INDEPENDENT AUDITOR'S REPORT

To the Stockholders of
    Medicine Man, Inc.
Dickinson, Texas


We have audited the accompanying balance sheet of Medicine Man,
Inc., as of September 30, 2000, and the related statements of
operations and retained earnings, and cash flows for each of the
two years then ended. 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 auditing standards
generally accepted in the United States of America. Those
standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable
basis for our opinion.

In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Medicine Man, Inc. as of September 30, 2000, and the results
of its operations and its cash flows for each of the two years
then ended in conformity with accounting principles generally
accepted in the United States of America.

As discussed in Note 7, on December 1, 2000, the Company was
forced into involuntary bankruptcy by its major supplier. The
Company filed for reorganization protection under Chapter 11 of
the Federal Bankruptcy Code. Effective June 1, 2001 100% of the
Company's business operations were sold to Park Pharmacy
Corporation in an asset sale from the bankruptcy estate of the
Company.




Hein + Associates LLP

August 3, 2001
Dallas, Texas

<PAGE>

                       MEDICINE MAN, INC.
                         Balance Sheets
<TABLE>
<CAPTION>
                                                         May 31,          September 30,
                                                          2001               2000
                                                       -----------        -------------
                                                       (Unaudited)
                                   ASSETS
                                   ------

                                                    <c>                 <c>
Current Assets:
  Cash                                                 $   939,871         $   880,852
  Trade accounts receivable, net of allowance
    for doubtful accounts of approximately
    $128,000 at May 31, 2001 and
    September 30, 2000                                     693,595             732,329
  Inventory                                                977,626             865,740
  Prepaid expenses and other current assets                 23,818              62,572
                                                       -----------         -----------
        Total current assets                            2,634,910            2,541,493

Property and Equipment, net                                 51,085              65,733

Other Assets                                                30,775              31,804
                                                       -----------         -----------

        Total assets                                   $ 2,716,770         $ 2,639,030
                                                       ===========         ===========

                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of long-term debt                    $     6,857         $    39,482
  Accounts payable                                       2,055,783           2,065,249
  Other accrued liabilities                                  3,194               2,758
                                                       -----------         -----------
        Total current liabilities                       2,065,834            2,107,489

Long-term Debt, net of current portion                      14,343              15,846

Commitments and Contingencies (note 5)                           -                   -

Stockholders' Equity:
  Common stock, no par value; 10,000,000 shares
    authorized; 3,639 shares issued and
    outstanding                                              1,000               1,000
  Retained earnings                                        635,593             514,695
                                                       -----------         -----------
          Total stockholders' equity                       636,593             515,695
                                                       -----------         -----------

          Total liabilities and stockholders' equity   $ 2,716,770         $ 2,639,030
                                                       ===========         ===========
</TABLE>

      See accompanying notes to these financial statements.

                               -2-

<PAGE>

                       MEDICINE MAN, INC.

         Statements of Operations and Retained Earnings

<TABLE>
<CAPTION>

                                          Eight Months Ended May 31,       Years Ended September 30,
                                        ----------------------------       ---------------------------
                                            2001           2000               2000          1999
                                        ------------   ------------        ------------   ------------
                                                (Unaudited)

                                     <c>            <c>                 <c>            <c>
Sales                                   $  8,471,072   $  8,662,285        $ 13,060,539   $ 11,536,747

Cost of Goods Sold                         6,941,714      7,293,460          10,828,863      9,826,105
                                        ------------   ------------        ------------  -------------

    Gross profit                           1,529,358      1,368,825           2,231,676      1,710,642

Selling, General and
  Administrative Expenses                  1,415,562      1,395,175           2,233,487      2,048,460

Depreciation Expense                          15,159         18,882              31,600         24,183
                                        ------------   ------------        ------------   ------------

Operating income (loss)                       98,637        (45,232)            (33,411)      (362,001)

Other Income, net                             22,261         34,515              55,317         65,933
                                        ------------   ------------        ------------   ------------

Net Income (Loss)                            120,898        (10,717)             21,906       (296,068)

Retained Earnings, beginning
   of period                                 514,695        492,789             492,789        788,857
                                        ------------   ------------        ------------   ------------

Retained Earnings, end of period        $    635,593   $    482,072        $    514,695   $    492,789
                                        ============   ============        ============   ============
</TABLE>

      See accompanying notes to these financial statements.

