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

                       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, 2004         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

           Securities registered pursuant to Section 12(g) of the Act:

                               Title of each class
                     --------------------------------------
                     Common Stock, par value $.01 per share

         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].

         Indicate by check mark whether the Registrant is an accelerated filer
(as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of June 18, 2004 was approximately $2,859,395. The number
of outstanding shares of the Registrant's common stock as of June 18, 2004 was
5,346,084 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the Registrant's definitive proxy statement to be filed not
later than 120 days after March 31, 2004, are incorporated into Part III of this
Report.

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

<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 to and other investments in 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 from
sale or other transfer for specified and significant 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 otherwise would be the case with
traditional investment companies.

         According to the U.S. Small Business Administration (the "SBA")
Regulations, the Company is required to be in compliance with the capital
impairment rules, as defined by regulation 107.1830 of the SBA Regulations. The
Company was notified by the SBA on April 30, 2003 that the Company was no longer
in compliance with the SBA's capital impairment requirements and that the SBA
had accelerated the maturity date of the Company's debentures. The aggregate
principal, interest and fees due under the debentures totaled approximately
$25.6 million as of April 30, 2003, including interest and fees due through the
next semi-annual payment date. As a result of subsequent repayments by the
Company, the aggregate principal, interest and fees due under the debentures
totaled approximately $21.1 million as of March 31, 2004, including interest and
fees due through the next semi-annual payment date. The SBA has transferred
Winfield Capital's account to liquidation status where any new investments and
material expenses are subject to prior SBA approval. Based on discussions and
meetings that the Company has had with the SBA to date, the SBA will not afford
the Company the flexibility of a self-managed liquidation to repay its
indebtedness. As a result, the Company anticipates that it will be required to
repay all or substantially all of the principal and interest owing to the SBA on
a schedule acceptable to the SBA. No definitive agreement has been reached with
the SBA and the SBA maintains the ability to pursue any remedies they deem
appropriate under the law or the instruments evidencing the Company's
indebtedness, including, without limitation, initiating proceedings for the
appointment of the SBA or its designee as receiver. If the SBA were to require
the Company to immediately pay back the entire indebtedness including accrued
interest, certain private security investments may need to be disposed of in a
forced sale which may result in proceeds less than their carrying value at March
31, 2004. As such, this impairment could have a material adverse effect on the
Company's financial position, results of operations and cash flows which raises
substantial doubt about the Company's ability to continue as a going concern.
The Company continues to explore various strategic alternatives, including a
third party equity infusion, although there can be no assurance that it will be
successful in its ability to consummate or implement these or any other
strategic alternatives.

         In addition, inasmuch as the Company's capital structure includes a
large amount of debt securities, all of which are debentures issued to the SBA
at fixed interest rates, unless and until the Company is able to invest all or
substantially all of the proceeds from such debt securities at annualized
interest or at other rates of return that substantially exceed annualized rates
of interest the Company is required to pay the SBA under these debentures, the
Company's operating results will be adversely affected which, in turn, may
depress 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 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 ("BDC"), a type of closed-end investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"). The Company has elected to be taxed as a Regulated Investment Company
("RIC") for Federal income tax purposes. The Company's offices are located at
237 Mamaroneck Avenue, White Plains, New York 10605 and its telephone number is
(914) 949-2600. The Company can also be reached via its Web site at
http://www.winfieldcapital.com.

         As a SBIC, the Company uses funds borrowed from the SBA, together with
its own capital, to provide loans to, and to make equity investments in,
unaffiliated 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
two years preceding any date of determination 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. As a BDC, the Company is
required to make available significant managerial assistance to its portfolio
companies.

         The Company has no independent investment adviser. The Company's loan
and other investment decisions are made by its officers, in accordance with the
Company's established investment policies and objectives, subject to oversight
by its Board of Directors. Historically, the Company has relied on its officers
to identify new financing opportunities. Following its initial public offering
("IPO") late in 1995, the Company expanded its marketing efforts and sought
transaction referrals from venture capitalists, investment bankers, attorneys,
accountants and commercial bankers. The Company has sought to enter into either
straight loan or equity transactions with portfolio companies or debt
transactions having equity components ("debt securities"). In connection with
the latter, the Company has sought and will continue to seek security interests
in and liens on 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.

Selected Recent Developments
----------------------------

         On June 17, 2002, the Company received notice from the Nasdaq Stock
Market, Inc. ("Nasdaq") that for the preceding 30 consecutive trading days, the
Company's common stock had not maintained the minimum Market Value of Publicly
Held Shares of $5,000,000 as required for continued inclusion by Marketplace
Rule 4450(a)(2) on the Nasdaq National Market. On July 23, 2002, the Company
received notice from Nasdaq that for the preceding 10 consecutive trading days,
the Company's common stock had not closed at the minimum $1.00 per share as
required for continued inclusion by Marketplace Rule 4450(a)(5) (the "Minimum
Bid Price Rule") on the Nasdaq National Market. As a result of these notices,
the Company made an application to the Staff of the Nasdaq Listing
Qualifications Department (the "Staff") to transfer the Company's common stock
from the Nasdaq National Market to the Nasdaq SmallCap Market. On September 25,
2002, the Company was notified by the Staff that its application to transfer the
listing was approved provided it met the Minimum Bid Price Rule by January 22,
2003 (the "Grace Period") and trading in the Company's common stock on the
Nasdaq SmallCap Market commenced on September 26, 2002. On January 22, 2003, the
Company received a determination of the Staff indicating that the Company still
failed to comply with the Minimum Bid Price by the end of the Grace Period and
was therefore, subject to delisting. As the delisting determination was based on
a quantitative deficiency, the Company's common stock was deemed eligible for
quotation on the Over the Counter Bulletin Board ("OTCBB"). On April 15, 2003,
the Company's common stock commenced trading on the OTCBB under the symbol
"WCAP".

         According to the U.S. Small Business Administration (the "SBA")
Regulations, the Company is required to be in compliance with the capital
impairment rules, as defined by regulation 107.1830 of the SBA Regulations. The
Company was notified by the SBA on April 30, 2003 that the Company was no longer
in compliance with the SBA's capital impairment requirements and that the SBA

                                       1
<PAGE>

had accelerated the maturity date of the Company's debentures. The aggregate
principal, interest and fees due under the debentures totaled approximately
$25.6 million as of April 30, 2003, including interest and fees due through the
next semi-annual payment date. As a result of subsequent repayments by the
Company, the aggregate principal, interest and fees due under the debentures
totaled approximately $21.1 million as of March 31, 2004, including interest and
fees due through the next semi-annual payment date. The SBA has transferred
Winfield Capital's account to liquidation status where any new investments and
material expenses are subject to prior SBA approval. Based on discussions and
meetings that the Company has had with the SBA to date, the SBA will not afford
the Company the flexibility of a self-managed liquidation to repay its
indebtedness. As a result, the Company anticipates that it will be required to
repay all or substantially all of the principal and interest owing to the SBA on
a schedule acceptable to the SBA. No definitive agreement has been reached with
the SBA and the SBA maintains the ability to pursue any remedies they deem
appropriate under the law or the instruments evidencing the Company's
indebtedness, including, without limitation, initiating proceedings for the
appointment of the SBA or its designee as receiver. If the SBA were to require
the Company to immediately pay back the entire indebtedness including accrued
interest, certain private security investments may need to be disposed of in a
forced sale which may result in proceeds less than their carrying value at March
31, 2004. As such, this impairment could have a material adverse effect on the
Company's financial position, results of operations and cash flows which raises
substantial doubt about the Company's ability to continue as a going concern.
The Company continues to explore various strategic alternatives, including a
third party equity infusion, although there can be no assurance that it will be
successful in its ability to consummate or implement these or any other
strategic alternatives

Characteristics of the Company's Investments
--------------------------------------------

         The Company invests in all kinds and classes of securities issued by
portfolio companies, including, but not limited to, notes and bonds; straight,
senior, subordinated, convertible and interest-paying debentures; preferred
stock; common stock; and options and warrants to purchase the foregoing. The
Company does not have a policy that limits the amount that it may invest in any
kind or class of security, except that it intends to primarily invest its assets
in straight loans or debt securities.

         When the Company's investments are structured as loans, they typically
are evidenced by promissory notes or equivalent instruments with a specified
maturity or due upon demand, and often are accompanied by warrants to acquire
equity interests in the borrower for nominal consideration. The loans are
usually collateralized by assets of the borrower, which security interests
frequently are senior to any other secured debt 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 collateralized by such
stockholders' personal assets. The Company's loans 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 (although there may be
exceptions), such loans require periodic payments of principal and interest that
fully amortize the loan at maturity, and mature in five years or less. In
addition, the Company intends to pursue "bridge loan" opportunities (e.g.,
typically with maturity dates not more than one year) as and to the extent
permitted by the SBA Regulations. Management believes that, although there can
be no assurance, 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 intends to continue seeking more financing
opportunities with equity participation and more investments with equity
components than previously were sought by the Company. There can be no assurance
that the Company will find such opportunities on terms favorable to the Company,
if at all.

         Investments that the Company holds in its portfolio companies may be
"restricted securities," as that term is defined under Rule 144 of the
Securities Act of 1933, as amended (the "1933 Act"). These securities may not be
sold freely in the absence of registration under the 1933 Act. As a result, its
ability to sell or otherwise transfer the securities it holds in its portfolio
will be limited. The capital stock it receives from portfolio companies is
expected to be acquired primarily in private transactions negotiated directly
with the portfolio company or an affiliate. The Company's management will
continue to be principally responsible for conducting negotiations with respect
to its investments in portfolio companies. The Company may acquire securities of
public companies in connection with mergers of its portfolio companies with such
public companies. The Company may invest a portion of its other assets in the
publicly traded securities of public companies. Such investments, and other
investments that are not "qualifying assets," may not exceed 30% of the value of
the Company's total assets at the time of any such investment.

                                       2
<PAGE>

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 are intended to continue
to be made, with the intention of having any 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 of time.

         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. Today, the Company focuses on investments in
privately held "Eligible Concerns" in industries that management considers
growing industries, including, but not limited to technology and other "new
economy" businesses, computer hardware/software, and consumer products
manufacturers and distributors. There can be no assurance that the Company will
continue to be able to locate investments in such businesses on favorable terms.
If the Company is unable to identify such investments, it would seek to
reevaluate its overall investment strategies. Although the Company is
headquartered and incorporated in the Northeast, it considers investments
throughout the country provided they are otherwise consistent with the Company's
loan and other investment selection criteria.

         Generally, 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 and net operating losses. Under
applicable SBA Regulations, the Company may not invest more than 20% of its
"Private Capital" in any single company without prior 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. In most instances, the
Company participates in loans and other investments with other investors.
Accordingly, the Company has been able to become involved 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 the Company's 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 will
           become profitable in the future.

                  Development Stage Companies. The Company attempts to identify
           and invest in development stage companies, (i.e., companies with a
           product or service that is beyond the testing stage). The Company
           generally seeks to avoid so-called "seed capital" and start-up
           companies.

                  Experienced Management Team. The Company seeks to invest in
           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.

