferential  pricing.  Should the Company not purchase the
required  number  of  terminals,  the  purchase  price  would  be  retroactively
increased to reflect the lower volume  acquired.  The Company  believes  that it
will be able to meet the required number of terminals pursuant to the agreement.

Note 15 - Statements of Cash Flows

During the fiscal year ended June 30, 2000:

The Company acquired $49,402 of fixed assets through capital leases.

The Company  converted  $495,884 of  convertible  notes and interest  payable to
587,546 shares of common stock.

The Company  converted  5,000 and 1,745 shares of Series A and C preferred stock
into 800 and 3,490,000 shares of common stock, respectively.

The Company  converted  $185,613 of accounts payable and other  liabilities into
256,839 shares of common stock.

<PAGE>


The Company accrued dividends payable of $56,424 and $23,750 on the Series C and
D preferred stock, respectively.

The Company issued 60,000 shares of common stock as partial  payment of Series C
accrued dividends and related liabilities.

The Company  obtained  fixed  assets  with a value of  $205,000 in exchange  for
common stock and warrants to purchase the Company's common stock.

The Company  incurred  various  noncash  transactions  related to their business
acquisitions (Note 3).

During the year ended June 30, 1999:

The  Company   acquired   $860,810  of  fixed  assets  through  capital  leases,
satisfaction of notes receivable and for stock.

The  Company  accrued  dividends  payable of  $58,025 on the Series C  Preferred
Stock.

The  Company  incurred  various  noncash  transactions  in  connection  with the
acquisition of the MedCard licensing rights (Note 3).

The Company converted $500,000 of franchise deposits,  $1,172,997 of convertible
notes and  interest  payable and  $123,430 of accounts  payable  into  2,260,675
shares of common stock.

The Company converted $327,661 of franchise deposits into notes payable.

The Company  converted  116,000  shares of Series A and B  Preferred  Stock into
28,200 shares of common stock.

The Company sold $635,237 of fixed assets by  transferring  the related  capital
leases to the acquiring entity.

Note 16 - Discontinued Operations

During the quarter ended June 30, 2000, the Company  decided to discontinue  its
ACDC  operations,  as they had not  generated any revenue for the Company in two
years.  The lack of prospects for future  revenue  generation,  coupled with the
Company's  focus on medical  technology  led the Company to reach this decision.
The ACDC  equipment  and phones will be disposed of prior to December  31, 2000,
except  for  certain  computer  components  and  related  hardware  that will be
retained.  These  components will be used as replacement  parts in the Company's
other intelligent vending machines,  primarily video vending machines. The total
net book  value of the ACDC  equipment  and phones  was  reduced to $48,312  and
reclassified to fixed assets for the Movie Vision  operations during the quarter
ended June 30, 2000. This amount equals the lower of the net book value and fair

<PAGE>

market value of the retained  component parts.  These are being depreciated over
the remaining  useful life of the equipment.  A loss on disposal of $358,456 was
recorded related to the discontinued ACDC operations.

As of June 30, 1997, the Company had sold  equipment  (ACDC units) to a customer
for a total sales  price of  $664,000.  The total  amount of $664,000 is payable
under the terms of a note receivable that bears interest at 8.5%.  Principal and
interest  is  payable   commencing   by  December  31,  1997  in  equal  monthly
installments of  approximately  $14,000  through  November 30, 2002. No payments
have  been  received  as of June 30,  2000.  The note is  collateralized  by the
original  equipment (ACDC machines).  The Company has been reducing the value of
the note to equal the estimated market value of the underlying  collateral.  The
Company is pursuing  legal action against the customer,  however,  collection of
this amount is uncertain.

Accordingly,  the Company has  written off the note  receivable  in full and has
recorded a fixed asset of $11,978  which equals the lower of  amortized  cost or
fair market value of the component  parts of the equipment  held as  collateral.
The loss on the  write-off  of the note  resulting  from the  discontinued  ACDC
operations was $92,693, bring the total loss on disposal to $451,149.

The only expenses related to the ACDC operations were as follows:


                                                  Year Ended June 30,

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

Depreciation                                $321,449               $402,788
Write down of value of note
     receivable                              106,530                 77,820
                                            --------               --------
                                            $427,979               $480,608
                                            ========               ========

The total loss on disposal of the ACDC units is a result of writing down the net
book value of the fixed  assets and note  collateral  to the lower of  estimated
depreciated cost or fair market value of the retained  component parts. No other
expenses are anticipated in connection with the disposal of the assets.

Note 17 - Related Party Transactions

The Company purchased equipment and received technical services from DSM.net, an
entity owned by the Company's Vice President and Chief Technology  Officer.  The
total of such  equipment and services  purchased by the Company was $218,936 and
$23,106,  respectively  during the year ended June 30, 2000.  There were no such
transactions  during the year  ended June 30,  1999.  The total  amount  owed to
DSM.net at June 30, 2000 was $107,095 and is included in accounts payable on the
accompanying consolidated balance sheet.



<PAGE>



                                   SIGNATURES


    In accordance  with Section 13 or 15(a) of the Exchange Act, the  Registrant
has caused this Report to be signed on its behalf by the undersigned,  thereunto
duly authorized on the 28th day of September 2000 .

                            MEDCOM USA, INCORPORATED

                                  By /s/ Mark Bennett
                                     -------------------------------------------
                                         Mark Bennett, President

                                  By /s/ Alan Ruben
                                     -------------------------------------------
                                     Alan Ruben , Principal Financial Officer
                                      and Chief Accounting Officer

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

Signature                            Title                    Date

 /s/ Mark Bennett
Mark Bennett                        Director              September _____, 2000

 /s/ Michael Malet
Michael Malet                       Director              September _____, 2000

 /s/ David Breslow
David Breslow                       Director              September _____, 2000

 /s/ Julio Curra
Julio Curra                         Director              September _____, 2000





<PAGE>








                                   FORM 10-KSB

                                    EXHIBITS

                            MedCom USA, Incorporated
                             18001 Cowan, Suites C&D
                                Irvine, CA 92614