================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                     -------

                                    FORM 10-K

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


For the fiscal year ended March 31, 1999         Commission File Number 33-94322


                             WINFIELD CAPITAL CORP.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            NEW YORK                                              13-2704241
---------------------------------                            -------------------
  (State or other jurisdiction                                  (IRS employer
of incorporation or organization)                            identification no.)


237 MAMARONECK AVENUE, WHITE PLAINS, NEW YORK                        10605
---------------------------------------------                      ----------
  (Address of principal executive offices)                         (Zip Code)


       Registrant's telephone number, including area code: (914) 949-2600
                                                          ---------------


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

                                                           Name of each exchange
         Title of each class                                on which registered
         -------------------                                -------------------
Common Stock, par value $.01 per share ................    Boston Stock Exchange


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

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X] The aggregate market value of the voting stock held by
non-affiliates of the registrant as of June 21, 1999 was approximately
$96,965,000.

     The number of outstanding shares of the registrant's common stock as of
June 21, 1999 was 5,255,904 shares.

================================================================================


<PAGE>

                                     RISKS

     Pursuant to Section 64(b) of the Investment Company Act of 1940, we are
required to advise you annually that Winfield Capital Corp. (the "Company") is
engaged in a high risk business. Loans and other investments to small business
concerns are extremely speculative. Most of such concerns are privately held.
Even if a public market for the securities of such concerns exists, the loans
and other securities purchased by the Company are often restricted against sale
or other transfer for specified periods of time. Thus, such loans and other
investments have little, if any, liquidity, and the Company and you, as its
shareholders, must bear significantly larger risks, including possible losses on
such investments, than would be the case with traditional investment companies.

     In addition, the Company's capital structure includes a large amount of
debt securities, mostly debentures issued to the Small Business Administration
at fixed interest rates. Therefore, unless and until the Company is able to
invest all or substantially all of the proceeds from such debt securities at
interest or at other returns that substantially exceed the carrying costs of
such debt securities, its operating results will be adversely affected, and that
can be expected to have a depressant effect on the market value of the Company's
shares of common stock.



<PAGE>


                                     PART I

ITEM 1.  BUSINESS.

     Winfield Capital Corp. (the "registrant" or the "Company") was incorporated
as a New York corporation in 1972. It is a small business investment company
("SBIC") that was licensed by the Small Business Administration (the "SBA") in
1972 under the Small Business Investment Act of 1958, as amended (the "Small
Business Investment Act"). The Company is a non-diversified investment company
that has elected to be regulated as a business development company ("Business
Development Company"), a type of closed-end investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Company is
qualified as a "regulated investment company" for federal income tax purposes.
The Company's offices are located at 237 Mamaroneck Avenue, White Plains, New
York 10605. Its telephone number is (914) 949-2600.

     As an SBIC, the Company uses funds borrowed from the SBA, together with its
own capital, to provide loans to, and to make equity investments in,
independently owned and operated business concerns that (i) do not have a net
worth in excess of $18 million and do not have average net income after federal
income taxes for the preceding two years of more than $6 million, or (ii) meet
size standards set by the SBA that are measured by either annual receipts or
number of employees, depending on the industry in which such concerns are
primarily engaged ("Eligible Concerns"). The types and dollar amounts of the
loans and other investments the Company may make are limited by the 1940 Act,
the Small Business Investment Act and the regulations of the SBA (the "SBA
Regulations"). The SBA is authorized to examine the operations of the Company,
and the Company's ability to obtain funds from the SBA is also governed by the
Small Business Investment Act and the SBA Regulations.

     The Company has no independent investment advisor. The Company's loan and
other investment decisions are made by its officers, subject to the Company's
investment policies and objectives and oversight by its Board of Directors.
Historically, the Company has relied on the efforts of its officers to identify
new financing opportunities. Following its public offering late in 1995, the
Company expanded its marketing efforts and sought referrals from venture
capitalists, investment bankers, attorneys, accountants and commercial bankers.
Prior to its public offering, the Company's investments in portfolio companies
were generally structured as straight loans, or as loans with warrants to
purchase equity securities of the portfolio companies. After its public
offering, the Company has sought to make more investments in portfolio companies
with equity features than was the case heretofore. In connection with its loans
to portfolio companies with equity features, the Company has sought and will
continue to seek security interests in the assets of the borrower. To the extent
it deems necessary, the Company also seeks to obtain personal guaranties from
the principals of its borrowers and security interests in certain of the assets
of such principals.

CHARACTERISTICS OF THE COMPANY'S INVESTMENTS

     The Company invests in all kinds and classes of securities of portfolio
companies, including, but not limited to, notes and bonds; straight,
subordinated, convertible and income debentures; preferred stock; common stock;
and options and warrants to purchase any of the foregoing. The Company does not
have a policy that limits the amount that may be invested in any kind or class
of security, except that it intends to invest approximately one-third of its
assets in straight loans or debt securities and two-thirds of its assets in
loans or debt securities with equity features, such as conversion rights and
warrants, or in direct equity investments (common stock and preferred stock).

     When the Company's investments are structured as loans, they are evidenced
by promissory notes and often are accompanied by warrants to acquire equity
interests in the borrower for nominal consideration. The loans are usually
secured by assets of the borrower, which security interests frequently are
senior to any other financing the borrower may have in place. When appropriate,
a personal guaranty of a borrower's major stockholder or stockholders is sought,
which may also be secured by such stockholders' personal assets. The Company's
loans

                                       1


<PAGE>



typically have a fixed rate of interest subject to the maximum rate allowed by
the SBA (see "SBA Regulation" below), although lower rates may be negotiated
depending on the creditworthiness of the borrowers and other relevant factors.
Typically, such loans require periodic payments of principal and interest which
fully amortize the loan at maturity, and mature in five years. In addition, the
Company intends to pursue bridge loan opportunities as and to the extent
permitted by the SBA Regulations. The Company's current management believes that
the performance of its investment portfolio could be enhanced by increasing the
Company's equity investments, relative to its loan portfolio. Accordingly, the
Company's management now seeks more financing opportunities with equity
participation and more investments with equity features than were made by the
Company heretofore. There can be no assurance that the Company will find such
opportunities on terms favorable to the Company.

INVESTMENT OBJECTIVES AND STRATEGIES

     The Company seeks both current income and long-term growth in the value of
its assets. The Company's investments are made, and will continue to be made,
with the intention of having the loan repaid within five years and any equity
investment liquidated within 5 to 10 years. Situations may arise, however, where
the Company may hold an equity interest for a longer or shorter period.

     Prior to May 2, 1995, when there was a change in management of the Company,
the Company's investments were made primarily in very small local retail and
service businesses. Under its current management, the Company focuses on
investments in privately held Eligible Concerns in growing industries, including
Internet-enabled businesses, computer hardware and software and consumer
products. There can be no assurance that the Company will be able to locate
investments in such industries on terms favorable to it. The Company
concentrates its investments in the Northeastern United States, but will
consider investments in other parts of the country if they are otherwise
consistent with the Company's loan and other investment selection criteria.

     For the most part, the Company's existing portfolio companies are expansion
stage businesses, although some are start-up and development stage companies,
including some with negative net worth. Under the SBA Regulations, the Company
may not invest more than 20% of its "Private Capital" in any single company
without SBA approval. Under the Small Business Investment Act and the SBA
Regulations, "Private Capital" is defined as the total of paid-in capital, other
than capital obtained from federal sources, such as the SBA, and paid-in
surplus. Pursuant to current SBA Regulations, the Company is able to invest
approximately $2,200,000, or 20% of its Private Capital, in a single company. In
most instances, the Company participates in loans and other investments with
other investors. Through such participation, the Company has been able to become
a participant in transactions larger than would otherwise be possible under the
investment limit of 20% of its own Private Capital.

SELECTION OF LOAN AND OTHER INVESTMENT OPPORTUNITIES

     Given its objective to emphasize equity investments, the Company uses the
following criteria in selecting investment opportunities:

          Potentially Profitable Operations. The Company attempts to identify
     companies that are profitable or that it believes are potentially
     profitable.

          Development Stage Companies. The Company attempts to identify and
     invest in development stage companies, that is, companies with a product or
     service that is beyond the testing stage. The Company generally will avoid
     seed and start-up companies.

          Experienced Management Team. The Company seeks portfolio companies
     that have experienced management with a substantial ownership interest and
     a demonstrated ability, or the potential, to accomplish the objectives set
     forth in such companies' business plan.

                                       2


<PAGE>


          Liquidation Value of Assets. The Company is not an "asset-based"
     lender, however, the value of assets securing its loans is an important
     consideration in its credit decisions. Emphasis is placed on balance sheet
     assets such as inventory, plant, property and equipment.

          Growth. In addition to generating sufficient cash flow to service
     prospective loans, the Company requires that prospective portfolio
     companies have what management believes to be a good chance of achieving
     substantial annual growth.

          Exit Strategy. Another investment consideration is whether there is an
     opportunity to liquidate the investment in a potential portfolio company.
     Such opportunity generally would allow the Company to realize a gain on its
     equity interests and include public offerings, sales of the portfolio
     company or repurchases by the portfolio company of the Company's equity
     interests.

CERTAIN NON-COMPLIANCE BY PORTFOLIO COMPANIES

     Although the Company's agreements with its portfolio companies require them
to furnish the Company with periodic and/or annual financial statements and to
include financial and other covenants by its borrowers in its loan agreements,
certain of its portfolio companies fail to supply the financial statements or to
otherwise comply with the covenants required of them. The Company deals with
these failures on a case-by-case basis, and its actions are influenced by the
payment records of such companies.

     The aggregate face amount of the Company's loans and the value of other
portfolio investments was $20,797,145 as of March 31, 1999 with loans and notes
receivable comprising 26% (87% were performing in accordance with their terms
and 13% were non-performing), equity interests 69% and assets acquired in
liquidation of defaulted loans 5%.

WRITE-OFFS

     During the past three fiscal years, the Company has written off loans and
investments and disposed of, at a loss, assets acquired in liquidation, in the
aggregate amount of $825,439 as described in the following table:

<TABLE>
<CAPTION>

                                                                               YEAR ENDED MARCH 31,
                                                                         ----------------------------------
                                                                          1997          1998          1999
                                                                          ----          ----          ----
<S>                                                                      <C>           <C>          <C>
Amount written off .................................................     $68,950       $289,570     $466,919

Amount written off as a percentage of aggregate loans
  and investments and assets acquired in liquidation
  as of the beginning of the year ..................................         1.6%           6.2%         3.5%

</TABLE>

SBA FUNDING

     The Small Business Investment Act and the regulations thereunder provide
for the purchase by the SBA of subordinated debentures issued by SBICs and the
guaranty by the SBA of debentures issued by SBICs to third parties. An SBIC can
issue such debentures in a principal amount up to either 200% or 300% of its
Private Capital, depending upon various factors.

     Under the current SBA Regulations, the Company is considered to have, as of
March 31, 1999, Private Capital of approximately $11,000,000, which would enable
it to sell debentures to, or with a guaranty by, the SBA up to a maximum
principal amount of approximately $33,000,000 (300% of its Private Capital). The
Company's ability to sell such debentures is subject to the availability of SBA
program funds and other funding limitations and compliance with the SBA
Regulations. See "SBA Regulation" below.


                                       3


<PAGE>



     The SBA offers eligible SBICs the opportunity to sell "participating
securities" (preferred stock or debentures having interest payable only to the
extent of earnings) to the SBA or to entities that receive SBA guaranties in the
amount up to 200% of the SBIC's Private Capital. Although the Company has the
minimum amount of Private Capital necessary to be eligible for the SBA's
participating securities program (i.e., $10,000,000), the issuance of the
Debentures in the Company's public offering may disqualify the Company from
participating in the program under the provisions of the SBA Regulations and the
1940 Act. In addition, the Company believes that, to date, only partnerships
have been allowed to issue participating securities and that corporations may
not be allowed to issue participating securities.