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

                  Growth. The Company requires that prospective borrowers have
           sufficient cash flow to service their debt along with having in
           management's determination 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 in the future. Such opportunity generally would
           allow the Company to realize a gain on its equity interests that have
           appreciated in value, if at all, through public offerings, sales of
           the portfolio company, mergers with other companies or repurchases by
           the portfolio company of the Company's equity interests. In this
           connection, the Company often seeks to obtain registration rights
           ("demand" and "piggyback") as a condition to its equity investments.

         The foregoing criteria are general guidelines rather than fixed
requirements and the Company may consider such other criteria as investment
opportunities arise.

                                       3
<PAGE>

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 may 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 the exercise by
the Company of appropriate remedies are often influenced by the payment records
of such companies.

         The aggregate face amount of the Company's outstanding loans and the
value of other portfolio investments was $31,216,170 as of March 31, 2004 with
loans and notes receivable comprising approximately 34% (80% of which were
performing in accordance with their terms and 20% were non-performing) and
equity interests approximately 66%.

         There was unrealized appreciation on loans and investments of
$1,262,680 for the year ended March 31, 2004 (principally reflecting the
increased market price of investments in four publicly traded portfolio
companies and the increased fair value of an investment in one privately held
portfolio company partially offset by the decreased fair value of investments in
two privately held portfolio companies). There was unrealized depreciation on
loans and investments of $2,654,690 for the year ended March 31, 2003
(principally reflecting the decreased market price of investments in nine
publicly traded portfolio companies partially offset by the increased market
price of one publicly traded portfolio company investment and the decreased fair
value of investments in five privately held portfolio companies partially offset
by the increased fair value of investments in five privately held portfolio
companies).

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 $2,532,638 as described in the following table:

<TABLE>
<CAPTION>
                                                                                                 Year Ended March 31,
                                                                                    --------------------------------------------
                                                                                       2002             2003             2004
                                                                                    ----------       ----------       ----------
<S>                                                                                 <C>              <C>              <C>
         Amount written-off..................................................       $2,337,716       $  182,001       $   12,921
         Amount written-off as a percentage of loans and
            investments and assets acquired in liquidation as of the
            beginning of the year............................................             7.73%            1.29%            0.07%
</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. A
SBIC can issue such debentures in a principal amount up to either 200% or 300%
of its Private Capital, depending upon various factors.

         The Company has, as approved by the SBA as of March 31, 2004, Private
Capital of approximately $27,000,000, which would enable it to sell debentures
to, or with a guaranty by, the SBA up to a maximum principal amount of
approximately $81,000,000 (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.

         The SBA offers eligible SBICs the opportunity to sell "participating
securities" (i.e., either preferred stock or debentures having interest payable
only to the extent of earnings) to the SBA or to entities that receive SBA
guaranties in an 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
any future Company debentures 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.

                                       4
<PAGE>

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 prescribed by the SBA relating
either to annual receipts or number of employees, depending on the industry in
which such business primarily operates, is eligible to receive financial
assistance from a SBIC (hereinafter referred to as an "Eligible Concern"). The
SBA Regulations also define a "Smaller Concern" as 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 business 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 made by
SBICs. The maximum maturity of these loans may not exceed 20 years. A borrower
from a 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 components) a
SBIC can charge an interest rate of up to 19% and on loans with equity
components an annualized interest rate of up to 14%. Notwithstanding the above
restrictions, a SBIC can charge a borrower 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 components, a SBIC may charge interest equal to 6%
above the base rate used and, in the case of a straight loan, 11% above the base
rate used.

         SBICs may invest directly in the equity of their 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. A SBIC may acquire options or warrants in its portfolio
companies. Such options and warrants may also have redemption provisions,
subject to certain restrictions. As a result of a recent change in the SBA
Regulations, SBICs are now permitted to 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 that 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 BDC 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 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 BDC unless so authorized by the
vote of the holders of a majority of its outstanding voting securities.

          A BDC is permitted, under specified conditions, to issue multiple
classes of indebtedness and one class of stock having rights as to voting,
liquidation and dividends which are 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 a SBIC, the only asset coverage
requirement applicable to it that 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

                                       5
<PAGE>

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 BDC 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; and

                      (c) does not have any class of securities with respect
                          to which margin credit may be extended by a member of
                          a national securities exchange, broker or dealer.

                  (2) Securities of any eligible portfolio company that is
                      controlled by the BDC.

                  (3) Securities received in exchange for or distributed on or
                      with respect to securities described in items (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 BDC 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 items (1) or (2) above and, in order to
count the securities as Qualifying Assets for the purpose of the 70% test, the
BDC 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 BDC, 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 a SBIC (such as the Company), making loans to a
portfolio company.

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 a SBIC and as a BDC, and to qualify as a "Regulated
         Investment Company" (as defined under the Internal Revenue Code of
         1986, as amended). In order to retain its status as a SBIC, the Company
         must limit its investments to Eligible Concerns and meet the minimum
         financing obligations applicable to Smaller Concerns (see "SBA
         Regulation").

                  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.

                                       6
<PAGE>

                  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 1933 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
         components to the extent permitted under the Small Business Investment
         Act and the 1940 Act.

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.

         In order to retain its status as a BDC, the Company may not acquire
assets (other than non-investment assets necessary and appropriate to its
operations as a BDC) if, after giving effect to such acquisition, the value of

                                       7
<PAGE>

its Qualifying Assets is less than 70% of the value of its total assets. See
"Regulation as a BDC". In order to qualify as a RIC, 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 RIC for the fiscal
year ended March 31, 2004.

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 resources of the banking community have grown 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.

Forward-Looking Statements
--------------------------

         This report and accompanying notes to the financial statements may
contain forward-looking statements. For this purpose, any statements contained
in this report and accompanying notes to the financial statements that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, words such as "may," "will," "expect," "could,"
"would," "should," "believe," "anticipate," "estimate," "continue," "provided,"
or comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
and actual results may differ materially depending on a variety of factors.

Personnel
---------

         As of June 18, 2004, the Company had two full-time employees (Messrs.
Paul A. Perlin, Chief Executive Officer and R. Scot Perlin, Chief Financial
Officer). In addition to its salaried employees, the Company has from time to
time engaged the services of independent consultants as and when needed. The
Company considers its relations with employees to be satisfactory.


Item 2.     Properties

         The Company operates its executive offices where it maintains its
investment and business records from rented quarters, consisting of
approximately 2,000 square feet, located in a four-story office building under a
lease expiring on February 29, 2008. 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.


Item 3.     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 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

         On April 15, 2003, the Registrant's common stock began trading on the
OTCBB under the symbol WCAP. From September 26, 2002 until April 15, 2003, the
Registrant's common stock was listed on the Nasdaq SmallCap Market. Previously,
the Registrant's common stock was listed on the Nasdaq National Market. The
reported high and low bid quotations for the Registrant's common stock as
reported by Nasdaq from April 1, 2002 to April 14, 2003 and as reported on the
OTCBB from April 15, 2003 until June 18, 2004 were as follows:

                                                              Common Stock
                                                          --------------------
                                                            High        Low
                                                          --------    --------
April 1 - June 30, 2002 ..............................    $   1.60    $   0.78
July 1 - September 30, 2002...........................        0.90        0.31
October 1 - December 31, 2002.........................        1.10        0.28
January 1 - March 31, 2003............................        0.47        0.30
April 1 - June 30, 2003...............................        0.51        0.15
July 1 - September 30, 2003...........................        0.30        0.15
October 1 - December 31, 2003.........................        0.35        0.18
January 1 - March 31, 2004............................        0.45        0.17
April 1 - June 18, 2004...............................    $   1.65    $   0.41

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

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

         As of June 18, 2004, the Company estimates that its shares of common
stock are held by approximately 4,131 beneficial holders.


Item 6.     Selected Financial Data

         See Summary of Financial Information for the years ended March 31,
2004, 2003, 2002, 2001 and 2000 on the following page:

                                       9
<PAGE>

                             WINFIELD CAPITAL CORP.

                        SUMMARY OF FINANCIAL INFORMATION
<TABLE>
<CAPTION>

                                                                              Years Ended March 31,
                                              -------------------------------------------------------------------------------------
                                                  2004              2003              2002              2001              2000
                                              -------------     -------------     -------------     -------------     -------------
<S>                                           <C>               <C>               <C>               <C>               <C>
Statement of Operations Data
     Total investment income ...............  $   1,550,947     $     729,897     $   1,057,404     $   1,185,799     $     873,445
     Total investment expenses .............  $   2,868,163     $   4,086,185     $   3,641,686     $   3,232,652     $   3,432,819
     Net realized gains (losses) on
         disposition of investments ........  $   1,191,185     $      16,407     $  (3,289,935)    $   1,282,344     $  30,851,848
     Unrealized appreciation (depreciation)
         on loans and investments ..........  $   1,262,680     $  (2,654,690)    $  (8,492,858)    $ (69,828,667)    $  42,284,344
     Net income (loss) .....................  $   1,136,649     $  (5,994,571)    $ (14,367,075)    $ (70,593,176)    $  70,576,818
     Earnings (loss) per share - Basic .....  $        0.21     $       (1.12)    $       (2.69)    $      (13.20)    $       13.36
     Weighted average number of shares
         outstanding .......................      5,346,084         5,346,084         5,346,084         5,346,084         5,282,131

Other Operating Data
     Number of loans and other investments
         outstanding at end of periiod .....             41                44                37                50                64
     Number of loans and other investments
         originated ........................              6                 7                 4                 7                22
     Principal amount of loans and other
         investments originated ............  $     154,905     $   7,618,912     $     367,676     $   9,637,953     $  18,624,388
     Investment expenses as a percentage of
         average net assets ................          139.3%             94.0%             22.3%              6.9%              4.8%

Balance Sheet Data
     Loans and investment portfolio
         including assets acquired in
         liquidation .......................  $  18,301,052     $  18,591,630     $  14,129,234     $  30,256,226     $ 102,739,179
     Total assets ..........................  $  23,918,679     $  26,656,254     $  32,498,086     $  49,031,295     $ 126,867,621
     SBA debentures ........................  $  19,536,660     $  24,650,000     $  24,650,000     $  25,550,000     $  20,850,000
     Common stock (including additional paid
         in-capital) .......................  $  18,445,415     $  19,762,631     $  23,036,159     $  24,806,818     $  26,968,537
     (Accumulated deficit) retained earnings  $  (2,902,553)    $  (4,093,738)    $  (4,027,385)    $   1,352,362     $     (44,848)
     Total shareholders' equity ............  $   2,627,744     $   1,491,095     $   7,485,666     $  23,128,930     $  93,722,106
</TABLE>

                                       10
<PAGE>

Item 7.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations

         Years Ended March 31, 2004, 2003, and 2002
         ------------------------------------------

Critical Accounting Policies
----------------------------

         The preparation of financial statements in conformity with U.S.
generally accepted accounting principles ("GAAP") requires the application of
accounting policies that often involve a significant degree of judgment.
Management, on an on-going basis, reviews estimates and assumptions. If
management determines, as a result of its consideration of facts and
circumstances, that modifications of its assumptions and estimates are
appropriate, results of operations and financial position as reported in the
financial statements may change significantly. The following sections discuss
accounting policies applied in preparing the Company's financial statements that
management believes are most dependent on the application of estimates and
assumptions.