                               -3-


<PAGE>

                       MEDICINE MAN, INC.


              Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>

                                                  Eight Months Ended May 31,     Years Ended September 30,
                                                  --------------------------     --------------------------
                                                     2001           2000             2000          1999
                                                  -----------    -----------     -----------    -----------
                                                          (Unaudited)
(s)                                               <c>            <c>             <c>            <c>
Cash Flows From Operating Activities:
  Net income (loss)                               $   120,898    $   (10,717)    $    21,906    $  (296,068)
  Adjustments to reconcile net income (loss)
   to net cash provided by operating activities:
   Depreciation expense                                15,159         18,882          31,600         24,183
   Change in assets and liabilities:
     Trade accounts receivable                         38,734       (164,782)       (197,674)        81,748
     Inventory                                       (111,886)       107,862          74,364         37,722
     Prepaid expenses                                  38,754         (8,608)        (37,261)        34,299
     Other assets                                       1,029          1,028           1,542        (22,571)
     Accounts payable and other
       accrued liabilities                             (9,030)       741,770         694,788        261,677
                                                  -----------    -----------     -----------    -----------
          Net cash provided by operating
             activities                                93,658        685,435         589,265        120,990
                                                  -----------    -----------     -----------    -----------

Cash Flows From Investing Activities:
  Purchases of property and equipment                       -        (14,790)        (15,389)       (44,883)
  Other, net                                             (511)           121            (117)           219
                                                  -----------    -----------     -----------    -----------
          Net cash used in investing activities          (511)       (14,669)        (15,506)       (44,664)
                                                  -----------    -----------     -----------    -----------
Cash Flows From Financing Activities:
  Proceeds from notes payable and long-term
   debt                                                     -         35,327          61,140              -
  Principal payments on notes payable and
    long-term debt                                    (34,128)        (7,321)        (12,839)       (45,005)
                                                  -----------    -----------      -----------    -----------
          Net cash provided by (used in)
            financing activities                      (34,128)        28,006          48,301        (45,005)
                                                  -----------    -----------     -----------    -----------

Net Increase in Cash                                   59,019        698,772         622,060         31,321
Cash, beginning of period                             880,852        258,792         258,792        227,471
                                                  -----------    -----------     -----------    -----------
Cash, end of period                               $   939,871    $   957,564     $   880,852    $   258,792
                                                  ===========    ===========     ===========    ===========

</TABLE>

      See accompanying notes to these financial statements.



                               -4-


<PAGE>

                       MEDICINE MAN, INC.

                  NOTES TO FINANCIAL STATEMENTS

    (The Eight-Month Periods Ended May 31, 2001 and 2000 are
                           unaudited)

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     NATURE OF OPERATIONS - Medicine Man, Inc. (the "Company")
     operates four retail pharmacies primarily located in the
     Houston, Texas metropolitan area.

     INVENTORY - Inventory consists of finished goods held for
     resale and is valued at the lower of cost or market. Cost is
     determined by the first-in, first-out method.

     PROPERTY AND EQUIPMENT - Property and equipment is stated at
     cost less accumulated depreciation. Depreciation is computed
     using accelerated methods over the estimated useful lives,
     generally five to seven years, of the underlying assets.
     Leasehold improvements are amortized using the straight-line
     method over the life of the related lease agreement. The
     costs of repairs and maintenance are expensed as incurred.