SBA REGULATION

     SBICs, such as the Company, are licensed by the SBA as part of a program
designed to stimulate the flow of private debt and/or equity capital to
"Eligible Concerns" and "Smaller Concerns." Under current SBA Regulations and
the Small Business Investment Act, an independently owned and operated business
concern that does not have a net worth in excess of $18 million and does not
have average net income after federal income taxes for the preceding two years
of more than $6 million, or meets size standards set by the SBA that are
measured by either annual receipts or number of employees, depending on the
industry in which such concern is primarily engaged, is eligible to receive
financial assistance from an SBIC (hence, it is referred to in this Form 10-K as
an "Eligible Concern"). The SBA Regulations also define a "Smaller Concern,"
which is a concern with a net worth of $6 million or less and average annual net
profits after taxes of $2 million or less, or depending on the industry in which
the concern operates, meets criteria based on the number of its employees or its
annual receipts. Commencing with its fiscal year ended March 31, 1996, the
Company was required by the SBA Regulations to earmark at least 10% of its
financing to Smaller Concerns and in each subsequent fiscal year to earmark at
least 20% of its financing to Smaller Concerns.

     SBA Regulations place certain limitations on the terms of loans by SBICs.
The maximum maturity of these loans may not exceed 20 years and, subject to
certain exceptions, the minimum maturity is five years. A borrower from an SBIC
cannot be required during the first five years to repay, on a cumulative basis,
more principal than an amount calculated on a straight-line, five-year
amortization schedule. On straight loans (without equity features), an SBIC can
charge an interest rate up to 19% and on loans with equity features, an interest
rate up to 14%. Notwithstanding the above, an SBIC may charge more by first
computing a base rate using either the SBA debenture rate currently in effect
plus an applicable charge permitted by the SBA, or a base rate using the
weighted average cost of the SBIC's borrowings from the SBA and qualified third
party lenders such as banks. On loans with equity features, an SBIC may charge
interest equal to 6% above the base rate used and, in the case of a straight
loan, 11% interest above the base rate used.

     SBICs may invest directly in the equity of its portfolio companies.
However, they may not become a general partner of a non-incorporated entity or
otherwise become jointly or severally liable for the general obligations of a
non-incorporated entity. An SBIC may acquire options or warrants in its
portfolio companies. Such options and warrants may also have redemption
provisions, subject to certain restrictions. In general, however, SBICs may not
control a portfolio company. "Control", for this purpose, is defined as the
ownership (or control) of a 50% interest in the outstanding voting securities of
a portfolio company if it is held by fewer than 50 shareholders, or if there are
50 or more shareholders, a 20% to 25% interest (depending on the holdings of
other shareholders of the portfolio company).

     With certain limited exceptions, SBICs may not invest overseas, in real
estate or in passive businesses, that is, businesses which are not regular and
continuous.

REGULATION AS A BUSINESS DEVELOPMENT COMPANY

     The Company is a closed-end, non-diversified investment company that has
elected to be regulated as a Business Development Company under the 1940 Act
and, as such, is subject to regulation under that Act. Among other things, the
1940 Act contains prohibitions and restrictions relating to transactions between
the Company and its affiliates, principal underwriters and affiliates of those
affiliates or underwriters and requires that a majority of


                                       4


<PAGE>


the Company's directors be persons other than "interested persons," as defined
in the 1940 Act. In addition, the 1940 Act prohibits the Company from changing
the nature of its business so as to cease to be, or to withdraw its election as,
a Business Development Company unless so authorized by the vote of the holders
of a majority of its outstanding voting securities.

     A Business Development Company is permitted, under specified conditions, to
issue multiple classes of indebtedness and one class of stock senior to the
Company's common stock (collectively, "Senior Securities," as defined in the
1940 Act) if the asset coverage, as defined in the 1940 Act, of any Senior
Security is at least 200% immediately after each such issuance and certain other
conditions are met. On the other hand, because the Company is an SBIC, the only
asset coverage requirement applicable to it would give the holders of its Senior
Securities constituting indebtedness, including the Debentures, the right to
elect a majority of the Board of Directors, if on the last business day of each
of 12 consecutive calendar months, the Company failed to maintain at least 100%
asset coverage. Also, while Senior Securities constituting preferred stock are
outstanding (other than preferred stock issued to or guaranteed by the SBA),
provision must be made to prohibit any distributions to shareholders or the
repurchase of such securities or shares unless the applicable asset coverage
ratios are met at the time of the distribution or repurchase. The Company may
also borrow amounts from banks evidenced by notes not to be publicly distributed
or for temporary purposes if the borrowing does not exceed 5% of the value of
its total assets. A loan is presumed to be for temporary purposes if it is
repaid within sixty days and is not extended or renewed.

     Under the 1940 Act, a Business Development Company may not acquire any
asset, other than assets of the type listed in Section 55(a) of the 1940 Act
("Qualifying Assets") unless, when the acquisition is made, such Qualifying
Assets represent at least 70% of its total assets. The principal categories of
Qualifying Assets relevant to the business of the Company are the following:

     (1)  Securities purchased in transactions not involving any public offering
          from the issuer of such securities, which issuer is an eligible
          portfolio company. An "eligible portfolio company" is defined, in
          pertinent part, in the 1940 Act as any issuer which:

               (a)  is organized under the laws of, and has its principal place
                    of business in, the United States;

               (b)  is not an investment company other than another SBIC that is
                    wholly-owned by the Company;

               (c)  and does not have any class of securities with respect to
                    which margin credit may be extended under federal law.

     (2)  Securities of any eligible portfolio company which is controlled by
          the Business Development Company.

     (3)  Securities received in exchange for or distributed on or with respect
          to securities described in item (1) or (2) above, or pursuant to the
          exercise of options, warrants or rights relating to such securities.

     (4)  Cash, cash items, government securities, or high quality debt
          securities maturing in one year or less from the time of investment.

     In addition, a Business Development Company must have been organized (and
have its principal place of business) in the United States for the purpose of
making investments in the types of securities described in item (1) or (2) above
and, in order to count the securities as Qualifying Assets for the purpose of
the 70% test, the Business Development Company must either control the issuer of
the securities or make available to the issuer of the securities significant
managerial assistance. Making available significant managerial assistance means,
among other things, any arrangement whereby a Business Development Company,
through its directors, officers or employees, offers to provide, and, if
accepted, does so provide, significant guidance and counsel concerning the
management, operations or business objectives and policies of a portfolio
company; or in the case of an SBIC (such as the Company), making loans to a
portfolio company.


                                       5


<PAGE>


FUNDAMENTAL AND OTHER INVESTMENT POLICIES

     The Company's investment objectives are to achieve a high level of current
income from interest and long-term growth through equity interests in its
portfolio companies.

Fundamental Policies

     In making investments and managing its portfolio, the Company will adhere
to the following fundamental policies, which may not be changed without the
approval of the holders of 50% or more of the Company's outstanding voting
securities, or the holders of 67% or more of the Company's outstanding voting
securities present at a meeting of security holders at which holders of 50% or
more of such securities are present in person or by proxy:

     1. The Company will conduct its business so as to retain its status as an
SBIC and as a Business Development Company, and to qualify as a "regulated
investment company" (as defined under the Code). In order to retain its status
as an SBIC, the Company must limit its investments to Eligible Concerns and meet
the minimum financing obligations applicable to Smaller Concerns (see "SBA
Regulation"). In order to retain its status as a Business Development Company,
the Company may not acquire assets (other than non-investment assets necessary
and appropriate to its operations as a Business Development Company) if, after
giving effect to such acquisition, the value of its Qualifying Assets is less
than 70% of the value of its total assets. See "Regulation as a Business
Development Company". In order to qualify as a "regulated investment company,"
the Company is required, among other things, to diversify its holdings as
required under the Internal Revenue Code of 1986, as amended. The Company
qualified as a "regulated investment company" for the fiscal year ended March
31, 1999.

     2. The Company will not borrow money except through the issuance of its
subordinated debentures, other debentures ranking on an equal basis with its
subordinated debentures, the SBA Debentures and through one or more bank lines
of credit.

     3. The Company may issue preferred stock with such terms as the Board of
Directors may determine, subject to the requirements of the 1940 Act and the
Small Business Investment Act.

     4. The Company will not (i) act as an underwriter of securities (except to
the extent it may be deemed to be an "underwriter" as defined in the Securities
Act of 1933, as amended (the "Securities Act") of securities purchased by it in
private transactions), (ii) purchase or sell real estate or interests in real
estate or real estate investment trusts (except that the Company may acquire
real estate which collateralizes its loans or guaranties of its loans upon
defaults of such loans and may dispose of such real estate as and when market
conditions permit), (iii) sell securities short, (iv) purchase securities on
margin (except to the extent that the registrant may be deemed to have done so
as a result of its acquisition of securities in connection with loans made to
portfolio companies which are funded with borrowed money), or (v) purchase or
sell commodities or commodity contracts, including futures contracts (except
where necessary in working out distressed loans or investments).

     5. The Company may write or buy put or call options in connection with
loans to, and other investments in, portfolio companies, or rights to require
the issuer of such securities to repurchase such loans and other investments
under certain circumstances.

     6. The Company has no policy with respect to concentration of investments
in a particular company, industry or groups of industries, except that it will
not loan money to, or invest in, any company if such loan or investment exceeds
20% of the Company's Private Capital, without SBA approval.

     7. The Company may make straight loans and loans with equity features to
the extent permitted under the Small Business Investment Act and the 1940 Act.

                                       6


<PAGE>

Other Investment Policies

     The Company's investment policies described below are not fundamental
policies, and may be changed, subject to the Small Business Investment Act and
the SBA Regulations, by the Company's Board of Directors without shareholder
approval:

     1. Except for subsidiaries organized by the Company to hold assets acquired
in foreclosures of defaulted loans, the Company will not acquire (i) 50% or more
of the outstanding voting securities of any issuer held by fewer than 50
shareholders, (ii) 25% or more of the outstanding voting securities of any
issuer having 50 or more shareholders, or (iii) 20% or more of the outstanding
voting securities of any issuer having 50 or more shareholders if, as a result
of such acquisition, the Company would hold a number of voting securities equal
to or greater than the largest other holding of such securities.

     2. The Company will not invest in companies for the purpose of controlling
management of such companies.

     3. The Company will not invest in finance companies, foreign companies,
passive businesses or real estate companies, except as permitted by the SBA.

     4. The Company has no policy with respect to portfolio turnover. Moreover,
because borrowers have certain prepayment rights pursuant to SBA Regulations,
the Company cannot control or predict the frequency of portfolio turnover.

     5. Pending the investment of its funds in Eligible Concerns (including
Smaller Concerns) or as otherwise permitted by the SBA, the Company may invest
its funds in direct obligations of, or obligations guaranteed as to principal
and interest by, the United States which mature in 15 months or less, repurchase
agreements with federally insured institutions with respect to such obligations
which mature in seven days or less, or certificates of deposit issued by a
qualified federally insured institution which mature in one year or less, or
will be deposited in a qualified federally insured institution in accounts which
may be subject to withdrawal restrictions not to exceed one year.

COMPETITION

     Many entities, including banks, lending companies (including other SBICs),
venture capital funds and other sources of capital, compete for loan
originations and investments similar to those made by the Company. The Company's
competition is not limited to entities that operate in the same geographical
area as the Company, as many of the Company's competitors operate throughout the
United States. Furthermore, competition for loan origination has increased as
the financial strength of the banking community has improved over the last few
years. Many of the Company's competitors have far greater financial and
personnel resources than the Company. In addition, many other SBICs use
professional investment advisors to seek and evaluate potential investments. The
Company does not have an independent investment advisor nor does it intend to
retain one.

FACILITIES; PERSONNEL

     The Company operates from rented quarters, consisting of approximately
2,000 square feet, located in a four story office building under a lease
expiring in November 2002. The lease is cancelable at the Company's option on 90
days prior written notice. Management considers that such quarters will be
adequate for the near term for the conduct of the Company's business. The
Company maintains its investment and business records at its executive offices.

     As of June 21, 1999, the Company had four full-time employees (three of
whom are Messrs. Paul A. Perlin, Chief Executive Officer, David Greenberg,
Managing Director, and R. Scot Perlin, Chief Financial Officer, and one of whom
handles clerical matters). In addition to its salaried employees, the Company
has from time to time


                                       7


<PAGE>

engaged the services of independent consultants as and when needed. The Company
considers its relations with employees to be satisfactory.