Valuation of Investments

         Securities that are traded on a securities exchange or the Nasdaq
National Market, which are not 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 on the valuation date. A
valuation discount is applied if the number of securities held is substantial in
relation to the average daily trading volume.

         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 30%, 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 30% 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 tradable, 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 assets acquired in liquidation 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 fair 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 cash flows from operations,
the market for 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 basis, management will
consider, based on available information, the appropriateness of the continued
accrual of interest and the carrying value of the loan.

                                       11
<PAGE>

Option Contracts - Derivatives

         The Company adopted Statement of Financial Accounting Standards No. 133
as amended by Statements No. 137 and No. 138, Accounting for Derivative
Instruments and Hedging Activities, (referred to hereafter as "SFAS 133"), on
January 1, 2001. At that time, the Company did not have any derivatives. SFAS
133 requires that an entity recognize all derivative instruments in the balance
sheet and measure those financial instruments at fair value. All changes in the
fair market value of financial instruments are included as changes in the
unrealized appreciation or depreciation of investments in the Statement of
Operations.

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: 1.)
derive at least 90% of its gross income from dividends, interest and gains from
the sale or disposition of securities, 2.) meet investment diversification
requirements defined by the Code, and 3.) distribute to shareholders 90% of its
net income (other than long-term capital gains).

         The Company may periodically make reclassifications among certain of
its capital accounts as a result of timing and characterization of certain
income and capital gains distributions determined annually in accordance with
Federal tax regulation. The reclassifications may result in a reduction of
capital. All reclassifications have been reflected on the statements of changes
in shareholders' equity.

Investment Income
-----------------

         Investment income increased by $821,050, or an increase of 112.5%, to
$1,550,947 for the year ended March 31, 2004 from $729,897 for the year ended
March 31, 2003. This reflected principally an increase in interest from small
business concerns of $1,031,061 as a result of the Company's increased
investments in loans in the last two quarters of fiscal 2003. Interest from
temporarily invested funds decreased by $209,209 as a result of a decrease in
invested idle funds as well as a decrease in interest rates. Other income
decreased by $802.

         Investment income decreased by $327,507 or a decrease of 30.9%, from
$1,057,404 for the year ended March 31, 2002 to $729,897 for the year ended
March 31, 2003. This reflected principally a $620,128 decrease in interest from
temporarily invested funds as a result of a decrease in the idle funds that were
being invested along with a decrease in interest rates, which was partially
offset by a $294,737 increase in interest from small business concerns as a
result of the Company's increased level of investment activity.

Interest Expense
----------------

         Interest expense decreased by $213,074 to $1,665,409 for the year ended
March 31, 2004 from $1,878,483 for the year ended March 31, 2003. This decrease
resulted from repayments of $5,113,340 of debentures to the SBA. Interest
expense remained relatively unchanged from $1,910,394 for the year ended March
31, 2002 to $1,878,483 for the year ended March 31, 2003.

Operating Expenses
------------------

         The Company's operating expenses decreased by $1,004,948 to $1,202,754
for the year ended March 31, 2004 from $2,207,702 for the year ended March 31,
2003. Amortization expense decreased by $574,428 primarily due to the
acceleration of the maturity of the SBA debentures which resulted in fully
expensing the related debenture fees in the year ended March 31, 2003. Payroll
and payroll-related expenses decreased by $217,536 due to the resignation of an
executive officer effective December 31, 2002 and the termination of a Secretary
effective December 31, 2003. Professional fees decreased by $66,756, shareholder
relations and other financial expenses decreased by $48,623, insurance expense
decreased by $37,009 and directors fees decreased by $23,725. There were other
miscellaneous decreases which totaled $36,871. The Company's operating expenses
increased from $1,731,292 for the year ended March 31, 2002 to $2,207,702 for
the year ended March 31, 2003 due primarily to the acceleration of the maturity
of the SBA debentures which resulted in fully expensing the related debenture
fees of $496,214 and an insurance expense increase of $35,421 due primarily to
the increased Directors and Officers insurance renewal premium. Partially
offsetting these increases were decreases in payroll and payroll-related
expenses of $52,678 due primarily to the resignation of an executive officer
effective December 31, 2002 and other operating costs that netted to $2,547.

                                       12
<PAGE>

Realized Gains or Losses on Equity Investments
----------------------------------------------

         The Company realizes gains or losses on its investments or rights to
acquire investments upon the disposition or write-offs thereof. The realized
capital gain for the year ended March 31, 2004 of $1,191,185 reflected long-term
capital gains on the sale of four equity securities of $1,437,675 and a gain of
$107,396 on the disposition of two loans partially off-set by a long-term
capital loss of $340,965 on the sale of one equity security and a write-off on
an asset acquired in liquidation of $24,707 partially offset by two recoveries
totaling $11,786. The realized capital gain for the year ended March 31, 2003 of
$16,407 reflected a long-term capital gain on an equity security of $208,287, a
short-term capital gain on an equity security of $50,680 partially offset by a
write-off of $182,001 on a debt security, long-term net capital losses on assets
acquired in liquidation of $45,168 and short-term losses on the repositioning of
temporarily invested funds of $15,391. The realized loss of $3,289,935 for the
year ended March 31, 2002 reflected long-term net capital losses on equity
securities of $1,039,442 and write-offs totaling $2,337,716 offset by an equity
security recovery of $87,223.

Unrealized Appreciation or Depreciation of Loans and Investments
----------------------------------------------------------------

         As an investment company, the Company is required to evaluate 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.
There was unrealized appreciation on loans and investments of $1,262,680 for the
year ended March 31, 2004 (principally reflecting the increased market price of
investments in four publicly traded portfolio companies and the increased fair
value of an investment in one privately held portfolio company partially offset
by the decreased fair value of investments in two privately held portfolio
companies). There was unrealized depreciation on loans and investments of
$2,654,690 (or $2,692,012 excluding an unrealized appreciation on short-term
marketable securities) for the year ended March 31, 2003 (principally reflecting
the decreased market price of investments in nine publicly traded portfolio
companies partially offset by the increased market price of one publicly traded
portfolio company and the decreased fair value of investments in five privately
held portfolio companies partially offset by the increased fair value of
investments in five privately held portfolio companies compared with an
unrealized depreciation on loans and investments of $8,492,858 (or $8,395,076
excluding an unrealized depreciation on short-term marketable securities) for
the year ended March 31, 2002 (principally reflecting the decreased market price
of investments in six publicly traded portfolio companies and the decreased fair
value of investments in six privately held portfolio companies as well as the
aforementioned net loss on the sale of equities).

Option Contracts - Derivatives
------------------------------

         Pursuant to a letter received from the SBA in October 2000 granting
permission to use hedging activities to protect its security positions, the
Company, beginning in January 2001, utilized put and call option contracts to
minimize market risks of its investments in publicly held companies. The Company
adopted SFAS 133 on January 1, 2001. SFAS 133 requires that an entity recognize
all derivative instruments in the balance sheet and measure those financial
instruments at fair value. All changes in the fair market value of financial
instruments are included as changes in the unrealized appreciation or
depreciation of investments in the Statement of Operations. During the fiscal
year ended March 31, 2002, all the option contracts became due. As of March 31,
2004, the Company has no option contracts outstanding as part of its portfolio.

Liquidity and Capital Resources
-------------------------------

         At March 31, 2004, the Company held cash totaling $5,473,063.

         According to the U.S. Small Business Administration (the "SBA")
Regulations, the Company is required to be in compliance with the capital
impairment rules, as defined by regulation 107.1830 of the SBA Regulations. The
Company was notified by the SBA on April 30, 2003 that the Company was no longer
in compliance with the SBA's capital impairment requirements and that the SBA
had accelerated the maturity date of the Company's debentures. The aggregate
principal, interest and fees due under the debentures totaled approximately
$25.6 million as of April 30, 2003, including interest and fees due through the
next semi-annual payment date. As a result of subsequent repayments by the
Company, the aggregate principal, interest and fees due under the debentures
totaled approximately $21.1 million as of March 31, 2004, including interest and
fees due through the next semi-annual payment date. The SBA has transferred

                                       13
<PAGE>

Winfield Capital's account to liquidation status where any new investments and
material expenses are subject to prior SBA approval. Based on discussions and
meetings that the Company has had with the SBA to date, the SBA will not afford
the Company the flexibility of a self-managed liquidation to repay its
indebtedness. As a result, the Company anticipates that it will be required to
repay all or substantially all of the principal and interest owing to the SBA on
a schedule acceptable to the SBA. No definitive agreement has been reached with
the SBA and the SBA maintains the ability to pursue any remedies they deem
appropriate under the law or the instruments evidencing the Company's
indebtedness, including, without limitation, initiating proceedings for the
appointment of the SBA or its designee as receiver. If the SBA were to require
the Company to immediately pay back the entire indebtedness including accrued
interest, certain private security investments may need to be disposed of in a
forced sale which may result in proceeds less than their carrying value at March
31, 2004. As such, this impairment could have a material adverse effect on the
Company's financial position, results of operations and cash flows which raises
substantial doubt about the Company's ability to continue as a going concern.
The Company continues to explore various strategic alternatives, including a
third party equity infusion, although there can be no assurance that it will be
successful in its ability to consummate or implement these or any other
strategic alternatives.

Debentures Payable to the U.S. Small Business Administration
------------------------------------------------------------

         Debentures payable to the SBA at March 31, 2004, with interest payable
semi-annually, consisted of the following:

                    Amount            Due Date         Interest Rate (per annum)
                -------------        ----------        -------------------------
                $     750,000         9/1/2005                  6.875%
                      600,000         9/1/2005                  6.875%
                    5,000,000         6/1/2006                  7.710%
                    3,000,000         3/1/2009                  6.240%
                    4,000,000         3/1/2009                  6.240%
                    1,186,660         9/1/2009                  7.220%
                    5,000,000         3/1/2011                  6.353%
                -------------
                $  19,536,660
                =============

         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
February 2002, the Company paid a non-refundable commitment fee of $40,000 to
the SBA to reserve $4,000,000 of SBA Guaranteed Debentures. As of March 31,
2003, the Company has not drawn on this commitment.

         On April 30, 2003, the SBA notified the Company that it was no longer
in compliance with the SBA's capital impairment rules, as defined by regulation
107.1830 of the SBA Regulations. Based on this non-compliance, the SBA has
accelerated the maturity date of the Company's debentures to a single demand
note including accrued interest. Interest payments are no longer due on a
semi-annual basis, but interest continues to accrue. As such, the total
remaining balance of debt issuance costs of $496,214 was accelerated at March
31, 2003 due to the acceleration of the indebtedness.