     INCOME TAXES - The Company accounts for income taxes on the
     liability method under which the amount of deferred income
     taxes is based upon the tax effects of the differences
     between the financial and income tax bases of the Company's
     assets and liabilities at the balance sheet date based upon
     existing laws.

     REVENUE RECOGNITION AND CONCENTRATION OF CREDIT RISK - The
     Company recognizes revenue when sales transactions occur and
     products are delivered to the customer. Revenue is reported
     at the estimated net realizable amounts expected to be
     received from individuals, third party payers, institutional
     healthcare providers and others. A portion of the Company's
     sales is derived from various state and federal medical
     assistance programs that are affected by changes in payment
     criteria and are subject to legislative actions.

     The Company does not generally require collateral in
     connection with credit sales, but performs periodic
     evaluations of its customers' creditworthiness and believes
     the allowance for doubtful accounts is adequate.

     USE OF ESTIMATES - The preparation of the Company's
     financial statements in conformity with generally accepted
     accounting principles requires the Company's management to
     make estimates and assumptions that affect the amounts
     reported in these financial statements and accompanying
     notes. Actual results could differ from those estimates and
     the differences could be material. The most significant
     estimate in the accompanying financial statements is the
     allowance for doubtful accounts receivable.

                               -5-

<PAGE>

                       MEDICINE MAN, INC.

                  NOTES TO FINANCIAL STATEMENTS

    (The Eight-Month Periods Ended May 31, 2001 and 2000 are
                           unaudited)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (continued)
     -------------------------------------------------------

     UNAUDITED INTERIM INFORMATION - The accompanying financial
     information as of May 31, 2001 and for the eight-month
     periods ended May 31, 2001 and 2000 has been prepared by the
     Company without audit, pursuant to the rules and regulations
     of the Securities and Exchange Commission. The financial
     statements reflect all adjustments, consisting of normal
     recurring accruals which are, in the opinion of management,
     necessary to fairly present such information in accordance
     with generally accepted accounting principles.


2.   PROPERTY AND EQUIPMENT
     ----------------------

     Property and equipment consisted of the following:

                                          May 31,       September 30,
                                            2001            2000
                                        -----------     ------------
                                        (Unaudited)
     Fixtures and equipment             $   366,481     $   365,393
     Office furniture                        90,858          90,858
     Vehicle                                 41,334          43,835
                                        -----------     -----------
                                            498,673         500,086
     Less accumulated depreciation         (447,588)       (434,353)
                                        -----------     -----------
                                        $    51,085     $    65,733
                                        ===========     ===========







                               -6-


<PAGE>

                       MEDICINE MAN, INC.

                  NOTES TO FINANCIAL STATEMENTS

    (The Eight-Month Periods Ended May 31, 2001 and 2000 are
                           unaudited)


3.   DEBT
     ----

Long-term debt consisted of the following:

                                        May 31,      September
                                         2001         30, 2000
                                      -----------   -----------
                                      (Unaudited)
Note payable to a bank, interest at    $   17,684    $   22,361
9.5%, due in monthly principal and
interest payments of $701,
remaining unpaid principal and
accrued interest due November
2003, collateralized by the
Company's office equipment and
computers. The note is guaranteed
by a Company stockholder.
Unsecured notes payable to insurance            -        26,900
companies, with interest rates
ranging from 8% to 10% due in
monthly principal payments of
$3,603 until fully paid.
Note payable collateralized by a            3,516         6,067
vehicle, interest at 9.5%, due in
monthly principal and interest
payments of $333, maturing in
April 2002. The note is guaranteed
by a Company stockholder.              ----------    ----------
      Total notes payable and long-term    21,200        55,328
debt

     Less current portion                  (6,857)      (39,482)
                                       ----------   -----------
                                       $   14,343   $    15,846
                                       ==========   ===========

Aggregate maturities of long-term debt obligations at
September 30, 2000 are as follows:

          Years Ending September 30,
        ------------------------------
        2001                                    $    39,482
        2002                                          7,851
        2003                                          7,995
                                                -----------
                                                $    55,328
                                                ===========


                               -7-


<PAGE>

                       MEDICINE MAN, INC.