LEGAL PROCEEDINGS

     From time to time in the ordinary course of business, the Company initiates
legal proceedings against borrowers in default and, where warranted, their
guarantors to seek payment of loan obligations and to take possession of
collateral. In the latter instances, these proceedings are sometimes followed by
court authorized liquidations. All such proceedings require outside counsel with
attendant professional fees and expenses.

     The Company has never been named as a defendant in any material litigation.


ITEM 2.  PROPERTIES.

     For a description of the Company's loans and other investments as of March
31, 1999 and March 31, 1998 see Pages F-19 to F-23.


ITEM 3.  LEGAL PROCEEDINGS.

         Not applicable.


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

         Not applicable.


                                       8


<PAGE>


                                     PART II


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

     The registrant's common stock trades in the NASDAQ SmallCap Market under
the symbol, "WCAP". The registrant's common stock is listed on the Boston Stock
Exchange under the symbol, "WNF", but there has been no meaningful trading of
such securities on that Exchange since the registrant's initial public offering,
which was made on October 26, 1995. The warrants issued in connection with the
Company's initial public offering traded in the NASDAQ SmallCap Market and were
listed on the Boston Stock Exchange under the symbols "WCAPW" and "WNFW",
respectively. The reported high and low bid quotations for the registrant's
common stock and warrants on the NASDAQ SmallCap Market from April 1, 1997 to
June 21, 1999 were as follows:

<TABLE>
<CAPTION>

                                                    COMMON STOCK                       WARRANTS
                                               ---------------------            ----------------------
                                                HIGH            LOW             HIGH             LOW
                                               ---------------------            ----------------------
<S>                                            <C>           <C>               <C>             <C>
April 1 - June 30, 1997 .................      1.9375         1.125            .625            .1875
July 1 - September 30, 1997 .............      1.4375         1.1875           .1875           .0625
October 1 - December 31, 1997 ...........      1.4375          .625            .0625           .0625
January 1 - March 31, 1998 ..............      1.3125          .875              *               *
April 1- June 30, 1998 ..................      1.625          1.00               *               *
July 1 - September 30, 1998 .............      8.50           1.375              *               *
October 1 - December 31, 1998 ...........      7.125          1.5625             *               *
January 1 - March 31, 1999 ..............     20.25           6.25               *               *
April 1 - June 21, 1999 .................     50.00          18.0625             *               *

</TABLE>

---------------

*  These warrants expired according to their terms on October 25, 1997.


     The foregoing quotations reflect inter-dealer prices, without retail
markup, markdown or commission, and do not necessarily represent actual
transactions.

     As of June 21, 1999, the Company estimates that its shares of common stock
are held by approximately 3,100 beneficial holders.


ITEM 6.  SELECTED FINANCIAL DATA.

     See Summary of Financial Information for the years ended March 31, 1999,
1998, 1997, 1996 and 1995 on the following page:


                                       9

<PAGE>

<TABLE>

                                                  WINFIELD CAPITAL CORP.

                                             SUMMARY OF FINANCIAL INFORMATION

<CAPTION>

                                                                               YEARS ENDED MARCH 31,
                                                      ----------------------------------------------------------------------
                                                          1999        1998             1997           1996         1995
                                                      -----------  -------------    -----------   -----------   ------------
<S>                                                   <C>           <C>             <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA
   Total investment income                            $   839,897   $  1,118,127    $ 1,436,957   $   599,537   $   290,972
   Total investment expenses                          $ 2,052,031   $  1,844,342    $ 1,731,499   $   995,985   $   674,903
   Net realized gains (losses) on disposition of
     investments                                      $   740,829   $  (184,206)    $    57,349   $    77,550   $  (26,926)
   Unrealized appreciation (depreciation)
     on loans and investments                         $25,323,076   $(1,074,053)    $   581,745   $ (133,195)   $ (120,000)
   Net income (loss)                                  $24,851,771   $(1,984,474)    $   344,552   $ (452,093)   $ (530,857)
   Earnings (loss) per share                          $      4.95   $      (.40)    $       .07   $     (.13)   $     (.90)
   Weighted average number of
     shares outstanding                                 5,023,361      5,023,361      5,023,361     3,484,630       591,608

OTHER OPERATING DATA
   Number of loans and other investments
     outstanding at end of period                              52             46             42            43            51
   Number of loans and other investments
     originated                                                13             16              7            3              3
   Principal amount of loans and other
     investments originated                           $ 9,420,696   $ 11,314,223    $ 3,959,335   $ 1,157,090   $   287,115
   Investment expenses as a percentage
     of average net assets                                   8.1%          19.5%          16.6%         19.3%        216.0%

BALANCE SHEET DATA
   Loans and investment portfolio
     including assets acquired in
     liquidation                                      $45,311,218   $ 13,364,711    $ 4,908,905   $ 3,977,593   $ 3,724,118
   Total assets                                       $50,128,912   $ 18,233,115    $20,748,682   $15,852,084   $ 4,448,322
   SBA debentures                                     $15,300,000   $  8,300,000    $ 8,900,000   $ 4,500,000   $ 3,750,000
   Common stock (including additional
     paid-in capital)                                 $ 9,264,680   $  9,492,599    $10,901,063   $10,901,063   $ 1,250,000
   Realized retained earnings (deficit)               $ (301,434)   $   (58,048)    $ (556,091)   $ (318,898)   $(1,019,450)
   Total shareholders' equity                         $33,477,319   $  8,625,548    $10,610,022   $10,265,470   $    47,050
</TABLE>

                                       10

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

        Years Ended March 31, 1999, 1998 and 1997

INVESTMENT INCOME

     Investment income decreased by $278,230 from $1,118,127 for the year ended
March 31, 1998 to $839,897 for the year ended March 31, 1999, a decrease of
24.9%. This reflected principally $326,692 in decreased interest earned from
temporarily invested funds as a result of the Company's investments originated
(mostly non-income producing equity investments) and lower prevailing interest
rates. This was partially offset by increases in other income of $12,843,
reflecting higher earnings on commitment fees, interest from small business
concerns of $23,258 and loan processing fees of $12,361.

     The Company's investment income decreased by $318,830 from $1,436,957 for
the year ended March 31, 1997 to $1,118,127 for the year ended March 31, 1998, a
decrease of 22.2%. This reflected principally $175,036 in decreased interest
earned from temporarily invested funds as a result of the Company's investments
originated (mostly non-income producing equity investments) and lower prevailing
interest rates. There was also a decrease in earnings from loan processing fees
and other income of $107,938 and $53,668, respectively, with the former
reflecting the higher percentage of new equity versus loan investments. There
are often no processing fees or commitment fees on equity investments.

INTEREST EXPENSE

     Interest expense increased by $62,229 from $814,309 for the year ended
March 31, 1998 to $876,538 for the year ended March 31, 1999 due to the
increased indebtedness of $7,000,000 to the SBA. Interest expense increased by
$33,663 from $780,646 for the year ended March 31, 1997 to $814,309 for the year
ended March 31,1998, due to the increased indebtedness of $5,000,000 to the SBA
partially offset by the repayment of $600,000 to the SBA on September 1, 1997.

OPERATING EXPENSES

     The Company's operating expenses consist of employee compensation and
benefits, rent, insurance, professional and consulting fees, marketing and
investment solicitation expenses and losses on loans receivable and assets
acquired in liquidation. The Company's operating expenses increased from
$1,030,033 for the year ended March 31, 1998 to $1,175,493 for the year ended
March 31, 1999, primarily as a result of an increase in professional fees of
$152,200 and smaller increases in depreciation and amortization of $18,839,
other operating costs of $7,405 and payroll and payroll related expenses of
$4,145. These increases were partially offset by a decrease in general and
administrative expenses of $37,129. The Company's operating expenses increased
from $950,853 for the year ended March 31, 1997 to $1,030,033 for the year ended
March 31, 1998, primarily as a result of increases in payroll and payroll
related expenses of $51,450 and in professional fees of $36,135.

                                       11


<PAGE>


REALIZED GAINS OR LOSSES ON EQUITY INVESTMENTS

     The Company realizes gains or losses on its equity investments or rights to
acquire equity investments upon the disposition or write-offs thereof. The
realized gain for the year ended March 31, 1999 of $740,829 primarily reflected
gains on equity securities of $1,213,016 principally offset by write-offs
totaling $466,919 and lesser miscellaneous net participant payments of $5,268.
The realized loss for the year ended March 31, 1998 of $184,206 included losses
on assets acquired in liquidation, write-offs and write-downs totaling $289,570
partially offset by a gain on the sale of equity and other portfolio assets
totaling $105,364.

UNREALIZED APPRECIATION OR DEPRECIATION OF LOANS AND INVESTMENTS.

     As an investment company, the Company evaluates its investment portfolio
periodically to determine the fair value of the portfolio and, accordingly, does
not maintain an allowance for loan losses similar to commercial banks. Any
change in the fair value of loans and other investments is reflected in
unrealized appreciation or depreciation of loans and investments, but has no
impact on net investment income. There was unrealized appreciation on loans and
investments of $25,323,076 for the year ended March 31, 1999 (principally
reflecting the market price of equity investments in two publicly traded
portfolio companies) compared with unrealized depreciation of $1,074,053 for the
year ended March 31, 1998 and unrealized appreciation of $581,745 for the year
ended March 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

     In January 1998, the Company paid a non-refundable commitment fee of
$100,000 to the SBA to reserve $10,000,000 of SBA guaranteed debentures through
September 2002. During the year ended March 31, 1999, the Company drew down
$7,000,000 of such debentures bearing an interest rate of 6.24% per annum.

     At March 31, 1999, the Company had cash and short-term bank money market
investments totaling $3,427,719. Subsequent to March 31, 1999, the Company drew
down an additional $3,000,000 of SBA debentures and received a proposal for a
$5,000,000 line of credit from Imperial Bank. The Company believes that its cash
and short-term investments, along with its remaining SBA funding commitment,
possible use of a bank line of credit and its ability to sell certain of its
publicly traded portfolio investments will be adequate to meet both the
investment opportunities that the Company anticipates and its working capital
needs through March 31, 2000.

NEWLY ISSUED ACCOUNTING STANDARDS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." SFAS No. 133 establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value.
SFAS No. 133 is effective for all quarters of fiscal years beginning after June
15, 2000. Management does not believe that the adoption of SFAS No. 133 will
have a material effect on the Company's financial statements and results of
operations.

YEAR 2000

     Many computer software systems in use today cannot properly process
date-related information from and after January 1, 2000. This is not an exposure
for the Company since it does not currently rely on any particular software
program to track either its investment portfolio or to provide accounting
functions. In addition, the Company has inquired of its commercial banks and
other service providers as well as of its major portfolio companies to determine
if they will be prepared for the Year 2000. While all have indicated they are
taking the

                                       12


<PAGE>

necessary steps to be in compliance, there can be no assurance that all exposure
will be eliminated. It is anticipated that the Company will incur no material
expenses related to the Year 2000 issue.



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

                                                                PAGE
                                                                ----
Report of Independent Accountants ...........                   F-1
Balance Sheets ..............................                   F-2
Statements of Operations ....................                   F-3
Statements of Shareholders' Equity ..........                   F-4
Statements of Cash Flows ....................                   F-5
Financial Highlights (Per Share Data
   and Ratios/Supplemental Data) ............                   F-6
Notes to Financial Statements ...............      F-7 through F-18
Portfolio of Investments .................... F-19 through and F-23


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

        None.


                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Incorporated by reference to the registrant's definitive proxy statement to
be filed not later than 120 days after March 31, 1999.


ITEM 11. EXECUTIVE COMPENSATION.

     Incorporated by reference to the registrant's definitive proxy statement to
be filed not later than 120 days after March 31, 1999.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     Incorporated by reference to the registrant's definitive proxy statement to
be filed not later than 120 days after March 31, 1999.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     Incorporated by reference to the registrant's definitive proxy statement to
be filed not later than 120 days after March 31, 1999.

                                       13

<PAGE>

                                     PART IV


ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

          (a)  Financial Statements:

               See Item 8 of Part II hereof.