Commitments and Contingencies

         The Company has an operating lease on its office facility which expires
in February 2008. The following are the future minimum rental commitments on the
lease:

<TABLE>
<CAPTION>
                                                  Payments Due By Period
                        ------------------------------------------------------------------------
                                        Less Than                                    More than
                           Total          1 Year       1-3 Years      4-5 Years       5 Years
                        ------------   ------------   ------------   ------------   ------------
<S>                     <C>            <C>            <C>            <C>            <C>
Operating lease         $    194,909   $     47,624   $     98,641   $     48,644   $         --
                        ============   ============   ============   ============   ============
</TABLE>

                                       14
<PAGE>

Item 7A.   Quantitative and Qualitative Disclosures about Market Risk

         The Company's earnings and cash flows are subject to fluctuations due
to changes in interest rates primarily from its investment of available cash
balances in bank money market funds with portfolios of investment grade
corporate and U.S. government securities, in individual bank certificates of
deposit and U.S. treasuries. Under its current policies, the Company does not
use interest rate derivative instruments to manage exposure to interest rate
changes.

         A portion of the Company's investment portfolio consists of fixed-rate
debt securities. Since these debt securities usually have relatively high fixed
rates of interest, minor changes in market yields of publicly traded debt
securities have little or no effect on the values of debt securities in the
Company's portfolio and no effect on interest income. On the other hand,
significant changes in the market yields of publicly traded debt securities may
have a material effect on the values of debt securities in the Company's
portfolio. The Company's investments in debt securities are generally held to
maturity and their fair values are determined on the basis of the terms of the
debt security and the financial condition of the issuer. As of March 31, 2004,
the Company had no publicly traded debt securities in its portfolio.

         A portion of the Company's investment portfolio consists of debt and
equity securities of private companies. The Company anticipates little or no
effect on the value of these investments from modest changes in public market
equity valuations. Should significant changes in market valuations of comparable
publicly owned companies occur, there may a be corresponding effect on
valuations of private companies, which would affect the value, amount and timing
of proceeds eventually realized from these investments. A portion of the
Company's investment portfolio also consists of restricted common stocks and
warrants to purchase common stocks of publicly owned companies. The fair values
of these restricted securities are influenced by the nature of applicable resale
restrictions, the underlying earnings and financial condition of the issuer and
the market valuations of comparable publicly owned companies. A portion of the
Company's investment portfolio also consists of unrestricted, freely marketable
common stocks of publicly owned companies. These freely marketable securities
are directly exposed to equity price fluctuations, in that a change in an
issuer's public market equity price would result in an identical change in the
fair value of the Company's investment in such security. The Company may
utilize, if they are available, put and call option contracts to attempt to
minimize the market risk of its investments in publicly owned companies. As of
March 31, 2004, the Company had no option contracts outstanding as part of its
portfolio.


Item 8.    Financial Statements and Supplementary Data
<TABLE>
<CAPTION>
                                                                                  Page
                                                                                  ----
<S>                                                                   <C>
Report of Independent Auditors - Current ...........................               F-1
Report of Independent Auditors - Predecessor .......................               F-2
Balance Sheets .....................................................               F-3
Statements of Operations ...........................................               F-4
Statements of Changes in Shareholders' Equity.......................               F-5
Statements of Cash Flows ...........................................               F-6
Financial Highlights (Per Share Data and Ratios/Supplemental Data)..               F-7
Notes to Financial Statements.......................................  F-8 through F-18
Portfolio of Investments............................................ F-19 through F-26
</TABLE>

Item 9.    Changes in and Disagreements with Auditors on Accounting and
           Financial Disclosure

          On October 18, 2003 a Form 8-K was filed by the Company in connection
with a change in the Company's certifying auditors. PricewaterhouseCoopers LLP
resigned as the independent auditors of the Company on October 8, 2003. On
October 14, 2003 with approval of the Company's Board of Directors, the Company
engaged the accounting firm of Lazar Levine & Felix LLP as its independent
auditors beginning with the fiscal year ending March 31, 2004 and to review the
Company's interim financial statements beginning with the fiscal quarter ended
September 30, 2003.

                                       15
<PAGE>

Item 9A.   Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures
    ------------------------------------------------

         As of the end of the period covered by this Annual Report on Form 10-K,
we evaluated, under the supervision our chief executive officer and chief
financial officer, the effectiveness of the design and operation of our
"disclosure controls and procedures" (as defined in the Securities Exchange Act
of 1934, Rules 13a-15(e) and 15d-15(e)). Based on that evaluation, our
management, including our chief executive officer and chief financial officer,
has concluded that as of the date of the evaluation our disclosure controls and
procedures are effective to ensure that all material information required to be
filed in this report has been made known to them.

(b) Changes in Internal Controls over Financial Reporting
    -----------------------------------------------------

         There have been no changes in our internal controls over financial
reporting that occurred during the fourth quarter of the fiscal year ended March
31, 2004 that have materially affected, or are reasonably likely to materially
affect, our internal controls over financial reporting.


                                    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, 2004.


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, 2004.


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, 2004.


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, 2004.


Item 14.   Principal Accountant Fees and Services

         Incorporated by reference to the Registrant's definitive proxy
statement to be filed not later than 120 days after March 31, 2004.


                                     PART IV

Item 15.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

         (a)  Financial Statements:

              See item 8 of Part II hereof.

                                       16
<PAGE>

         (b)  No reports on Form 8-K were filed during the fourth quarter of the
              Registrant's fiscal year ended March 31, 2004. The Registrant
              filed a report on Form 8-K on October 18, 2003, incorporated by
              reference to Exhibit 99.1 of the Registrant's Form 10-K for the
              fiscal year ended March 31, 2004 in SEC File No. 33-94322 .

         (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(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(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.

              10(I).     Employment Agreement with Paul A. Perlin, dated April
                         4, 2001 as of November 1, 2000 incorporated by
                         reference to Exhibit 10(I) to the Registrant's Form
                         10-K for the fiscal year ended March 31, 2001 in SEC
                         File No. 33-94322 .

              10(J).     Employment Agreement with David Greenberg, dated April
                         4, 2001 as of November 1, 2000, incorporated by
                         reference to Exhibit 10(J) to the Registrant's Form
                         10-K for the fiscal year ended March 31, 2001 in SEC
                         File No. 33-94322 .

              10(K).     Employment Agreement with Paul A. Perlin, dated
                         November 15, 2002 as of November 1, 2002 incorporated
                         by reference to Exhibit 10(K) to the Registrant's Form
                         10-K for the fiscal year ended March 31, 2003 in SEC
                         File No. 33-94322 .

              11.        Statement of Computation of Earnings (Loss) Per Share,
                         incorporated herein by reference to the Notes to the
                         Financial Statements included in this report.

              31.1       Certification of Paul A. Perlin, Chief Executive
                         Officer, pursuant to Section 302 of the Sarbanes-Oxley
                         Act of 2002.

              31.2       Certification of R. Scot Perlin, Chief Financial
                         Officer, pursuant to Section 302 of the Sarbanes-Oxley
                         Act of 2002.

              32.1       Certification of Paul A. Perlin, Chief Executive
                         Officer, pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002.

                                       17
<PAGE>

              32.2       Certification of R. Scot Perlin, Chief Financial
                         Officer, pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002.

         (d)  Financial Statement Schedules: The schedules specified under
              Regulation S-X are either included 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, 2004.

                                   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 18, 2004               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 18, 2004               By: /s/ PAUL A. PERLIN
                                        ------------------------------
                                        Paul A. Perlin
                                        Chairman of the Board &
                                        Chief Executive Officer
                                        (Principal Executive Officer) & Director

Dated:  June 18, 2004               By: /s/ R. SCOT PERLIN
                                        ------------------------------
                                        R. Scot Perlin
                                        Chief Financial Officer
                                        (Principal Financial &
                                        Accounting Officer) & Director

Dated:  June 18, 2004               By: /s/ JOEL I. BARAD
                                        ------------------------------
                                        Joel I. Barad
                                        Director


Dated:  June 18, 2004               By: /s/ BARRY J. GORDON
                                        ------------------------------
                                        Barry J. Gordon
                                        Director


Dated:  June 18, 2004               By: /s/ DAVID GREENBERG
                                        ------------------------------
                                        David Greenberg
                                        Director


Dated:  June 18, 2004               By: /s/ BRUCE A. KAUFMAN
                                        ------------------------------
                                        Bruce A. Kaufman
                                        Director


Dated:  June 18, 2004               By: /s/ ALLEN L. WEINGARTEN
                                        ------------------------------
                                        Allen L. Weingarten
                                        Director

                                       18
<PAGE>

                             WINFIELD CAPITAL CORP.

                             MARCH 31, 2004 AND 2003

                                    CONTENTS



                                                                            Page
                                                                            ----

Report of Independent Auditors - Current                                     F-1

Report of Independent Auditors - Predecessor                                 F-2

Balance Sheets                                                               F-3
    (At March 31, 2004 and 2003)

Statements of Operations                                                     F-4
(For each of the three years in the period ended March 31, 2004)

Statements of Changes in Shareholders' Equity                                F-5
(For each of the three years in the period ended March 31, 2004)

Statements of Cash Flows                                                     F-6
(For each of the three years in the period ended March 31, 2004)

Financial Highlights                                                         F-7
    Per Share Operating Performance
      (For the years ended March 31, 2004 and 2003)
    Ratios/Supplemental Data
      (For the years ended March 31, 2004 and 2003)

Notes to Financial Statements                                         F-8 - F-18

Portfolio of Investments                                             F-19 - F-26

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

To The Board of Directors and Shareholders
of Winfield Capital Corp.
(A Small Business Investment Company licensed
by the U.S. Small Business Administration ("SBA"))
White Plains, NY

We have audited the accompanying balance sheet of Winfield Capital Corp. as of
March 31, 2004 and the related statements of operations, changes in
shareholders' equity and cash flows for the year then ended. Our audit also
included the financial statement schedules listed in accompanying index of this
Form 10-K. These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and schedules are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and schedules. 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
audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winfield Capital Corp. at March
31, 2004 and the results of their operations and their cash flows for the year
then ended, in conformity with accounting principles generally accepted in the
United States of America. Also, in our opinion, the related financial statement
schedules, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and its debentures payable to the SBA are currently due as a result of an
impairment under SBA regulations. These matters raise substantial doubt about
the Company's ability to continue as a going concern. Management's plan in
regard to these matters is also described in Note 2. The financial statements do
not include any adjustments that might result from the outcome of this
uncertainty.


/s/ LAZAR LEVINE & FELIX LLP
----------------------------
Lazar Levine & Felix LLP

New York, NY
June 7, 2004

                                      F-1

<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

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

In our opinion, the financial statements listed in the accompanying index
present fairly, in all material respects, the financial position of Winfield
Capital Corp. at March 31, 2003, and the results of its operations and its cash
flows for each of the two years in the period ended March 31, 2003 in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedules listed in the
accompanying index present fairly, in all material respects, the information set
forth therein when read in conjunction with the related financial statements.
These financial statements and financial statement schedules are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company has suffered recurring losses from operations
and its debentures payable to the SBA are currently due as a result of an
impairment under SBA regulations. These matters raise substantial doubt about
the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 2. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.