                  NOTES TO FINANCIAL STATEMENTS

    (The Eight-Month Periods Ended May 31, 2001 and 2000 are
                           unaudited)


4.   INCOME TAXES
     ------------

The Company has net operating loss ("NOL") carryforwards as of
September 30, 2000 totaling approximately $225,000, expiring in
various amounts through 2019. The ability of the Company to
utilize the carryforwards is dependent upon the Company
generating sufficient taxable income in the future.

The tax effect of significant temporary differences representing
deferred tax assets and liabilities are as follows:

                                               May 31,      September 30,
                                                 2001           2001
                                             -----------     ------------
                                             (Unaudited)
     NOL carryforwards                       $    35,000     $   76,500
     Financial basis of assets in
       excess of tax basis                        43,500         43,500
     Valuation allowance                         (78,500)      (120,000)
                                             -----------     ----------
          Net deferred tax balance           $         -     $        -
                                             ===========     ==========


The Company's taxable income for the eight months ended May 31,
2000 was offset by approximately $120,000 of the NOL carryforward
available from the prior year.


5.   COMMITMENTS AND CONTINGENCIES
     -----------------------------

     LEASES - The Company leases pharmacy from an affiliate under
     a lease agreement which expires in March 2002.  Monthly rental
     payments under the lease are $1,150.  The Company leases its
     other three pharmacies and general office space from an
     affiliate on a month-to-month basis pursuant to unwritten
     lease agreements. Rental expense under this operating
     lease was approximately $95,700, $98,200, $146,000 and
     $160,000 for the eight months ended May 31, 2001 and 2000
     and for the years ended September 30, 2000 and 1999,
     respectively.


     CONTINGENCIES - The Company is involved in various claims
     and legal actions arising in the ordinary course of
     business. In the opinion of management, the ultimate
     disposition of these matters will not have a material
     adverse effect on the Company's financial condition or
     results of operations.



                               -8-


<PAGE>

                       MEDICINE MAN, INC.

                  NOTES TO FINANCIAL STATEMENTS

    (The Eight-Month Periods Ended May 31, 2001 and 2000 are
                           unaudited)

6.   FAIR VALUE OF FINANCIAL INSTRUMENTS
     -----------------------------------

The Company's financial instruments primarily consist of accounts
receivable, accounts payable and notes payable. The carrying
amounts of these financial instruments approximate their fair
values because of their short-term nature, or in the case of the
notes payable, because the interest rates are similar to
prevailing market rates of interest.


7.   SUBSEQUENT EVENT
     ----------------

On December 1, 2000, the Company was forced into involuntary
bankruptcy by its primary supplier and affiliated companies. The
Company filed a petition for reorganization under Chapter 11 of
the United States Bankruptcy Code and began operating its
business as a debtor in possession under the supervision of the
Bankruptcy Court. Effective June 1, 2001, the Company sold its
business to Park Pharmacy Corporation ("Park") in an asset sale.
The Company was essentially liquidated at that time; however, the
corporation has not yet been dissolved. All of the Company's key
management personnel were subsequently hired by Park to manage
the four retail pharmacy locations that were sold to Park.


8.   401(K) PROFIT SHARING PLAN
     --------------------------

The Company has a 401(k) Profit Sharing Plan covering
substantially all full-time employees with one year of credited
service, as defined, and at least 20-1/2 years of age. The
Company's contribution to the Plan is a discretionary matching
contribution equal to a percentage of the amount of an employee's
elected deferred salary. Certain conditions apply to qualify for
matching contributions. For the years ended September 30, 2000
and 1999, profit-sharing expense amounted to approximately
$15,830 and $14,265, respectively. For the eight-month periods
ended May 31, 2001 and 2000, profit-sharing expense amounted to
approximately $10,226 and $10,451, respectively.










                               -9-