          (b)  Financial Statement Schedules: The schedules specified under
               Regulation S-X are either included elsewhere in this Form 10-K,
               not applicable or are immaterial to the Company's financial
               statements for each of the three years in the period ended March
               31, 1999.

          (c)  Exhibits:

               3(A). Certificate of Incorporation, as amended, incorporated by
                     reference to Exhibit 1(A) to the registrant's registration
                     statement in SEC File No. 33-94322.

               3(B). Certificate of Amendment of Certificate of Incorporation,
                     incorporated by reference to Exhibit 1(B) to the
                     registrant's registration statement in SEC File No.
                     33-94322.

               3(C). By-laws, as amended, incorporated by reference to Exhibit 2
                     to the registrant's registration statement in SEC File No.
                     33-94322.

               4(A). Warrant Agreement, including Form of Warrant, incorporated
                     by reference to Exhibit 3(B) to the registrant's
                     registration statement in SEC File No. 33-94322.

               4(B). Form of Debenture incorporated by reference to Exhibit 3(C)
                     to the registrant's registration statement in SEC File No.
                     33-94322.

               4(C). Agency Agreement for the Debentures, incorporated by
                     reference to Exhibit 3(D) to the registrant's registration
                     statement in SEC File No. 33-94322.

               10(A). Indemnification Agreement, incorporated by reference to
                      Exhibit 4 to the registrant's registration statement in
                      SEC File No. 33-94322.

               10(B). Stock Option Plan, incorporated by reference to Exhibit 5
                      to the registrant's registration statement in SEC File No.
                      33-94322.

               10(C). Registrant's License from SBA, incorporated by reference
                      to Exhibit 6 to the registrant's registration statement in
                      SEC File No. 33-94322.

               10(D). Stock Purchase Agreement dated as of August 25, 1994, as
                      amended, incorporated by reference to Exhibit 7 to the
                      registrant's registration statement in SEC File No.
                      33-94322.

            10(E)(1). Employment Agreement with Paul A. Perlin, incorporated
                      by reference to Exhibit 8(A) to the registrant's
                      registration statement in SEC File No. 33-94322.

            10(E)(2). Stock Option Agreement with Paul A. Perlin,
                      incorporated by reference to Exhibit 8(B) to the
                      registrant's registration statement in SEC File
                      No. 33-94322

                                       14

<PAGE>


              10(G). Employment Agreement with David Greenberg, incorporated by
                     reference to Exhibit 9(C) to the registrant's registration
                     statement in SEC File No. 33-94322.

              10(H). Lock-up Agreement with Officers and Directors,
                     incorporated by reference to Exhibit 9(D) to the
                     registrant's registration statement in SEC File No.
                     33-94322.

              10(I). Employment Agreement with Paul A. Perlin, dated June 24,
                     1999 as of November 1, 1998.

              10(J). Employment Agreement with David Greenberg, dated June 24,
                     1999 as of November 1, 1998.

               11.  Statement of Computation of Earnings (Loss) Per Share.

               12.  Letter of Joel Popkin & Company, P.C. to the Securities and
                    Exchange Commission dated June 5, 1997, incorporated by
                    reference to Item 7. (c) Exhibit 1 to the registrants's
                    Current Report on Form 8-K dated June 5, 1997 in SEC File
                    No. 33-94322.

               27.  Financial Data Schedule.


(d)  No reports on Form 8-K were filed during the fourth quarter of the
     registrant's fiscal year ended March 31, 1999.


                                       15


<PAGE>



                                   SIGNATURES

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


                                    WINFIELD CAPITAL CORP.


Dated:  June 25, 1999               By: /s/  PAUL A. PERLIN
                                        ----------------------------------------
                                             PAUL A. PERLIN
                                             CHAIRMAN OF THE BOARD


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


Dated:  June 25, 1999               By: /s/ PAUL A. PERLIN
                                        ----------------------------------------
                                         PAUL A. PERLIN
                                         CHAIRMAN OF THE BOARD
                                         (CHIEF EXECUTIVE OFFICER) AND DIRECTOR


Dated:  June 25, 1999               By: /s/ R. SCOT PERLIN
                                        ---------------------------------------
`                                           R. SCOT PERLIN
                                            (CHIEF FINANCIAL OFFICER &
                                            CHIEF ACCOUNTING OFFICER) AND
                                            DIRECTOR


Dated:  June 25, 1999               By: /s/ DAVID GREENBERG
                                        ----------------------------------------
                                            DAVID GREENBERG
                                            MANAGING DIRECTOR AND DIRECTOR


Dated:  June 25, 1999               By: /s/ BRUCE A. KAUFMAN
                                        ----------------------------------------
                                            BRUCE A. KAUFMAN
                                            DIRECTOR


Dated:  June 25, 1999               By: /s/ JOEL I. BARAD
                                        ----------------------------------------
                                            JOEL I. BARAD
                                            DIRECTOR


Dated:  June 25, 1999               By: /s/ BARRY J. GORDON
                                        ----------------------------------------
                                            BARRY J. GORDON
                                            DIRECTOR


Dated:  June 25, 1999               By: /s/ ALLEN L. WEINGARTEN
                                        ---------------------------------------
                                            ALLEN L. WEINGARTEN
                                            DIRECTOR

                                       16

<PAGE>



                          INDEX TO FINANCIAL STATEMENTS

               ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                                                                       PAGE
                                                                     ---------


Report of Independent Accountants                                      F-1

Balance Sheets
(At March 31, 1999 and 1998)                                           F-2

Statements of Operations
(For each of the three years in the period ended March 31, 1999)       F-3

Statements of Changes in Shareholders' Equity
(For each of the three years in the period ended March 31, 1999)       F-4

Statements of Cash Flows
(For each of the three years in the period ended March 31, 1999)       F-5

Financial Highlights                                                   F-6
  Per Share Data
  (For the years ended March 31, 1999 and 1998)
  Ratios/Supplemental Data
  (For the years ended March 31, 1999 and 1998)

Notes to Financial Statements                                        F-7-F-18

Portfolio of Investments                                             F-19-F-23





<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders
of Winfield Capital Corp.
(A Small Business Investment Company licensed by
the U.S. Small Business Administration):

We have audited the accompanying balance sheets of Winfield Capital Corp. as of
March 31, 1999 and 1998, including portfolio of investments as of March 31, 1999
and 1998 and the related statements of operations, of changes in shareholders'
equity and of cash flows for each of the three years in the period ended March
31, 1999 and the financial highlights for the periods indicated thereon. These
financial statements and financial highlights are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included verification of investments owned as of
March 31, 1999 and 1998 by examination. 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 and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Winfield Capital Corp. as of March 31, 1999 and March 31, 1998, and the results
of its operations and its cash flows for each of the three years in the period
ended March 31, 1999 and the financial highlights for the periods indicated
thereon, in conformity with generally accepted accounting principles.


/s/PRICEWATERHOUSECOOPERS





New York, NY
June 11, 1999

                                      F-1
<PAGE>


                             WINFIELD CAPITAL CORP.

                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                                         MARCH 31,
                                                                                ----------------------------
                                   ASSETS:                                          1999            1998
                                                                                ------------    ------------
<S>                                                                             <C>             <C>
Investments, at value:
 Loans and notes receivable (cost: $5,327,319 and $6,948,875,
  respectively)                                                                 $  5,134,357    $  6,598,875
 Equity interests in small business concerns (cost:  $14,342,312 and
  $5,758,404, respectively)                                                       39,954,775       6,051,901
 Assets acquired in liquidation (cost:  $1,127,514 and $1,466,435,
  respectively)                                                                      222,086         713,935
                                                                                ------------    ------------

    Total investments                                                             45,311,218      13,364,711

Cash                                                                               3,427,719         848,777
Short-term marketable securities                                                        --         3,462,587
Accrued interest receivable                                                          135,007         164,556
Receivable from broker                                                               782,624            --
Furniture and equipment (net of accumulated depreciation of $74,827
  and $68,250, respectively)                                                          12,797          18,615
Other assets (principally deferred debenture costs)                                  459,547         373,869
                                                                                ------------    ------------

   Total assets                                                                 $ 50,128,912    $ 18,233,115
                                                                                ============    ============

                    LIABILITIES AND SHAREHOLDERS' EQUITY:

Debentures payable to the U.S. Small Business Administration                    $ 15,300,000    $  8,300,000
Subordinated debentures payable                                                    1,024,340         983,502
Accrued expenses                                                                     302,958         279,162
Deferred income                                                                       24,295          44,903
                                                                                ------------    ------------

   Total liabilities                                                              16,651,593       9,607,567
                                                                                ------------    ------------

Commitments and contingencies (Note 7)

 Shareholders' equity:
 Preferred stock - .001 par value; Authorized - 1,000,000 shares Issued and
  outstanding - none
 Common stock - $.01 par value; Authorized - 10,000,000
  shares; Issued and outstanding - 5,023,361 shares at March 31, 1999
  and 1998                                                                            50,234          50,234
 Additional paid-in capital                                                        9,214,446       9,442,365
 Accumulated deficit (dated May 2, 1995)                                            (301,434)        (58,048)
 Unrealized appreciation (depreciation) on investments, net                       24,514,073        (809,003)
                                                                                ------------    ------------
   Total shareholders' equity                                                     33,477,319       8,625,548
                                                                                ------------    ------------

   Total liabilities and shareholders' equity                                   $ 50,128,912    $ 18,233,115
                                                                                ============    ============
</TABLE>

    The accompanying notes are an integral part of the financial statements.



                                      F-2
<PAGE>




                             WINFIELD CAPITAL CORP.

                            STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                       MARCH 31,
                                                      --------------------------------------------
                                                          1999            1998            1997
                                                      ------------    ------------    ------------
<S>                                                   <C>             <C>             <C>
Investment income:
 Interest from small business concerns                $    580,525    $    557,267    $    539,455
 Interest from invested idle funds                         193,139         519,831         694,867
 Loan processing fees                                       51,408          39,047         146,985
 Other income                                               14,825           1,982          55,650
                                                      ------------    ------------    ------------

   Total investment income                                 839,897       1,118,127       1,436,957
                                                      ------------    ------------    ------------

Expenses:
 Interest                                                  876,538         814,309         780,646
 Payroll and payroll related expenses                      530,285         526,140         474,690
 General and administrative expenses                       225,551         262,680         259,043
 Professional fees                                         341,624         189,424         153,289
 Depreciation and amortization                              48,610          29,771          19,933
 Other operating costs                                      29,423          22,018          43,898
                                                      ------------    ------------    ------------

   Total investment expenses                             2,052,031       1,844,342       1,731,499
                                                      ------------    ------------    ------------

   Investment loss - net                                (1,212,134)       (726,215)       (294,542)
                                                      ------------    ------------    ------------

Realized gain (loss) on investments                        740,829        (184,206)         57,349

Change in unrealized appreciation (depreciation) of
 investments                                            25,323,076      (1,074,053)        581,745
                                                      ------------    ------------    ------------

   Gain (loss) on investments, net                      26,063,905      (1,258,259)        639,094
                                                      ------------    ------------    ------------

   Net increase (decrease) in shareholders'
    equity resulting from operations                  $ 24,851,771    $ (1,984,474)   $    344,552
                                                      ============    ============    ============

Per share net increase (decrease) in shareholders'
 equity resulting from operations

  Basic                                               $       4.95    $      (0.40)   $       0.07
                                                      ============    ============    ============
  Diluted                                             $       4.54    $      (0.40)   $       0.07
                                                      ============    ============    ============
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                      F-3
<PAGE>


                             WINFIELD CAPITAL CORP.