/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PricewaterhouseCoopers LLP

New York, NY
June 13, 2003

                                      F-2

<PAGE>

                             WINFIELD CAPITAL CORP.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                    Years Ended March 31,
                                                               ----------------------------
                                                                   2004            2003
                                                               ------------    ------------
<S>                                                            <C>             <C>
ASSETS

Investments, at value:
    Loans and notes receivable (cost:
        $10,569,529 and $10,365,361, respectively)             $  8,483,825    $  8,371,521
    Equity interests in small business
        concerns (cost: $20,646,641 and
        $22,372,142, respectively)                                9,817,227      10,220,109
    Assets acquired in liquidation
        (cost: $0 and $24,707,
        respectively)                                                    --              --
                                                               ------------    ------------

                  Total investments                              18,301,052      18,591,630

Cash and cash equivalents                                         5,473,063       4,396,206
Short-term marketable securities                                         --       3,454,226
Accrued interest receivable                                          62,070          85,276
Furniture and equipment (net of accumulated
  depreciation of $47,316 and $41,880,
  respectively)                                                      11,088          13,246
Other assets                                                         71,406         115,670
                                                               ------------    ------------

                  Total assets                                 $ 23,918,679    $ 26,656,254
                                                               ============    ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Debentures payable to the U.S. Small
  Business Administration                                      $ 19,536,660    $ 24,650,000
Deferred income                                                     101,922         129,102
Accrued expenses                                                  1,652,353         386,057
                                                               ------------    ------------

                  Total liabilities                              21,290,935      25,165,159
                                                               ------------    ------------

Commitments and contingencies

Shareholders' equity:
    Preferred stock - $.001 par value; Authorized -
      1,000,000 shares; issued and outstanding - none
    Common stock - $.01 par value; Authorized -
      30,000,000 shares at March 31, 2004 and 2003;
          issued and outstanding - 5,346,084 shares
      at March 31, 2004 and 2003                                     53,461          53,461
    Additional paid-in capital                                   18,391,954      19,709,170
    Accumulated deficit                                          (2,902,553)     (4,093,738)
    Unrealized depreciation on investments, net                 (12,915,118)    (14,177,798)
                                                               ------------    ------------

                  Total shareholders' equity                      2,627,744       1,491,095
                                                               ------------    ------------

                  Total liabilities and shareholders' equity   $ 23,918,679    $ 26,656,254
                                                               ============    ============
</TABLE>

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

                                      F-3
<PAGE>

                             WINFIELD CAPITAL CORP.
                            STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                           Years Ended March 31,
                                              --------------------------------------------
                                                  2004            2003            2002
                                              ------------    ------------    ------------
<S>                                           <C>             <C>             <C>
Investment income:
    Interest from small business concerns     $  1,490,908    $    459,847    $    165,110
    Interest from invested idle funds               50,737         259,946         880,074
    Loan processing fees                                --              --             927
    Other income                                     9,302          10,104          11,293
                                              ------------    ------------    ------------

                  Total investment income        1,550,947         729,897       1,057,404
                                              ------------    ------------    ------------

Expenses:
    Interest                                     1,665,409       1,878,483       1,910,394
    Payroll and payroll-related expenses           609,314         826,850         879,529
    General and administrative expenses            370,068         474,219         448,381
    Professional fees                              173,933         240,689         259,880
    Depreciation and amortization                    5,436         580,113          85,358
    Other operating costs                           44,003          85,831          58,144
                                              ------------    ------------    ------------

                  Total investment expenses      2,868,163       4,086,185       3,641,686
                                              ------------    ------------    ------------

                  Investment loss - net         (1,317,216)     (3,356,288)     (2,584,282)
                                              ------------    ------------    ------------

Realized gains (losses) on investments,
 net                                             1,191,185          16,407      (3,289,935)

Change in unrealized appreciation
    (depreciation) of investments                1,262,680      (2,654,690)     (8,492,858)
                                              ------------    ------------    ------------

                  Gain (loss) on
                    investments, net             2,453,865      (2,638,283)    (11,782,793)
                                              ------------    ------------    ------------

                  Net increase (decrease)
                    in shareholders'
                    equity resulting from
                    operations                $  1,136,649    $ (5,994,571)   $(14,367,075)
                                              ============    ============    ============

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

        Basic                                 $       0.21    $      (1.12)   $      (2.69)
                                              ============    ============    ============

        Diluted                               $       0.21    $      (1.12)   $      (2.69)
                                              ============    ============    ============
</TABLE>

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

                                      F-4
<PAGE>

                             WINFIELD CAPITAL CORP.
                  STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                       (Accumulated Deficit)
                                                                         Retained Earnings
                                                                    ---------------------------
                                                                                                    Unrealized
                                                                         Net            Net        Appreciation
                             Common Stock            Additional     Undistributed  Undistributed  (Depreciation) on
                      ---------------------------     Paid-In        Investment      Realized       Investments -
                         Shares         Amount        Capital       Income/(Loss)   Gain/(Loss)         net            Total
                      ------------   ------------   ------------    ------------    ------------    ------------    ------------
<S>                      <C>         <C>            <C>             <C>             <C>             <C>             <C>
Balance - April 1,
2001                     5,346,084   $     53,461   $ 24,753,357    $     76,172    $  1,276,190    $ (3,030,250)   $ 23,128,930

Net (decrease)
  increase
  in shareholders'
  equity
  resulting from
  operations                                                          (2,584,282)     (3,289,935)     (8,492,858)    (14,367,075)

Dividends paid                                                                        (1,276,189)                     (1,276,189)

Reclassification
  as described in
  Note 3                                              (1,770,659)      2,612,856        (842,197)
                      ------------   ------------   ------------    ------------    ------------    ------------    ------------

Balance - March 31,
2002                     5,346,084         53,461     22,982,698         104,746      (4,132,131)    (11,523,108)      7,485,666

Net (decrease)
  increase
  in shareholders'
  equity
  resulting from
  operations                                                          (3,356,288)         16,407      (2,654,690)     (5,994,571)

Reclassification
  as described in
  Note 3                                              (3,273,528)      3,251,542          21,986
                      ------------   ------------   ------------    ------------    ------------    ------------    ------------

Balance - March 31,
2003                     5,346,084         53,461     19,709,170              --      (4,093,738)    (14,177,798)      1,491,095

Net (decrease)
  increase
  in shareholders'
  equity
  resulting from
  operations                                                          (1,317,216)      1,191,185       1,262,680       1,136,649

Reclassification
  as described in
  Note 3                                              (1,317,216)      1,317,216
                      ------------   ------------   ------------    ------------    ------------    ------------    ------------


Balance - March 31,
2004                     5,346,084   $     53,461   $ 18,391,954    $         --    $ (2,902,553)   $(12,915,118)   $  2,627,744
                      ============   ============   ============    ============    ============    ============    ============
</TABLE>

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

                                      F-5
<PAGE>

                             WINFIELD CAPITAL CORP.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                            Years Ended March 31,
                                                                               --------------------------------------------
                                                                                   2004            2003            2002
                                                                               ------------    ------------    ------------
<S>                                                                            <C>             <C>             <C>
Operating activities
   Net increase (decrease) in shareholders' equity resulting from operations   $  1,136,649    ($ 5,994,571)   ($14,367,075)
   Adjustments to reconcile net increase (decrease) in shareholders' equity
     resulting from operations to net cash used in operating activities:
        Realized (gains) losses on investments, net                              (1,191,185)        (16,407)      3,289,935
        Change in unrealized (appreciation) depreciation of investments          (1,255,461)      2,692,012       8,395,076
        Change in unrealized (appreciation) depreciation of
           short-term marketable securities                                          (7,219)        (37,322)         97,782
        Depreciation and amortization of fixed assets                                 5,436           5,685           6,862
        Accretion of interest to face value of notes                               (385,651)       (115,147)             --
        Amortization of debenture costs                                                  --         574,428          78,496
        Decrease in receivable from broker                                               --              --          46,599
        Decrease (increase) in accrued interest receivable                           23,206          74,529        (152,927)
        Decrease (increase) in other assets                                          44,264         (49,519)         (9,244)
        (Increase) in income taxes payable                                               --              --         (23,404)
        (Decrease) in deferred income                                               (27,180)             --              --
        Increase in accrued expenses                                              1,266,296          23,637          33,459
                                                                               ------------    ------------    ------------

            Net cash used in operating activities                                  (390,845)     (2,842,675)     (2,604,441)
                                                                               ------------    ------------    ------------

Investing activities:
   Purchases of short-term marketable securities                                         --      (6,487,954)    (13,735,656)
   Proceeds from the maturity of short-term marketable securities                 3,430,000      15,808,742      16,732,951
   Proceeds from sale of equity interests and return of capital                   2,823,397         920,337       4,524,282
   Investments originated                                                          (154,905)     (7,618,912)       (367,676)
   Proceeds from collection of loans                                                485,828         199,679         102,105
   Acquisition of fixed assets                                                       (3,278)             --         (11,724)
                                                                               ------------    ------------    ------------

            Net cash provided by investing activities                             6,581,042       2,821,892       7,244,282
                                                                               ------------    ------------    ------------

Financing activities:
   Repayment of debentures payable to SBA                                        (5,113,340)             --        (900,000)
   Debenture costs paid                                                                  --              --         (40,000)
   Dividends paid                                                                        --              --      (1,276,189)
                                                                               ------------    ------------    ------------

            Net cash used in financing activities                                (5,113,340)             --      (2,216,189)
                                                                               ------------    ------------    ------------

            Increase (decrease) in cash and cash equivalents                      1,076,857         (20,783)      2,423,652
   Cash and cash equivalents - beginning of year                                  4,396,206       4,416,989       1,993,337
                                                                               ------------    ------------    ------------

             Cash and cash equivalents - end of year                           $  5,473,063    $  4,396,206    $  4,416,989
                                                                               ============    ============    ============

Supplemental disclosures of cash flow information:
  Cash paid for interest                                                       $    330,392    $  1,878,483    $  1,889,523
                                                                               ============    ============    ============
Supplemental schedule of non-cash investing and financing activities:
  Conversion of loans and notes receivable into equity interests                         --    $      3,125    $     18,370
                                                                               ------------    ------------    ------------
  Receivable from escrow account                                               $         --    $         --    $    197,369
                                                                               ------------    ------------    ------------
</TABLE>

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

                                      F-6
<PAGE>

                             WINFIELD CAPITAL CORP.
                              FINANCIAL HIGHLIGHTS


                                                     Years Ended March 31,
                                               -------------------------------
                                                   2004               2003
                                               -------------     -------------

Per Share Operating Performance

Shareholders' equity, beginning of period      $         .28     $        1.40
                                               -------------     -------------

Investment loss - net                                  (0.25)            (0.63)

Net realized and unrealized gain (loss)
  on investments                                        0.46             (0.49)
                                               -------------     -------------

Total from investment operations                        0.21             (1.12)
                                               -------------     -------------

Dividends paid                                            --                --
                                               -------------     -------------

Shareholders' equity, end of year              $         .49     $         .28
                                               =============     =============

Per share market value, end of year            $         .42     $         .36
                                               =============     =============

Shares outstanding, end of year                    5,346,084         5,346,084
                                               =============     =============


Ratios/Supplemental Data

Shareholders' equity, end of period            $   2,627,744     $   1,491,095

Ratio of investment expenses to average
   shareholders' equity                               139.27%            94.03%

Ratio of investment loss - net to average
   shareholders' equity                                63.96%            77.24%

                                      F-7
<PAGE>

                             WINFIELD CAPITAL CORP.
                          NOTES TO FINANCIAL STATEMENTS
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


1.  Organization

             Winfield Capital Corp. (the "Registrant" or the "Company") was
    incorporated 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, senior, subordinated, convertible and interest-paying
    debentures; preferred stock; common stock; and options and warrants to
    purchase the foregoing. The Company's investments are 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.  Basis of Presentation

             On April 11, 2003, the Company received notice from the Nasdaq
    Stock Market, Inc. that effective April 15, 2003 the Company's securities
    were delisted from the Nasdaq SmallCap Market. The Company's securities
    became eligible for quotation on the OTC Bulletin Board effective April 15,
    2003 with the assigned symbol "WCAP" (see Note 10).