                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>

                                                                           ACCUMULATED (DEFICIT)
                                                                       ----------------------------    UNREALIZED
                                   COMMON STOCK            ADDITIONAL  UNDISTRIBUTED   NET UNDISTRI-  APPRECIATION
                            ----------------------------    PAID-IN    NET INVESTMENT BUTED REALIZED (DEPRECIATION) ON
                               SHARES          AMOUNT       CAPITAL        INCOME      GAIN/(LOSS)    INVESTMENTS-NET     TOTAL
                            ------------    ------------  ------------  ------------   ------------    ------------    ------------

<S>                            <C>          <C>           <C>           <C>           <C>              <C>             <C>
Balance - April 1, 1996        5,023,361    $     50,234  $ 10,850,829  $   (318,898)                  $   (316,695)   $ 10,265,470

Net increase in
 shareholders'
 equity resulting
 from operations                                                            (237,193)                       581,745         344,552
                            ------------    ------------  ------------  ------------   ------------    ------------    ------------

Balance - March 31, 1997       5,023,361          50,234    10,850,829      (556,091)                       265,050      10,610,022

Net decrease in
 shareholders'
 equity resulting
 from operations                                                            (726,215)      (184,206)     (1,074,053)     (1,984,474)

Reclassification
 pursuant to SOP 93-2
 as described in Note 2                                     (1,408,464)    1,282,306        126,158
                            ------------    ------------  ------------  ------------   ------------    ------------    ------------

Balance - March 31, 1998       5,023,361          50,234     9,442,365             0        (58,048)       (809,003)      8,625,548

Net increase in
 shareholders'
 equity resulting
 from operations                                                          (1,212,134)       740,829      25,323,076      24,851,771

Reclassification
 pursuant to SOP 93-2
 as described in Note 2                                       (227,919)    1,211,148       (983,229)
                            ------------    ------------  ------------  ------------   ------------    ------------    ------------

Balance - March 31, 1999       5,023,361    $     50,234  $  9,214,446  $       (986)  $   (300,448)   $ 24,514,073    $ 33,477,319
                            ============    ============  ============  ============   ============    ============    ============
</TABLE>



    The accompanying notes are an integral part of the financial statements.


                                      F-4
<PAGE>

                             WINFIELD CAPITAL CORP.

                            STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                     YEARS ENDED MARCH 31,
                                                           --------------------------------------------
                                                               1999            1998            1997
                                                           ------------    ------------    ------------
<S>                                                        <C>             <C>             <C>
Operating activities:
 Net increase (decrease) in shareholders' equity
  resulting from operations                                $ 24,851,771    $ (1,984,474)   $    344,552
 Adjustments to reconcile net increase (decrease)
  in shareholders' equity resulting from operations
  to net cash used in operating activities:
   Realized loss (gain) on investment                          (740,829)        184,206         (57,349)
   Dividend reinvested                                                             (159)
   Amortization of discount                                      40,838          40,837          40,837
   Change in unrealized (appreciation)
    depreciation on investments                             (25,323,076)      1,074,053        (581,745)
   Depreciation and amortization of fixed assets                  6,577           6,433           3,671
   Amortization of debenture costs                               70,762          52,067          45,016
   (Increase) decrease in accrued interest receivable            29,549         (92,468)          4,636
   Decrease in other assets                                      18,559          (6,724)            269
   Increase in deferred income                                  (20,608)         44,903
   Increase (decrease) in accrued expenses                       23,796         (16,833)        140,659
                                                           ------------    ------------    ------------
   Net cash used in operating activities                     (1,042,661)       (698,159)        (59,454)
                                                           ------------    ------------    ------------

Investing activities:
 Purchases of short-term marketable securities               (1,201,919)     (4,845,368)    (14,683,274)
 Proceeds from the maturity of short-term marketable
  securities                                                  4,664,506      13,491,055      10,706,149
 Cost of assets acquired in liquidation                          (6,500)
 Proceeds from sale of equity interests                         377,907         105,198         376,299
 Investments originated                                      (9,420,696)    (11,314,223)     (3,959,335)
 Proceeds from collection of loans                            2,187,485       1,508,598       3,290,817
 Acquisition of fixed assets                                       (759)        (13,199)         (6,199)
 Proceeds on sale of assets acquired in liquidation             196,579
 Decrease in funds held in escrow                                                               (24,450)
                                                           ------------    ------------    ------------

   Net cash used in investing activities                     (3,203,397)     (1,067,939)     (4,299,993)
                                                           ------------    ------------    ------------

Financing activities:
 Proceeds from debentures payable to the SBA                  7,000,000                       5,000,000
 Repayment of debentures payable to the SBA
  and bank note                                                                (600,000)       (605,000)
 Debenture costs paid                                          (175,000)       (100,000)       (131,250)
                                                           ------------    ------------    ------------
    Net cash provided by (used in) financing activities       6,825,000        (700,000)      4,263,750
                                                           ------------    ------------    ------------
    Increase (decrease) in cash                               2,578,942      (2,466,098)        (95,697)
    Cash - beginning of year                                    848,777       3,314,875       3,410,572
                                                           ------------    ------------    ------------
    Cash - end of year                                     $  3,427,719    $    848,777    $  3,314,875
                                                           ============    ============    ============
Supplemental disclosures of cash flow information:
 Cash paid for interest                                    $    799,521    $    749,723    $    589,663
                                                           ============    ============    ============
Supplemental schedule of non-cash
 investing and financing activities:
  Assets acquired in liquidation of loans                  $          0    $    688,809    $    317,885
                                                           ============    ============    ============
</TABLE>


    The accompanying notes are an integral part of the financial statements.


                                      F-5
<PAGE>

                             WINFIELD CAPITAL CORP.

                              FINANCIAL HIGHLIGHTS

                                                 YEARS ENDED MARCH 31,
                                              --------------------------
                                                  1999            1998
                                              -----------     ----------

PER SHARE OPERATING PERFORMANCE

Shareholders' equity, beginning of period     $      1.71     $     2.11
                                              -----------     ----------

Investment loss - net                               (0.24)         (0.15)

Net realized  and unrealized gain (loss)
 on investments                                      5.19          (0.25)
                                              -----------     ----------

Total from investment operations                     4.95          (0.40)
                                              -----------     ----------

Shareholders' equity, end of period           $      6.66     $     1.71
                                              ===========     ==========

Per share market value, end of period         $   20.1875     $   1.1875
                                              ===========     ==========

Shares outstanding, end of period               5,023,361      5,023,361
                                              ===========     ==========


RATIO/SUPPLEMENTAL DATA

Shareholders' equity, end of period           $33,477,319     $8,625,548

Ratio of investment expenses
  to average shareholders' equity                    8.12%         19.50%

Ratio of investment loss, net
  to average shareholders' equity                   (4.80%)        (7.68%)


    The accompanying notes are an integral part of the financial statements.



                                      F-6
<PAGE>


                             WINFIELD CAPITAL CORP.

                          NOTES TO FINANCIAL STATEMENTS

                    Years ended March 31, 1999, 1998 and 1997


1.    ORGANIZATION:

      Winfield Capital Corp. (the "registrant" or the "Company") was
      incorporated as a New York corporation in 1972. The Company is a small
      business investment company ("SBIC") that was licensed by the U.S. Small
      Business Administration (the "SBA") in 1972 under the Small Business
      Investment Act of 1958, as amended (the "Small Business Investment Act").
      The Company is a non-diversified investment company that has elected to be
      regulated as a business development company ("Business Development
      Company"), a type of closed-end investment company under the Investment
      Company Act of 1940, as amended (the "1940 Act"). Beginning April 1, 1996,
      the Company elected to be taxed as a Regulated Investment Company under
      Subchapter M of the Internal Revenue Code of 1986, as amended.

      The Company uses funds borrowed from the SBA, together with its own
      capital, to provide loans to, and make equity investments in,
      independently owned and operated business concerns that, in accordance
      with SBA Regulations, (i) do not have a net worth in excess of $18 million
      and do not have average net income after federal income taxes for the
      preceding two years of more than $6 million, or (ii) meet size standards
      set by the SBA that are measured by either annual receipts or number of
      employees, depending on the industry in which such concerns are primarily
      engaged ("Eligible Concerns"). The Company invests in all kinds and
      classes of securities of portfolio companies, including, but not limited
      to, notes and bonds; straight, subordinated, convertible and income
      debentures; preferred stock; common stock; and options and warrants to
      purchase any of the foregoing. The Company seeks both current income and
      long-term growth in the value of its assets. The Company's investments are
      made, and will continue to be made, with the intention of having loans
      repaid within five years and equity investments liquidated within 5 to 10
      years. Situations may arise, however, where the Company may hold an equity
      interest for a shorter or longer period.



2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

      Valuation of Investments

      Securities that are traded on a securities exchange or the NASDAQ National
      Market System, which are not deemed to be restricted investments, are
      valued at the security's last sales price on the last trading day of the
      period. Securities traded over-the-counter are valued at the closing price
      for the valuation date. A valuation discount is applied if the number of
      securities held is substantial in relation to the average daily trading
      volume.



                                    CONTINUED

                                      F-7
<PAGE>



                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997


      The Company's investments in restricted securities of public companies are
      valued at the closing price on the valuation date less a discount rate of
      10% to 40%, which is determined by the Board of Directors of the Company
      (the "Board of Directors") based upon applicable factors such as resale
      restrictions, contractual agreement, size of position held and trading
      history of the portfolio company. In some cases, a discount of greater
      than 40% may be used based upon applicable factors including, but not
      limited to (by way of example): 1) whether the portfolio company will be
      financially solvent at the time such restricted securities become freely
      tradeable, 2) whether the Company has knowledge of material non-public
      information about the portfolio company which it is not at liberty to
      disclose in connection with its sale of the securities of such portfolio
      company and 3) the risk that the portfolio company's securities might be
      delisted from an exchange or automated trading market with published
      trading reports.

      Loans and other investments for which no public market exists are stated
      at "fair value" as determined in good faith by the Board of Directors.

      The carrying values of loans to small business concerns are based on the
      Board of Directors' evaluation of the financial condition of the borrowers
      and/or the underlying collateral. The values assigned are considered to be
      amounts which could be realized in the normal course of business which
      anticipates the Company holding the loans to maturity and realizing the
      face value of the loans. The carrying value of loans normally corresponds
      to cost less amortized original issue discount, if any, unless adverse
      factors lead to a determination of value at a lower amount. In such
      instances, the Company records an increase in unrealized depreciation of
      investments to reduce the carrying value of such loans to a value, as
      determined by the Board of Directors.

      Investments in non-public companies securities (including equity
      investments, warrants and convertible instruments) are recorded at fair
      value as determined in good faith by the Board of Directors, after
      consideration of all pertinent information, including factors such as
      significant equity financing by sophisticated, unrelated new investors,
      history of positive cash flows from operations, the market of comparable
      publicly traded companies (discounted for illiquidity) and other pertinent
      factors. The values assigned to these securities are based upon available
      information and do not necessarily represent amounts which might
      ultimately be realized, since such amounts depend on future circumstances
      and cannot reasonably be determined until the individual positions are
      liquidated.

      Certain of the Company's loans are delinquent as to the required principal
      and/or interest due under the respective loan agreements. Loans are
      generally considered to be in default when they become 180 days past due
      pursuant to SBA regulations. However, on a case by case


                                    CONTINUED

                                      F-8
<PAGE>

                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

      basis, management will consider, based on available information, the
      appropriateness of the continued accrual of interest and the carrying
      value of the loan.

      At March 31, 1999 and March 31, 1998, the investment portfolio included
      investments totaling $15,507,529 and $13,108,959, respectively, whose
      values had been estimated by the Board of Directors in the absence of
      readily ascertainable market values. Because of the inherent uncertainty
      of the valuations, the values may differ significantly from the values
      that would have been used had a ready market for the securities existed,
      and the differences could be material.

      At March 31, 1999, all investments were in small business concerns located
      in the United States of America.

      Realized and Unrealized Gain or Loss

      Realized gains or losses are recorded upon disposition of investments and
      calculated as the difference between the proceeds from such dispositions
      and the cost basis determined using the specific identification method.
      The cost of investments that in the Board of Directors' judgment have
      become permanently impaired, in whole or in part, are written off, and
      such amounts are reported as realized losses.

      All other changes in the valuation of portfolio investments are included
      as changes in the unrealized appreciation or depreciation of investments
      in the statement of operations.

      Description of Loan Terms

      The Company's loans to small business concerns range up to approximately
      $2,000,000 in size, typically have a five-year maturity, and, in many
      cases, are convertible into common stock or are accompanied by warrants to
      purchase common stock of the borrower at a nominal exercise price, subject
      in most cases to certain conditions.