             According to the U.S. Small Business Administration (the "SBA")
    Regulations, the Company is required to be in compliance with the capital
    impairment rules, as defined by regulation 107.1830 of the SBA Regulations.
    The Company was notified by the SBA on April 30, 2003 that the Company was
    no longer in compliance with the SBA's capital impairment requirements and
    that the SBA had accelerated the maturity date of the Company's debentures.
    The aggregate principal, interest and fees due under the debentures totaled
    approximately $25.6 million as of April 30, 2003, including interest and
    fees due through the next semi-annual payment date. As a result of
    subsequent repayments by the Company, the aggregate principal, interest and
    fees due under the debentures totaled approximately $21.1 million as of
    March 31, 2004, including interest and fees due through the next semi-annual
    payment date. The SBA has transferred Winfield Capital's account to
    liquidation status where any new investments and material expenses are
    subject to prior SBA approval. Based on discussions and meetings that the
    Company has had with the SBA to date, the SBA will not afford the Company
    the flexibility of a self-managed liquidation to repay its indebtedness. As
    a result, the Company anticipates that it will be required to repay all or
    substantially all of the principal and interest owing to the SBA on a
    schedule acceptable to the SBA. No definitive agreement has been reached
    with the SBA and the SBA maintains the ability to pursue any remedies they
    deem appropriate under the law or the instruments evidencing the Company's
    indebtedness, including, without limitation, initiating proceedings for the
    appointment of the SBA or its designee as receiver. If the SBA were to
    require the Company to immediately pay back the entire indebtedness
    including accrued interest, certain private security investments may need to
    be disposed of in a forced sale which may result in proceeds less than their
    carrying value at March 31, 2004. As such, this impairment could have a
    material adverse effect on the Company's financial position, results of
    operations and cash flows which raises substantial doubt about the Company's
    ability to continue as a going concern. The Company continues to explore
    various strategic alternatives, including a third party equity infusion,
    although there can be no assurance that it will be successful in its ability
    to consummate or implement these or any other strategic alternatives.

                                      F-8
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


3.  Summary of Significant Accounting Policies

    Valuation of Investments

             Securities that are traded on a securities exchange or the Nasdaq
    National Market, which are not 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.

             In the fiscal year ended March 31, 2002, the Company, in accordance
    with the Securities and Exchange Commission Guidelines and the AICPA Audit
    of Investment Companies Guide, eliminated the blockage discount in
    calculating the fair market value of its portfolio securities listed on the
    national exchanges. If the Company had not changed its method of estimating
    the fair market value of its portfolio securities, the additional loss for
    the fiscal year 2002 would have been $179,220, or an additional loss of $.03
    per share.

             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 30%, 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 and trading history of the
    portfolio company. In some cases, a discount of greater than 30% may be used
    based upon applicable factors including, but not limited to: 1) whether the
    portfolio company will be financially solvent at the time such restricted
    securities become freely tradable, 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. Investments in restricted securities, which have
    been subjected to a discount as determined by the Board of Directors
    amounted to $423,514 and $117,940 as of March 31, 2004 and 2003,
    respectively.

             Loans and assets acquired in liquidation 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 (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 cash flows
    from operations, the market for 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 basis, management
    will consider, based on available information, the appropriateness of the
    continued accrual of interest and the carrying value of the loan.

                                      F-9
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


             At March 31, 2004 and 2003, the investment portfolio included
    investments totaling $12,223,604 and $17,631,300, respectively, whose fair
    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, 2004 and 2003, 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. For the fiscal years ended
    March 31, 2004, 2003 and 2002, net realized losses from write-offs after
    recoveries totaled $12,921, $182,001 and $2,337,716, respectively. 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.

             At March 31, 2004 and 2003, the aggregate gross unrealized
    depreciation of investments was $16,799,648 and $15,171,830, respectively,
    and the aggregate gross unrealized appreciation of investments was
    $3,884,530, and $1,001,251, respectively, resulting in a net unrealized
    depreciation of $12,915,118 and $14,170,579, respectively (excluding
    unrealized depreciation on short-term marketable securities of $0 and
    $7,219, respectively).

    Description of Loan Terms

             The Company's loans to small business concerns range up to
    approximately $5,400,000 in size, typically have a maturity of five years or
    less, 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 6.0% to 19.0%, 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.

    Option Contracts - Derivatives

             The Company adopted Statement of Financial Accounting Standards No.
    133 as amended by Statements No. 137 and No. 138, Accounting for Derivative
    Instruments and Hedging Activities, (referred to hereafter as "SFAS 133"),
    on January 1, 2001. At that time, the Company did not have any derivatives.
    SFAS 133 requires that an entity recognize all derivative instruments in the
    balance sheet and measure those financial instruments at fair value. All
    changes in the fair market value of financial instruments are included as
    changes in the unrealized appreciation or depreciation of investments in the
    statements of operations.

                                      F-10
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


    Assets Acquired in Liquidation

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

    Cash and Cash Equivalents

             The Company considers all highly liquid investments purchased with
    an original maturity of three months or less to be cash and cash
    equivalents. The carrying amount reported in the balance sheet for cash and
    cash equivalents approximates fair value.

    Short-term Marketable Securities

             Short-term marketable securities are carried at fair value.
    Interest income earned on short-term marketable securities for the fiscal
    years ended March 31, 2004, 2003 and 2002, was $14,589, $238,484, and
    $821,713, respectively.

    Deferred Debenture Costs

             SBA debenture costs were amortized over ten years, which
    represented the terms of the SBA debentures. See Note 5.

    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,
    any unamortized portion of the loan origination fees are recognized.

    Furniture and Equipment

             Furniture and equipment are carried at cost. The Company
    depreciates furniture and office equipment over an 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.

                                      F-11
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


             In order to maintain its RIC status, the Company must in general:
    1) derive at least 90% of its gross income from dividends, interest and
    gains from the sale or disposition of securities 2) meet investment
    diversification requirements defined by the Code and 3) distribute to
    shareholders 90% of its net income (other than long-term capital gains).

             The Company may periodically make reclassifications among certain
    of its capital accounts as a result of timing and characterization of
    certain income and capital gains distributions determined annually in
    accordance with Federal tax regulation. The reclassifications may result in
    a reduction of capital. All reclassifications have been reflected on the
    statements of changes in shareholders' equity.

    Stock Options

             The Company accounts for stock-based compensation relating to its
    stock option plan 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 7).

             Had the Company measured compensation expense under SFAS No. 123,
    there would be no material impact to the net decrease in shareholders'
    equity resulting from operations or the per share net increase (decrease) in
    shareholders' equity resulting from operations for the years ended March 31,
    2004, 2003 and 2002. The following table illustrates the effect on net
    income (loss) and earnings (loss) per share if the Company had applied the
    fair value recognition provisions of SFAS No. 123 to stock-based employee
    compensation.

<TABLE>
<CAPTION>
                                                                                   Years Ended March 31,
                                                                    ----------------------------------------------
                                                                        2004            2003             2002
                                                                    -------------   -------------    -------------
<S>                                                                 <C>             <C>              <C>
    Net increase (decrease) in shareholders' equity, as reported    $   1,136,649   $  (5,994,571)   $ (14,367,075)
    Deduct: Total stock-based employee compensation as
      Determined under the fair value based method for all
      awards, net of related tax effects                                       --              --          (17,628)
                                                                    -------------   -------------    -------------
    Pro forma net increase (decrease) in shareholders' equity       $   1,136,649   $  (5,994,571)   $ (14,384,703)

       Basis - as reported                                          $        0.21   $       (1.12)   $       (2.69)

       Basis - pro forma                                            $        0.21   $       (1.12)   $       (2.69)
</TABLE>

             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 for the fiscal year ended 2002 - expected volatility was
    132%; risk-free interest of approximately 4.3%; and expected lives ranging
    from 3 to 6 years.

    Per Share Data

             Under SFAS No. 128 "Earnings Per Share", net increase (decrease) in
    shareholders' equity per share is computed by dividing net increase
    (decrease) in shareholders' equity resulting from operations 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.

                                      F-12
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


    Risks and Uncertainties

             The Company is engaged in a high-risk business. Loans and other
    investments to small business concerns are extremely speculative. Most of
    such small business 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 factors which are beyond the
    Company's control.

             In addition, see Note 2 with regard to certain uncertainties.

    Use of Estimates

             The preparation of financial statements in conformity with
    accounting principles generally accepted in the United States of America
    requires management to make estimates and assumptions that affect the
    reported amounts of 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
    investments. Actual results could differ from those estimates.

    Recent Accounting Pronouncements

             On July 30, 2002, the Financial Accounting Standards Board (the
    "FASB") issued Statement of Financial Accounting Standards No. 146,
    "Accounting for Costs Associated with Exit or Disposal Activities" ("SFAS
    146"), that is applicable to exit or disposal activities initiated after
    December 31, 2002. This standard requires companies to recognize costs
    associated with exit or disposal activities when they are incurred rather
    than at the date of a commitment to an exit or disposal plan. This standard
    does not apply where SFAS 144 is applicable. This new standard does not
    currently have any impact on the Company's operating results and financial
    position.

             On December 31, 2002, FASB issued Statement of Financial Accounting
    Standards No. 148, "Accounting for Stock-Based Compensation - Transition and
    Disclosure" ("SFAS 148"), that is applicable to financial statements issued
    for fiscal years ending after December 15, 2002. This standard amends
    Statement of Financial Accounting Standards No. 123, "Accounting for
    Stock-Based Compensation" ("SFAS 123") and provides guidance to companies
    electing to voluntarily change to the fair value based method of accounting
    for stock-based compensation. In addition, this standard amends SFAS 123 to
    require more prominent and more frequent disclosures in financial statements
    regarding the effects of stock-based compensation. This new standard does
    not currently have any impact on the Company's operating results and
    financial position.

             During April 2003, the Financial Accounting Standards Board issued
    SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging
    Activities." SFAS 149 amends and clarifies accounting for derivative
    instruments, including certain derivative instruments embedded in other
    contracts, and for hedging activities under SFAS 133,"Accounting for
    Derivative Instruments and Hedging Activities." The statement requires that
    contracts with comparable characteristics be accounted for similarly and
    clarifies when a derivative contains a financing component that warrants
    special reporting in the statement of cash flows. SFAS 149 is effective for
    contracts entered into or modified after June 30, 2003, except in certain
    circumstances, and for hedging relationships designated after June 30, 2003.
    This new standard does not currently have any impact on the Company's
    operating results and financial position.

                                      F-13
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


             In December 2003, the Financial Accounting Standards Board issued
    Statement of Financial Accounting Standards No. 132 (revised 2003),
    "Employers' Disclosures about Pensions and Other Postretirement Benefits -
    an amendment of FASB Statements No. 87, 88, and 106" ("SFAS 132 (revised
    2003)"), effective for fiscal years beginning after December 15, 2002,
    subject to certain exemptions. SFAS 132 (revised 2003) revises employers'
    disclosures about pension plans and other postretirement benefit plans. It
    does not change the measurement or recognition of those plans required by
    Statement of Financial Accounting Standards No. 87, "Employers' Accounting
    for Pensions," Statement of Financial Accounting Standards No. 88,
    "Employers' Accounting for Settlements and Curtailments of Defined Benefit
    Pension Plans and for Termination Benefits," and Statement of Financial
    Accounting Standards No. 106, "Employers' Accounting for Postretirement
    Benefits Other Than Pensions." This Statement retains the disclosure
    requirements contained in Statement of Financial Accounting Standards No.
    132, "Employers' Disclosures about Pensions and Other Postretirement
    Benefits" ("SFAS 132"), which it replaces. It requires additional
    disclosures to those in the original SFAS 132 about the assets, obligations,
    cash flows, and net periodic benefit cost of defined benefit pension plans
    and other defined benefit postretirement plans. The required information
    should be provided separately for pension plans and for other postretirement
    benefit plans. The Company adopted SFAS 132 (revised 2003) as of January 1,
    2003. The effect of the adoption of this Statement was not material.

4.  Fair Value of Financial Statements:

    Short-term marketable securities

             As of March 31, 2004 and 2003, short-term marketable securities
    consisted of the following:

                                                     Years Ended March 31,
                                                 ---------------------------
                                                     2004           2003
                                                 ------------   ------------
    U.S. Government obligations                  $         --   $  1,299,597
    Certificates of deposit                                --      2,154,629
                                                 ------------   ------------
                                                 $         --   $  3,454,226
                                                 ============   ============

             As of March 31, 2004 and 2003, unrealized depreciation on
    short-term marketable securities was $0 and $7,219, respectively.

    Debentures payable to the U.S. Small Business Administration

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

    Option Contracts

             Beginning in January 2001, the Company utilized put and call option
    contracts to minimize market risks of its investments in publicly held
    companies. The unrealized net appreciation was presented at fair value based
    on the market price of exchange listed options. During the fiscal year ended
    March 31, 2002, all option contracts became due. As of March 31, 2004, the
    Company has no option contracts outstanding as part of its portfolio.

5.  Debentures Payable to the U.S. Small Business Administration:

             Debentures payable to the SBA at March 31, 2004, with interest
    payable semi-annually, consisted of the following:

                                      F-14
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


                                                        Interest Rate
                      Amount           Due Date          (per annum)
                   ------------        --------          -----------

                   $    750,000        9/1/2005             6.875%
                        600,000        9/1/2005             6.875%
                      5,000,000        6/1/2006             7.710%
                      3,000,000        3/1/2009             6.240%
                      4,000,000        3/1/2009             6.240%
                      1,186,660        9/1/2009             7.220%
                      5,000,000        3/1/2011             6.353%
                   ------------
                   $ 19,536,660
                   ============

             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 February 2002, the Company paid a non-refundable
    commitment fee of $40,000 to the SBA to reserve $4,000,000 of SBA Guaranteed
    Debentures. As of March 31, 2003, the Company has not drawn on this
    commitment.

             On April 30, 2003, the SBA notified the Company that it was no
    longer in compliance with the SBA's capital impairment rules, as defined by
    regulation 107.1830 of the SBA Regulations. Based on this non-compliance,
    the SBA has accelerated the maturity date of the Company's debentures to a
    single demand note including accrued interest. Interest payments are no
    longer due on a semi-annual basis, but interest continues to accrue. As
    such, the total remaining balance of debt issuance costs of $496,214 was
    accelerated at March 31, 2003 due to the acceleration of the indebtedness.

6.  Commitments and Contingencies:

             The Company has an operating lease on its office facility which
    expires in February 2008. Rent expense was $46,647, $46,150, and $45,291 for
    the years ended March 31, 2004, 2003 and 2002, respectively. The following
    are the minimum rental commitments for the next four fiscal years:

                    Fiscal Year Ending              March 31,
                    ------------------              ---------
                           2005                     $  47,624
                           2006                        47,421
                           2007                        51,220
                           2008                        48,644
                                                    ---------
                                                    $ 194,909
                                                    =========

             The Company has an employment agreement with an officer which
    provides for an annual compensation of $306,180 which expires on October 31,
    2004.

7.  Stock Option Plan:

             In October 1995, which was subsequently amended by the shareholder
    vote in September 1997, the Company adopted the 1995 stock option plan (the
    "Plan") under which 1,250,000 shares of common stock were reserved for
    issuance pursuant to options granted under 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 as qualified
    options, stock appreciation rights ("SARs") and shares of Restricted Common
    Stock may be granted or issued.

             Qualified Options granted to Eligible Employees (as defined in 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
    for options granted to any employee who owns 10% or more of the outstanding

                                      F-15
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


    stock of the Company ("10% shareholder"), for which 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. In the case of an
    option granted to a 10% shareholder, such period may not exceed five years.

             Options not intended to qualify as qualified options may be granted
    to Eligible Employees under the Plan and shall have such exercise prices and
    such other terms and conditions as the Compensation Committee of the Company
    (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 determines 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
    expire 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 Common 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.

             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 activity for the past three years has been as follows:

<TABLE>
<CAPTION>
                                     2004                      2003                      2002
                           ------------------------   -----------------------   -----------------------
                                          Average                   Average                   Average
                                          Exercise                  Exercise                  Exercise
                             Shares        Price        Shares       Price        Shares       Price
                           ----------    ----------   ----------   ----------   ----------   ----------
<S>                           <C>        <C>             <C>       <C>             <C>       <C>
    Balance,                  874,563    $     1.19      874,563   $     1.19      862,563   $     1.17
    beginning of
      fiscal year
    Granted                        --                         --                    12,000         1.68
    Exercised
    Expired                    (8,000)         5.00           --                        --
                           ----------                 ----------                ----------
    Balance, end of
      fiscal year             866,563          1.15      874,563         1.19      874,563         1.19
                           ==========                 ==========                ==========
    Options
      exercisable at
      end of fiscal year      778,563    $     1.14      778,563   $     1.14      778,563   $     1.14
                           ==========                 ==========                ==========
</TABLE>

             During the year 2002, the Board of Directors approved the extension
    of the expiration date of 856,563 stock options for an additional number of
    years up to the maximum ten years stipulated in the Plan. In accordance with

                                      F-16
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


    Financial Accounting Standard Board Interpretation Number 44, "Accounting
    for Certain Transactions Involving Stock Compensation - An Interpretation of
    APB Opinion Number 25", no compensation cost was incurred with the extension
    as the exercise prices were higher than their fair value at the date of
    modification.

             The following table summarizes information about the stock options
    outstanding as of March 31, 2004:

<TABLE>
<CAPTION>
                                                                                                 Options
                                             Options Outstanding                               Exercisable
                       ----------------------------------------------------------------     ------------------
    Exercise price     Number outstanding   Weighted-average remaining contractual life     Number exercisable
    --------------     ------------------   -------------------------------------------     ------------------
<S>                           <C>                             <C>                                 <C>
        $ 1.11                464,277                         3.99                                404,277
        $ 1.16                366,286                         1.13                                366,286
        $ 1.50                  4,000                         3.14                                  4,000
        $ 1.53                 20,000                         2.92                                  4,000
        $ 1.68                 12,000                         2.70                                     --
                             --------                                                           ---------
                              866,563                                                             778,563
                             ========                                                           =========
</TABLE>

8.  Concentration of Credit and Market Risk:

             Financial instruments that potentially subject the Company to
    concentrations of credit risk consisted of cash and cash equivalents and
    short-term marketable securities of $5,473,063 and $7,850,432 at March 31,
    2004 and 2003, respectively. Cash is invested with banks in amounts, which,
    at times, exceed insurable limits. Short-term marketable securities are
    invested in U.S. government obligations and certificates of deposits. As of
    March 31, 2004, 93% of the Company's total investment value was held in six
    notes and equity securities: Accent Optical Technologies, Inc., J.L. French
    Automotive Castings, Inc., Comdial Corporation, Open Solutions, Inc. and
    Petroleum Place, Inc. and Engenia Software, Inc.

             As of March 31, 2003, 87% of the Company's total investment value
    was held in seven notes and equity securities, Accent Optical Technologies,
    Inc., Engenia Software, Inc., Evoke Software Corporation, Open Solutions,
    Inc., Petroleum Place, Inc., Comdial Corporation, and J.L. French Automotive
    Castings, Inc.

9.  Earnings (Loss) Per Common Share:
<TABLE>
<CAPTION>
                                                                        Years Ended March 31,
                                                             ------------------------------------------
                                                                 2004           2003           2002
                                                             ------------   ------------   ------------
<S>                                                          <C>            <C>            <C>
    Net earnings (loss) available for common stock
        equivalent shares deemed to have a dilutive effect   $  1,136,649   $ (5,994,571)  $(14,367,075)
                                                             ============   ============   ============
    Per share net increase (decrease)
        in shareholders' equity resulting from operations
        Basic                                                $       0.21   $      (1.12)  $      (2.69)
                                                             ============   ============   ============
        Diluted                                              $       0.21   $      (1.12)  $      (2.69)
                                                             ============   ============   ============
    Shares used in computation:
        Basic
           Weighted average common shares                       5,346,084      5,346,084      5,346,084
                                                             ============   ============   ============


        Diluted
            Weighted average common shares                      5,346,084      5,346,084      5,346,084
                                                             ============   ============   ============
            Common stock equivalents                             -A-            -A-            -A-
                                                             ------------   ------------   ------------
                                                                5,346,084      5,346,084      5,346,084
                                                             ============   ============   ============
</TABLE>

    (A) For the years ended March 31, 2004, 2003 and 2002, the effect of
        exercising the outstanding stock options would have been anti-dilutive
        and, therefore, the use of common stock equivalent shares was not
        considered.

                                      F-17
<PAGE>

                             WINFIELD CAPITAL CORP.
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                    YEARS ENDED MARCH 31, 2004, 2003 AND 2002


10.  Nasdaq Stock Market, Inc. ("Nasdaq") Letters and Delisting:

             On June 17, 2002, the Company received notice from the Nasdaq Stock
    Market, Inc. ("Nasdaq") that for the preceding 30 consecutive trading days,
    the Company's stock had not maintained the minimum Market Value of Publicly
    Held Shares of $5,000,000 as required for continued inclusion by Marketplace
    Rule 4450(a)(2)(the "Rule") on the Nasdaq National Market.