      The loans bear interest at rates ranging from 7.5% to 18.0%, per annum.
      Interest is payable in monthly, quarterly, or semi-annual installments
      with principal payments payable either over the term of the loan or at
      maturity. These loans are generally collateralized by the assets of the
      borrower, certain of which are subject to prior liens, and/or guarantees.
      The Company seeks to maximize the difference, or "spread," between the
      rate at which it borrows funds from the SBA and the rate at which it lends
      these funds to small business concerns. Interest rates are subject to a
      cap determined by the SBA.

      The Company also participates in syndicated loans and equity investments.

      Assets Acquired in Liquidation

      Assets acquired in liquidation ("Liquidations") include those loan
      balances for which collateral in real estate and other assets have

                                   CONTINUED

                                      F-9
<PAGE>


                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

      been obtained by the Company and which have been or are in the process of
      being liquidated. These Liquidations are carried at a value as determined
      in good faith by the Board of Directors based upon amounts which the
      Company expects to realize upon disposition of the collateral, on a
      discounted basis, after reasonable selling expenses. The Company
      capitalizes expenditures related to Liquidations subsequent to foreclosure
      on the collateral, and accrued interest receivable as of the date of such
      foreclosure, if the Board of Directors expects such amounts to be
      recovered by the Company.

      Deferred Debenture Costs

      SBA debenture costs are amortized over ten years which represents the
      terms of the SBA debentures.

      Revenue Recognition

      Interest income is recognized as it is earned on short-term marketable
      securities and debt investments. Dividend income from equity investments
      is recognized as of the ex-dividend date.

      Deferred Income

      Loan origination fees paid to the Company are deferred and amortized over
      the terms of the respective loans. Upon prepayment of loans, loan
      processing fees are recognized in full.

      Furniture and Equipment

      Furniture and equipment are carried at cost. The Company depreciates
      furniture and equipment over the estimated useful life of 10 years using
      the straight-line method except for computer equipment which is
      depreciated under an accelerated method over five years.

      Income Taxes

      Effective April 1, 1996, the Company has elected to be taxed as a
      regulated investment company ("RIC") under Subchapter M of the Internal
      Revenue Code (the "Code"). If the Company, as a RIC, satisfies certain
      requirements relating to the source of its income, the diversification of
      its assets and the distribution of its net income, the Company is taxed as
      a pass-through entity which acts as a partial conduit of income to its
      shareholders.

      In order to maintain its RIC status, the Company must in general: a)
      derive at least 90% of its gross income from dividends, interest and gains
      from the sale or disposition of securities b) meet investment
      diversification requirements defined by the Code and c) distribute to
      shareholders 90% of its net income (other than long-term capital gains).

      Pursuant to Statement of Position 93-2, "Determination, Disclosure, and
      Financial Statement Presentation of Income, Gain, and Return of Capital
      Distributions by Investment Companies," ("SOP 93-2"), the Company may
      periodically make reclassifications among certain of their capital
      accounts as a result of timing and characterization of certain income and
      capital gains distributions determined annually in accordance with federal
      tax regulation.

                                   CONTINUED

                                      F-10
<PAGE>

                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

      The reclassifications may result in reduction of capital. All
      reclassifications have been reflected on the statements of changes in
      shareholders' equity.

      At March 31, 1999 and 1998, the aggregate gross unrealized depreciation of
      investments was $1,098,390 and $1,102,500, respectively, and the aggregate
      gross unrealized appreciation of investments was $25,612,463 and $293,497,
      respectively, resulting in a net unrealized appreciation of $24,514,073
      and a net unrealized depreciation of ($809,003), respectively.

      Stock Options

      The Company accounts for stock-based compensation using the intrinsic
      value method prescribed in Accounting Principles Board Opinion No. 25,
      "Accounting for Stock Issued to Employees," and related interpretations
      ("APB No. 25"). Under APB No. 25, compensation cost is measured as the
      excess, if any, of the quoted market price of the Company's shares at the
      date of grant over the exercise price of the option granted. No
      compensation cost has been recognized in connection with the Company's
      stock option plans. The Company provides additional pro forma disclosures
      as required under Statement of Financial Accounting Standards ("SFAS") No.
      123, "Accounting for Stock Based Compensation" (see Note 8).

      Per Share Data

      The Company adopted SFAS No. 128 "Earnings Per Share" which supersedes
      Accounting Principles Board Opinion No. 15. Under SFAS No. 128, net
      increase (decrease) in shareholders' equity per share is computed by
      dividing net increase (decrease) in shareholders' equity by the weighted
      average number of common shares outstanding during the period. Diluted
      earnings per share reflects the potential dilution that could occur if
      securities or other contracts to issue common stock were exercised or
      converted into common stock or resulted in the issuance of common stock.

      Risks and Uncertainties

      Pursuant to Section 64(b)(1) of the Investment Company Act of 1940, the
      Company is required to advise shareholders annually that the Company is
      engaged in a high risk business. Loans and other investments to small
      business concerns are extremely speculative. Most of such concerns are
      privately held. Even if a public market for the securities of such
      concerns exists, the loans and other securities purchased by the Company
      are often restricted against sale or other transfer for specified periods
      of time. Thus, such loans and other investments have little, if any,
      liquidity, and the Company must bear significantly larger risks, including
      possible losses on such investments, than would be the case with
      traditional investment companies. The market value of public securities
      may fluctuate significantly in response to several factors which are
      beyond the Company's control.

                                   CONTINUED

                                      F-11
<PAGE>

                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

      Use of Estimates

      The preparation of financial statements in conformity with generally
      accepted accounting principles requires management to make estimates and
      assumptions that affect the reported amounts of assets and liabilities and
      disclosure of contingent assets and liabilities at the date of the
      financial statements and the reported amounts of income and expense during
      the reporting period. The most significant estimates relate to the
      valuation of non-public securities and restricted investments. Actual
      results could differ from those estimates.

      Newly Issued Accounting Standards

      In June 1998, the Financial Accounting Standards Board ("FASB") issued
      SFAS No.133, "Accounting for Derivative Instruments and Hedging
      Activities." SFAS No. 133 establishes accounting and reporting standards
      for derivative instruments, including certain derivative instruments
      embedded in other contracts and for hedging activities. It requires that
      an entity recognize all derivatives as either assets or liabilities in the
      statement of financial position and measure those instruments at fair
      value. SFAS No. 133 is effective for all quarters of fiscal years
      beginning after June 15, 2000. The Company believes the adoption of SFAS
      No. 133 will not have a material impact on the financial statements.

3.    FAIR VALUE OF FINANCIAL INSTRUMENTS:

      Cash and Short-Term Marketable Securities

      The carrying amount reported in the balance sheet for cash and short-term
      marketable securities approximates fair value.

      Debentures payable to the U.S. Small Business Administration

      The carrying amount of the Company's debentures payable to the SBA
      approximates fair value.

                                   CONTINUED

                                      F-12
<PAGE>



                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997


4.    DEBENTURES PAYABLE TO THE U.S. SMALL BUSINESS ADMINISTRATION:

      Debentures payable to the SBA at March 31, 1999, with interest payable
      semi-annually, consist of the following:

                                                            INTEREST RATE
         AMOUNT                         DUE DATE             (PER ANNUM)
      ---------------                ---------------      -------------------

      $       300,000                    6/1/99                 8.950%
              450,000                    9/1/99                 8.800%
              300,000                    6/1/00                 9.300%
              900,000                    9/1/01                 8.330%
              750,000                    9/1/05                 6.875%
              600,000                    9/1/05                 6.875%
            5,000,000                    6/1/06                 7.710%
            3,000,000                    3/1/09                 6.240%
            4,000,000                    3/1/09                 6.240%
      ---------------

      $    15,300,000
      ===============

      Under the terms of the debentures, the Company may not repurchase or
      retire any of its capital stock, make any distributions to its
      shareholders other than dividends out of retained earnings pursuant to SBA
      regulations or increase officers' salaries without the prior written
      approval of the SBA. In January 1998, the Company paid a non-refundable
      commitment fee of $100,000 to the Small Business Administration to reserve
      $10,000,000 of SBA Guaranteed Debentures through September 30, 2002. An
      additional fee of $175,000 has been deducted with the draw down in January
      1999 of $7,000,000 of SBA Debentures.



5.    SUBORDINATED DEBENTURES:

      In October 1995, in conjunction with its public offering of common stock,
      the Company issued 6.5% subordinated debentures due in 2000 with warrants
      attached. The debentures are unsecured, have no sinking fund provision and
      are not issued under a trust agreement. At March 31, 1999 and 1998, the
      debentures are carried, net of unamortized discount, as follows:

                                                          1999         1998
                                                       ----------  -----------
         Face value of debentures                      $1,089,000  $ 1,089,000

         Less, unamortized discount                        64,660      105,498
                                                       ----------  -----------

                                                       $1,024,340  $   983,502
                                                       ==========  ===========

                                   CONTINUED

                                      F-13
<PAGE>



                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

      The debentures have been discounted to yield an effective interest rate of
      8.0%. The warrants issued in connection with the unit offering were valued
      at $.25 per warrant and expired on October 25, 1997.



6.    TRANSACTIONS WITH AFFILIATES:

      Mr. Stanley M. Pechman, the Company's former President, and Maple
      Investors, Inc., a corporation whose shares are held in trust for members
      of Stanley M. Pechman's family have on occasion participated with the
      Company in portfolio investments. During 1999, 1998 and 1997, Mr. Pechman
      and Maple Investors, Inc. were participants in loans of approximately
      $86,000, $88,000, and $93,000, respectively. During the year ended March
      31, 1998, certain officers and directors of the Company acquired
      participations totaling $435,000 as part of a loan of $2,000,000 made to a
      portfolio company which was satisfied by year end; the Company and all the
      other participants received a beneficial interest in a warrant from such
      Company, and they exercised the warrant in the year ended March 31, 1999
      and received common stock.



7.    COMMITMENTS:

      The Company has operating leases on real property expiring through
      November 30, 2002 with aggregate minimum rental commitments as follows:

        FISCAL
      YEAR ENDING                                             MARCH 31,
      -------------                                         --------------
         2000                                               $       38,625
         2001                                                       39,988
         2002                                                       41,406
         2003                                                       28,251
                                                            --------------

                                                            $      148,270
                                                            ==============

      Rent expense was $38,948, $35,579 and $38,274 for the years ended March
      31, 1999, 1998 and 1997, respectively.


                                   CONTINUED

                                      F-14
<PAGE>

                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

8.    STOCK OPTION PLAN:

      In October 1995 and amended by shareholder vote in September 1997, the
      Company adopted the 1995 stock option plan (the "Plan") by which 1,250,000
      shares of common stock were reserved pursuant to the Plan. Under the Plan,
      options intended to qualify as "incentive stock options" under Section 422
      of the Code ("Qualified Options"), options not intended to qualify, stock
      appreciation rights ("SARs") and shares of Restricted Common Stock may be
      granted or issued.

      Qualified Options granted to Eligible Employees under the Plan will be
      exercisable at a price equal to the fair market value of the shares at the
      time the Qualified Option is granted, or, if no such market value is
      determinable, at the current net asset value of such shares, except with
      respect to options granted to any employee who owns 10% or more of the
      outstanding stock of the Company (a "10% stockholder"), the exercise price
      may not be less than 110% of the current fair market value of the common
      stock. If the aggregate fair market value (determined at the time the
      Qualified Option is granted) of the shares exercisable for the first time
      by any grantee during any calendar year exceeds $100,000, such excess
      shares may not be treated as a Qualified Option. No Qualified Option may
      be exercised more than 10 years after the date on which it is granted,
      except that such period may not exceed five years in the case of an option
      granted to a 10% stockholder.

      Options not intended to qualify as "incentive stock options" under the
      Code may be granted to Eligible Employees under the Plan and shall have
      such exercise prices and such other terms and conditions as the Committee
      may determine in its discretion, subject to the requirements of the 1940
      Act.

      The Plan is administered by the Board of Directors. The Board of Directors
      will determine who is eligible to participate in the Plan and the number
      of shares, if any, on which options are to be granted, the SARs, if any,
      to be granted with respect to such options and the shares of restricted
      Common Stock, if any, to be issued, to eligible parties.

      Options granted under the Plan will not be transferable, other than by the
      laws of descent and distribution, and during the grantee's life may be
      exercised only by such grantee. All rights to exercise options will
      terminate upon termination for cause of the holder's employment or
      directorship.

      The Plan also provides that shares of restricted Common Stock may be
      granted to eligible employees on such terms and in such amounts as the
      Committee determines. Such shares of Stock will be issued under a written
      agreement which will contain restrictions on transfers thereof as may be
      required by law and as the Committee may determine in its discretion.

                                   CONTINUED

                                      F-15
<PAGE>

                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

      The Plan will terminate when there have been granted shares of Common
      Stock and options on the total number of shares authorized by the Plan or
      by action of the Board of Directors, but in no event later than June 12,
      2005. The authorized number of shares may be increased, and the Plan's
      date of termination may be extended, only by shareholder action.

      Stock option transactions are as follows:
<TABLE>
<CAPTION>

                                         1999                       1998                       1997
                               -------------------------  -------------------------  -------------------------
                                 Shares       Average       Shares        Average      Shares        Average
                               -----------   -----------  -----------    ----------  -----------    ----------

<S>                             <C>           <C>        <C>            <C>           <C>          <C>
Balance, April 1,               1,249,572          1.16       458,572     $    1.24       438,572   $     1.23

Granted                               --                      791,000          1.11        20,000         1.53

Expired                           (64,286)         1.16
                               ----------                 -----------                 -----------

Balance, March 31,              1,185,286          1.16     1,249,572          1.16       458,572         1.24
                               ==========                 ===========                 ===========

Options
  exercisable at March 31,      1,101,286          1.12       980,572          1.13       434,572         1.17
                               ==========                 ===========                 ===========
</TABLE>

      The Company applied the intrinsic value based method permitted by SFAS 123
      in accounting for its stock-based compensation plans and awards.
      Accordingly, no compensation expense has been recognized since the options
      were granted with exercise prices equal to the market value of the common
      stock on the date of grant. As of March 31, 1999 several options expired
      but no options have been exercised.

      Had the Company measured compensation expense under the fair value based
      method for the stock options granted in 1999, 1998 and 1997, the Company's
      net income and net income per share would have been reduced to the pro
      forma amounts indicated below:

                                              1999          1998         1997
                                          ------------  ------------  ----------

      Net income - as reported            $ 24,851,771  $ (1,984,474) $ 344,552
      Net income - pro forma              $ 24,851,771  $ (2,381,208) $ 332,435
      Net income per share - as reported  $      4.95   $       (.40) $     .07
      Net income per share - pro forma    $      4.95   $       (.47) $     .06

      The fair value of each option is estimated on the date of grant using the
      Black-Scholes option-pricing model with the following weighted average
      assumptions used for grants - expected volatility of 40%; risk-free
      interest rate of approximately 6.1%; and expected lives ranging from 3 to
      6 years.

                                   CONTINUED

                                      F-16
<PAGE>

                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

9.    CONCENTRATION OF CREDIT RISK:

      Financial instruments which potentially subject the Company to
      concentrations of credit risk consist principally of cash of $3,427,719 at
      March 31, 1999, invested with banks and which balances at times exceed
      insurable limits.



10.   EARNINGS (LOSS) PER COMMON SHARE:

      The reconciliation of basic and diluted earnings (loss) per common share
      computation is as follows:
<TABLE>
<CAPTION>

                                                                 Years Ended March 31,
                                                         1999           1998         1997
                                                       ----------   ------------  ----------
<S>                                                    <C>          <C>           <C>
Basic and diluted earnings (loss) per common share

Net earnings (loss) available for common stock
 equivalent shares deemed to have a dilutive effect   $24,851,771   $(1,984,474)  $  344,552
                                                       ==========   ===========   ==========

Earnings (loss) per common share
 Basic                                                 $     4.95   $     (0.40)  $     0.07
                                                       ==========   ===========   ==========
 Diluted                                               $     4.54   $     (0.40)  $     0.07
                                                       ==========   ===========   ==========

Shares used in computation:
 Basic
  Weighted average common shares                        5,023,361     5,023,361    5,023,361
                                                       ==========   ===========   ==========
 Diluted:
  Weighted average common shares                        5,023,361     5,023,361    5,023,361
                                                       ==========   ===========   ==========
  Common stock equivalents                                453,300       (A)          191,932
                                                       ----------   -----------   ----------

                                                        5,476,661     5,023,361    5,215,293
                                                       ==========   ===========   ==========
</TABLE>


      (A)  For the year ended March 31, 1998 the effect of exercising the
           outstanding stock options would have been antidilutive and,
           therefore, the use of common stock equivalent shares was not
           considered.


                                   CONTINUED

                                      F-17
<PAGE>




                             WINFIELD CAPITAL CORP.

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                    Years ended March 31, 1999, 1998 and 1997

11.   SUBSEQUENT EVENTS:

      Subsequent to March 31, 1999, the Company borrowed $3,000,000 from the SBA
      under the five year $10,000,000 commitment by the SBA (see Note 4).

      Subsequent to March 31, 1999, the Company made six new equity investments
      totaling approximately $2,544,000 (including $500,000 in Commerce One,
      Inc., $516,000 in Modacad, Inc., $750,000 in Bluestone Software, Inc., and
      $500,000 in Pseudo Programs, Inc.).



                                      F-18
<PAGE>


                             WINFIELD CAPITAL CORP.
                            PORTFOLIO OF INVESTMENTS
                                 MARCH 31, 1999

LOANS AND NOTES RECEIVABLES
<TABLE>
<CAPTION>

                                                                  Loan                                              % of
                                                                Maturity   Interest                                 Total
            Company Name                      Industry            Date      Rate(%)        Cost         Value    Investments
-------------------------------------     -----------------     ---------- ----------  ------------ ------------ ------------

<S>                                      <C>                   <C>         <C>         <C>          <C>          <C>
LOANS
Bob's Auto Body Shop (a)                  Auto Repairs          01-Mar-98      15.00   $    10,023  $    10,023     0.0%
Carpenito's Restaurant, Inc. (a)(d)       Restaurant            01-Feb-01      12.00       135,563      135,563     0.3%
D&S Diner Rte 7 Cobleskill Diner Corp.(b) Restaurant            16-Oct-00      16.25       130,982       80,982     0.2%
Diversified Development, LLC              Land Development      20-Jun-01      14.00       600,000      600,000     1.3%
Diversified Development, LLC              Land Development      20-Jun-01      16.00       430,000      430,000     0.9%
Francis A. Lee, Inc. (a)                  Construction          01-Sep-97      15.00        66,186       56,186     0.1%
H. Lockings Corp. (a)                     Food Service          19-Jul-95      16.25        33,016       33,016     0.1%
HPA Monon Corp.                           Trailer Manufacturer  15-May-02      12.00     2,000,000    2,000,000     4.4%
Improved Drinking Water & Pool Co. (a)    Swimming Pools        31-Dec-99      12.00        20,805       10,805     0.0%
Jerusalem Refrigeration Corp.             Refrigeration         01-May-00      15.50        24,725       24,725     0.1%
NAI Technologies, Inc. (d)                Computer Systems      15-Jan-01      12.00       400,000      400,000     0.9%
No-Name Deli/Grocery, Inc. (a)            Food Service          28-Jul-93      16.50       142,928       52,928     0.1%
Phone Management Enterprises, Inc.(a)     Communication         15-Aug-95       None        64,448       44,448     0.1%
Senior Housing Concepts                   Assisted Living       12-Mar-00      18.00       800,000      800,000     1.8%

NOTES RECEIVABLE
Barrier Motor Fuels, Inc. (d)             Gas Retailing         01-Apr-99      15.00       112,688      112,688     0.2%
Gabriel Lamanna                           Real Estate           01-Mar-04      11.50        80,681       80,681     0.2%
Gisante Realty Corp. (a)                  Real Estate           08-Mar-96      11.00        12,962            0     0.0%
957 South Elmora, Inc. (a)                Real Estate           01-Dec-04       7.50       103,280      103,280     0.2%
Vassar Development Corp.                  Real Estate           07-Apr-03      10.00       159,032      159,032     0.4%
                                                                                       ------------ ------------ ------------
  Total Loans and Notes Receivable                                                     $ 5,327,319  $ 5,134,357     11.3%
                                                                                       ============ ============ ============
<FN>
(a) non-income producing or past due as to required principal and/or interest

(b) foreclosed upon during the year

(c) foreclosed upon subsequent to year end

(d) repaid subsequent to year end
</FN>
</TABLE>

              See accompanying notes to the financial statements.


                                      F-19
<PAGE>


                             WINFIELD CAPITAL CORP.
                            PORTFOLIO OF INVESTMENTS
                                 MARCH 31, 1998

LOANS AND NOTES RECEIVABLES
<TABLE>
<CAPTION>

                                                                  Loan                                               % of
                                                                Maturity   Interest                                  Total
            Company Name                      Industry            Date      Rate(%)        Cost          Value    Investments
-------------------------------------     -----------------     ---------- ----------  ------------  ------------ ------------

<S>                                      <C>                   <C>         <C>          <C>          <C>              <C>
LOANS
Bob's Auto Body Shop (a)                  Auto Repairs          01-Mar-98         15.50  $     23,126  $    23,126       0.2%
Buona Pasta, Ltd. (d)                     Food Service          31-Mar-98         12.00        57,775       57,775       0.4%
Carpenito's Restaurant, Inc. (a)          Restaurant            01-Feb-01         12.00       149,382      119,382       0.9%
Cyberian Outpost Inc. (d)                 On-line Computer
                                          Retailer              31-Oct-98         12.50       750,000      750,000       5.6%
DIA Annapolitan Senior Living, LLC (d)    Assisted Living       28-Oct-98         16.00       600,000      600,000       4.5%
DIA Odenton Senior Living, LLC (d)        Assisted Living       10-Aug-98         12.00       330,000      330,000       2.5%
D&S Diner Rte 7 Cobleskill Diner Corp.    Restaurant            16-Oct-00         16.25        96,371       96,371       0.7%
Diversified Development, LLC              Land Development      20-Jun-01         14.00       600,000      600,000       4.5%
Diversified Development, LLC              Land Development      20-Jun-01         16.00       430,000      430,000       3.2%
Fishmarket Inn, Inc. (a)                  Restaurant            01-May-93         15.75       147,746       32,746       0.2%
Francis A. Lee, Inc. (a)                  Construction          01-Sep-97         15.00        63,071       63,071       0.5%
Global Network Communications, Inc.(a)    Communication         01-Jun-99         13.50        37,847       37,847       0.2%
H. Lockings Corp. (a)                     Food Service          19-Jul-95         16.25        40,145       40,145       0.3%
HPA Monon Corp.                           Trailer Manufacturer  15-May-02         12.00     2,000,000    2,000,000       15.0%
Improved Drinking Water & Pool Co. (a)    Swimming Pools        31-Dec-99         12.00        21,555       11,555       0.1%
Jerusalem Refrigeration Corp.             Refrigeration         01-May-00         15.50        42,668       42,668       0.3%
NAI Technologies, Inc.                    Computer Systems      15-Jan-01         12.00       400,000      400,000       3.0%
No-Name Deli/Grocery, Inc. (a)            Food Service          28-Jul-93         16.50       138,036       63,036       0.5%
Phone Management Enterprises, Inc.(a)     Communication         15-Aug-95          None        67,506       47,506       0.4%
Schiattin Realty Corp. (a)                Construction          15-Oct-92         16.00       120,949       20,949       0.2%

NOTES RECEIVABLE
Barrier Motor Fuels, Inc.                 Gas Retailing         01-Aug-99         15.00       119,304      119,304       0.9%
Courtney Properties (d)                   Real Estate           01-Dec-00         10.00       330,000      330,000       2.5%
Gabriel Lamanna                           Real Estate           01-Apr-04         11.50        91,086       91,086       0.7%
Gisante Realty Corp. (a)                  Real Estate           08-Mar-96         11.00        12,962       12,962       0.1%
957 South Elmora, Inc.                    Real Estate           01-Dec-04          7.50       115,314      115,314       0.8%
Vassar Development Corp.                  Real Estate           07-Apr-03         10.00       164,032      164,032       1.2%
                                                                                         ------------- ------------  --------------
  Total Loans and Notes Receivable                                                       $  6,948,875  $ 6,598,875       49.4%
                                                                                         ============= ============  ==============
<FN>
(a) non-income producing or past due as to required principal and/or interest

(b) foreclosed upon during the year

(c) foreclosed upon subsequent to year end

(d) repaid subsequent to year end
</FN>
</TABLE>

              See accompanying notes to the financial statements.

                                      F-20
<PAGE>


                             WINFIELD CAPITAL CORP.
                            PORTFOLIO OF INVESTMENTS
                                 MARCH 31, 1999


EQUITY INTERESTS
<TABLE>
<CAPTION>



          Company Name                         Industry                             Number of Shares
----------------------------------       ----------------------      ------------------------------------------------

<S>                                      <C>                         <C>
Alliance National, Inc.                  Office Rental               65,000 Shares, Unregistered Common Stock

Commerce One, Inc.                       Enterprise                  258,005 Shares, Unregistered Series D
                                         Procurement Software        Preferred Stock

Cool Zone, Inc.                          Cooling Systems             40,000 Shares, Unregistered Common Stock

Creative Foods, Inc.                     Specialty Baking            Warrant to Purchase Common Stock
(formerly Desserts & Cafes, Inc.)

Cyberian Outpost, Inc. (b)               On-Line Computer            466,330 Shares, Unregistered Common Stock
                                         Retailer                    (from Series B Preferred Stock)
                                                                     375,000 Shares, Unregistered Common Stock
                                                                     (from Series C Preferred Stock)
                                                                     489,130 Shares, Unregistered Series B
                                                                     Common Stock (from Series B Preferred)
                                                                     79,395 shares of Unregistered Common Stock
                                                                     (from exercise of warrants)

Diversified Development, LLC.            Land Development            Warrant to Purchase Common Stock

Dowling, Residences LLC.                 Dormitory                   Preferred Return Units
                                         Management

DRS Technologies, Inc. (b)               Computer Systems            Warrant to purchase 25,000 shares of Common Stock
(bought NAI Technologies, Inc.)                                      (from exchange of NAI Technologies, Inc. warrant)


HPA Monon Corp.                          Trailer Manufacturer        625,000 Shares, Unregistered Convertible
                                                                     Preferred Stock

Improved Drinking Water                  Swimming Pools              12.75% Preferred Stock, convertible
   & Pool Co.                                                        into Common Stock

Independence Brewing                     Brewing                     949,941 Shares, Restricted Common Stock
   Company (b)

Internet Gift Registries, Inc.           On-line Gift Registry       50,000 Shares, Series B Preferred Stock
                                                                     Warrant to purchase 60,000 shares of common stock

Juno Online Services, Inc. (a)           Internet Service and        261,846 Unregistered Common Stock shares
                                         E-mail Provider             (from Series B Preferred Stock)

Mpath Interactive, Inc. (a)              Manages and owns            227,273 Shares Unregistered Common Stock (from
                                         On-Line Communities         Series E Preferred Stock)

NAI Technologies, Inc.                   Computer Systems            Convertible Note into 200,000 Shares of
(bought by DRS Technologies, Inc.)                                   Common Stock

New York Restaurant                      Owns and Manages            16,920 Shares, Unregistered Series A
   Group, Inc.                           Restaurants                 Preferred Stock

Panebello USA                            Specialty Baking            20.1943% of Class A equity
                                                                     (subordinated to Class B equity)

PNV. Net, Inc.                           In-Cab Cable TV             93,750 Shares, Unregistered Series C
(formerly Park N'View Inc.)              and Phone Service           Preferred Stock

Prio, Inc. (formerly SaveSmart, Inc.)    On-line promotions          116,279 Shares, Unregistered Series F
                                         and incentives              Preferred Stock

RoweCom Inc. (a)(b)                      Intranet Knowledge          153,676 Shares, Unregistered Common Stock
                                         Subscriptions               (from Series C Preferred Stock)

SynQuest, Inc.                           Enterprise                  40,300 Shares, Unregistered Series G
                                         Optimization Software       Preferred Stock

TeraStor Corporation                     Data Storage                485,437 Shares, Unregistered Series E
                                         Technology                  Preferred Stock

Vivid Semiconductor, Inc.                Semi-Conductor              440,000 Shares, Unregistered Series E
                                         Manufacturer                Preferred Stock
                                                                     79,366 Shares, Unregistered Series F-1
                                                                     Preferred Stock

WorldGate                                On-Line Access              93,897 Shares Unregistered Common Stock (from
   Communications, Inc. (a)              VIA TV                      Series B Preferred Stock)


   Total Equity Interests


<CAPTION>

                                           Cost or                              % of
                                         Contributed                           Total
          Company Name                       Value            Value         Investments
----------------------------------     ---------------   ----------------  ---------------

<S>                                    <C>               <C>                 <C>
Alliance National, Inc.                $                 $        58,500             0.1%

Commerce One, Inc.                             900,000           900,000             2.0%


Cool Zone, Inc.                                200,000           100,000             0.2%

Creative Foods, Inc.                                               4,847             0.0%
(formerly Desserts & Cafes, Inc.)

Cyberian Outpost, Inc. (b)                     715,040         8,289,016            18.3%

                                             1,000,000         6,665,625            14.7%

Cyberian Outpost, Inc.                         750,000         8,694,286            19.2%

                                               254,930         1,411,246             3.1%


Diversified Development, LLC.

Dowling, Residences LLC.                       250,325           250,325             0.6%


DRS Technologies, Inc. (b)
(bought NAI Technologies, Inc.)


HPA Monon Corp.


Improved Drinking Water                         25,000
   & Pool Co.

Independence Brewing                             4,755            45,787             0.1%
   Company (b)

Internet Gift Registries, Inc.                 500,000           500,000             1.1%

Juno Online Services, Inc. (a)               1,678,711         1,678,711             3.7%


Mpath Interactive, Inc. (a)                  1,500,001         1,500,001             3.3%


NAI Technologies, Inc.
(bought by DRS Technologies, Inc.)

New York Restaurant                            163,278           163,278             0.4%
   Group, Inc.

Panebello USA


PNV. Net, Inc.                                 750,000           750,000             1.7%
(formerly Park N'View Inc.)

Prio, Inc. (formerly SaveSmart, Inc.)          500,000           500,000             1.1%


RoweCom, Inc. (a)(b)                         1,500,000         4,692,881            10.4%


SynQuest, Inc.                                 250,263           250,263             0.6%


TeraStor Corporation                           500,000           500,000             1.1%


Vivid Semiconductor, Inc.                    1,650,000         1,386,000             3.0%

                                               250,003           250,003             0.6%


WorldGate                                    1,000,006         1,364,006             2.9%
   Communications, Inc. (a)
                                       ----------------  ----------------  ---------------

   Total Equity Interests              $    14,342,312   $    39,954,775            88.2%
                                       ================  ================  ===============

<FN>
(a) Share numbers have been updated to reflect conversions and splits subsequent to March 31, 1999
(b) Publicly traded at March 31, 1999
</FN>
</TABLE>

             See accompanying notes to the financial statements.


                                      F-21
<PAGE>


                             WINFIELD CAPITAL CORP.
                            PORTFOLIO OF INVESTMENTS
                                 MARCH 31, 1998


EQUITY INTERESTS
<TABLE>
<CAPTION>

                                                                                  Cost or                       % of
                                                                                Contributed                    Total
      Company Name             Industry              Number of Shares              Value         Value      Investments
-------------------------- ----------------- --------------------------------- ---------------------------- -------------

<S>                       <C>                <C>                               <C>              <C>           <C>
Alliance National, Inc.    Office Rental     65,000 Shares, Unregistered                        $   58,500          0.4%
                                             Common Stock

Cool Zone, Inc.            Cooling Systems   40,000 Shares, Unregistered       $     200,000    $  200,000          1.5%
                                             Common Stock

Creative Foods, Inc.       Specialty         Warrant to Purchase Common                              9,000          0.1%
 (formerly Desserts        Baking            Stock
 & Cafes, Inc.)

Cyberian Outpost, Inc.     On-Line Computer  155,443.47 Shares, Unregistered         715,040       715,040          5.4%
                           Retailer          Preferred Series B Stock
                                             125,000 Shares, Unregistered          1,000,000     1,000,000          7.5%
                                             Preferred Series C Stock
                                             Warrant to Purchase 44,687.50
                                             shares of Unregistered Common
                                             Stock

Diversified Development,   Land              Warrant to Purchase Common
 LLC.                      Development       Stock

Dowling Residences,        Dormitory         Preferred Return Units                  250,325       250,325          1.9%
 LLC.                      Management

HPA Monon Corp.            Trailer           625,000 Shares, Unregistered
                           Manufacturer      convertible Preferred Stock

Improved Drinking Water    Swimming Pools    12.75% Preferred Stock                   25,000
 & Pool Co.                                  convertible into Common Stock

Independence Brewing       Brewing           949,941 Shares, Restricted                4,755        55,752          0.4%
 Company (b)                                 Common Stock

NAI Technologies, Inc. (b) Computer          Convertible Note into 200,000 Shares                  200,000          1.5%
                           Systems           of Common Stock, Warrant to
                                             Purchase 100,000 Shares of
                                             Common Stock

New York Restaurant        Owns and          16,920 Shares, Unregistered             163,278       163,278          1.2%
 Group, Inc.               Manages           Series A Preferred Stock
                           Restaurants

Panebello USA              Specialty         20.1943% of Class A equity
                           Baking            (subordinated to Class B equity)

Park N'View, Inc.          In-Cab Cable      93,750 Shares, Unregistered             750,000       750,000          5.6%
                           TV and Phone      Series C Preferred Stock
                           Service

Vivid Semiconductor, Inc.  Semi-Conductor    440,000 Shares, Unregistered          1,650,000     1,650,000         12.3%
                           Manufacturer      Series E Preferred Stock

WorldGate                  On-Line Access    140,846 Shares, Unregistered          1,000,006     1,000,006          7.5%
 Communications, Inc.      via TV            Series B Preferred Stock
                                                                               -------------- ------------- -------------

   Total Equity Interests                                                      $   5,758,404  $  6,051,901         45.3%
                                                                               ============== ============= =============

<FN>
(b) Publicly traded at March 31, 1998
</FN>
</TABLE>


             See accompanying notes to the financial statements.

                                      F-22
<PAGE>


                             WINFIELD CAPITAL CORP.
                            PORTFOLIO OF INVESTMENTS
                             MARCH 31, 1999 AND 1998


ASSETS ACQUIRED IN LIQUIDATION
<TABLE>
<CAPTION>

                                                                 March 31, 1999
                                              ----------------------------------------------------
                                                                                     % of Total
Company Name                                       Cost                Value         Investments
------------------------------------------    ---------------     ---------------  ---------------

<S>                                           <C>                 <C>                         <C>
Maypat Realty Corp.                           $       162,063     $        77,063             0.2%
Panebello USA                                         802,928                   0             0.0%
The Partition Corp.                                   137,816             137,816             0.3%
Suburban Enterprises, Inc.                             24,707               7,207             0.0%
                                              ---------------     ---------------  ---------------
   Total Assets Acquired in Liquidation       $     1,127,514     $       222,086             0.5%
                                              ===============     ===============  ===============






                                                                March 31, 1998
                                              ----------------------------------------------------
                                                                                     % of Total
Company Name                                       Cost                Value         Investments
------------------------------------------    ---------------     ---------------  ---------------

Bashert Enterprises, Inc.                     $       208,197     $       158,197             1.1%
Hall Diner                                            104,907              19,907             0.1%
Keystone Terminal Operating Corp.                      32,317              17,317             0.1%
Maypat Realty Corp.                                   162,063              77,063             0.6%
Panebello USA                                         802,928             302,928             2.3%
The Partition Corp.                                   131,317             131,317             1.0%
Suburban Enterprises, Inc.                             24,706               7,206             0.1%
                                              ---------------     ---------------  ---------------
   Total Assets Acquired in Liquidation       $     1,466,435     $       713,935             5.3%
                                              ===============     ===============  ===============
</TABLE>

             See accompanying notes to the financial statements.


                                      F-23