             On July 23, 2002, the Company received notice from Nasdaq that for
    the preceding 10 consecutive trading days, the Company's common stock had
    not maintained the minimum $1.00 per share as required for continued
    inclusion by Marketplace Rule 4450(a)(5)(the 'Rule') on the Nasdaq National
    Market.

             On September 25, 2002, the Company was notified that the staff of
    the Nasdaq Listing Qualifications Department had approved the Company's
    application to transfer the listing of its common stock $0.01 par value,
    from the Nasdaq National Market to the Nasdaq SmallCap Market.

             On January 22, 2003, the Company received a determination of the
    staff (the "Staff Determination") of the Nasdaq Listing Qualifications
    Department (the "Staff") indicating that the Company failed to comply with
    the minimum bid price of its common stock requirement for continued listing
    set forth in Marketplace Rule 4450(a)(5) and that its securities were,
    therefore, subject to delisting from the Nasdaq SmallCap Market effective
    January 31, 2003. The Company was granted a hearing on March 6, 2003 before
    a Nasdaq Listing Qualification Panel (the "Panel") to review the Staff
    Determination. This hearing stayed the delisting of the Company's common
    stock pending the Panel's decision.

             On April 11, 2003, effective April 15, 2003, the Company received
    notice from Nasdaq that the Company's securities were delisted from the
    Nasdaq SmallCap Market. The Company's securities are quoted on the OTC
    Bulletin Board effective April 15, 2003 with the assigned symbol "WCAP".

                                      F-18
<PAGE>

                             WINFIELD CAPITAL CORP.
                            PORTFOLIO OF INVESTMENTS
                                 MARCH 31, 2004


Loans and Notes Receivable
<TABLE>
<CAPTION>
                                            Loan
                                          Maturity     Interest                    Fair         % of Net
Company Name            Industry            Date       Rate (%)      Cost          Value         Assets
------------------    ------------        --------    ---------   -----------   -----------   -----------
<S>                     <C>               <C>           <C>       <C>           <C>                 <C>
Loans
D&S Diner Rte 7         Restaurant        16-Oct-00     16.25     $    24,049   $        --           0.0%
  Cobleskill Diner
  Corp. (a) (b)
H. Lockings Corp.
  (a) (b)               Food Service      19-Jul-95     16.25          25,976        25,976           1.0%
Horizon Medical         Medical
  Products, Inc.          Devices         16-Jul-05      8.00         246,250       246,250           9.4%
HPA Monon Corp.         Trailer
  (a) (c)                 Manufacturer    15-Mar-02     12.00       2,000,000            --           0.0%
Phone Management        Communication     18-Sep-01      None          61,655            --           0.0%
  Enterprises Inc. (a)
Comdial Corporation     Communication     27-Mar-06     12.00       1,973,503     1,973,503          75.1%
J.L. French
  Automotive            Automotive        31-Dec-07     19.00       5,937,802     5,937,802         226.0%
  Castings, Inc.
Engenia Software,       Software
  Inc.                    Design          31-Dec-04      8.00         245,658       245,658           9.3%

Notes Receivable
John Papakonstantis     Restaurant        17-Jul-17     10.00          54,636        54,636           2.1%
                                                                  -----------   -----------   -----------
    Total Loans and Notes Receivable                              $10,569,529   $ 8,483,825         322.9%
                                                                  ===========   ===========   ===========
</TABLE>
---------------------------
(a) Non-income producing or past due as to required principal and/or interest.
(b) Foreclosed upon
(c) Declared Chapter 7 bankruptcy

                                      F-19
<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2003


Loans and Notes Receivable

<TABLE>
<CAPTION>
                                            Loan
                                          Maturity     Interest                    Fair         % of Net
Company Name            Industry            Date       Rate (%)      Cost          Value         Assets
------------------    ------------        --------    ---------   -----------   -----------   -----------
<S>                     <C>               <C>           <C>       <C>           <C>                 <C>
Loans
D&S Diner Rte 7         Restaurant        16-Oct-00     16.25     $    24,049   $        --           0.0%
  Cobleskill Diner
  Corp. (a) (b)
H. Lockings Corp.       Food Service      19-Jul-95     16.25          21,450        21,450           1.4%
Horizon Medical         Medical
  Products, Inc.          Devices         16-Jul-05      6.00         246,875       246,875          16.6%
HPA Monon Corp.         Trailer
  (a) (c)                 Manufacturer    15-Mar-02     12.00       2,000,000            --           0.0%
No-Name Deli/           Food Service      01-Aug-93     16.50         131,747       161,746          10.8%
  Grocery, Inc. (a)(b)
Phone Management        Communication     18-Sep-01      None          61,655            --           0.0%
  Enterprises Inc. (a)
Comdial Corporation     Communication     27-Sep-05     12.00       1,955,835     1,955,835         131.2%
J.L. French
  Automotive            Automotive        31-Dec-07     19.00       5,532,614     5,532,614         371.0%
  Castings, Inc.
Engenia Software,       Software          31-Dec-04      8.00          90,753        90,753           6.1%
  Inc.                    Design

Notes Receivable
Gabriel Lamana          Real Estate       01-Mar-04     11.50          20,023        20,023           1.3%
957 South Elmora        Real Estate       01-Dec-04      6.68          85,678        85,678           5.7%
  Inc. (a)
John Papakonstantis     Restaurant        17-Jul-17     10.00          56,547        56,547           3.8%
Vassar Development      Real Estate       07-Apr-03     10.00         138,135       200,000          13.4%
  Corp.                                                           -----------   -----------   -----------

    Total Loans and Notes Receivable                              $10,365,361   $ 8,371,521         561.3%
                                                                  ===========   ===========   ===========
</TABLE>
---------------------------
(a) Non-income producing or past due as to required principal and/or interest.
(b) Foreclosed upon
(c) Declared Chapter 7 bankruptcy

                                      F-20
<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2004

Equity Interests
<TABLE>
<CAPTION>
                                                                      Cost or
                                                                    Contributed          Fair           % of Net
Company Name             Industry            No. of Shares             Value             Value           Assets
--------------        --------------        ---------------         ------------      -----------      ----------
<S>                   <C>                   <C>                     <C>               <C>                    <C>
Accent Optical        Optoelectronics       585,366 Shares,         $  1,200,000      $   600,000            22.8%
  Technologies,                              Unregistered
  Inc.                                      Series A Preferred
                                             Stock
Bigfoot               E-Marketing           177,815 Shares,              518,364          185,369             7.1%
  Interactive, Inc.   Services               Unregistered
                                             Series B Preferred
                                             Stock
                                            127,901 Shares,
                                             Unregistered
                                             Series C Preferred
                                             Stock
Comdial               Communication         352,000 Shares,              103,680          421,144            16.0%
  Corporation (a)                            Common Stock
Commerce One,         Enterprise            25,401 Shares,               295,359           40,896             1.6%
  Inc. (a)            Procurement            Common Stock
                      Software              33,112 Shares,               499,998           53,310             2.0%
                                             Common Stock
Creative Foods,       Specialty             Warrant to Purchase               --            2,370             0.1%
  Inc. (a)            Baking                 Common Stock
divine, inc. (b)      Collaboration,        12,342 Shares,               500,000               --             0.0%
                      Interaction &          Common Stock
                      Knowledge             3,918 Shares,              1,274,422               --             0.0%
                      Solutions              Common Stock
Engenia               Collaborative         418,680 Shares,            2,600,002          700,002            26.6%
  Software, Inc.      Services               Unregistered Series
                      Software               C Preferred Stock
etang.com, Inc.       Internet              11,306 Shares,               412,504               --             0.0%
                      Service                Unregistered Common
                      Provider               Stock
Evoke Software        Data                  1,219,512 Shares,          2,500,000          120,000             4.6%
  Corporation         Management             Unregistered Series
                      Software               E Preferred Stock
                                            2,151,470 Shares,             47,840           47,840             1.8%
                                             Unregistered Series
                                             AA Preferred Stock
                                            6,454,409 Shares,             59,087           59,087             2.2%
                                             Unregistered Series
                                             AA Preferred Stock
Homepoint             Home                  10,875 Shares,               682,852          105,000             4.0%
  Corporation         Furnishings            Unregistered Series B
                      Management             Preferred Stock
                      Software
</TABLE>
---------------------------------
(a) Publicly traded at March 31, 2004
(b) Delisted at March 31, 2004

                                      F-21
<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2004

Equity Interests
<TABLE>
<CAPTION>
                                                                      Cost or
                                                                    Contributed          Fair           % of Net
Company Name             Industry            No. of Shares             Value             Value           Assets
--------------        --------------        ---------------         ------------      -----------      ----------
<S>                   <C>                   <C>                     <C>               <C>                   <C>
InfoSpace.com,        Internet              4,011 Shares,           $    400,129      $   155,908             5.9%
  Inc. (a)            Infrastructure          Common Stock
                      Services              501 Shares,                   50,000           19,474             0.7%
                                              Common Stock
Independence          Brewing               949,941 Shares,                4,755               --             0.0%
  Brewing Co. (b)                             Common Stock
J. L. French          Automotive            227,869 Warrants to            2,800            2,800             0.1%
  Automotive                                  Purchase Common
  Castings, Inc.                              Stock
MarketFirst           E-Marketing           938,881 Shares,              999,908               --             0.0%
  Software, Inc.      Solutions               Unregistered Series
                                              D Preferred Stock
myGeek.com, Inc.      On-Line Personal      287,969 Shares,            1,000,000          100,000             3.8%
                      Shopper                 Unregistered Series
                                              A Preferred Stock
NeoPlanet, Inc.       Branding              62,448 Shares,               750,000           19,689             0.8%
                      Solutions               Unregistered Series
                                              B Preferred Stock
Open Solutions,       Electronic            240,582 Shares,            2,044,949        5,309,645           202.1%
  Inc. (a)            Commerce Banking        Common Stock
                      & Enterprise
                      Processing
                      Applications
Petroleum Place,      Energy Internet       25,372 Shares,             1,499,992        1,799,992            68.5%
  Inc.                Marketplace and         Unregistered Series
                      Portal                  C Preferred Stock
Primedia, Inc. (a)    Special Interest      27,667 Shares,               500,000           74,701             2.8%
                      Magazine Publisher      Common Stock
Streaming Media       Rich Media            586,667 Shares,            2,200,000               --             0.0%
  Corporation         Delivery                Unregistered Series
                                              A Preferred Stock
U.S. Wireless         Internet-based        83,333 Shares,               500,000               --             0.0%
  Data, Inc. (a)      Wireless                Common Stock          ------------      -----------      ----------
                      Transaction
                      Processing

    Total Equity Interests                                          $ 20,646,641      $ 9,817,227           373.5%
                                                                    ============      ===========      ==========
</TABLE>
---------------------------------
(a) Publicly traded at March 31, 2004
(b) Delisted at March 31, 2004

                                      F-22
<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2003

Equity Interests
<TABLE>
<CAPTION>
                                                                      Cost or
                                                                    Contributed          Fair           % of Net
Company Name             Industry            No. of Shares             Value             Value           Assets
--------------        --------------        ---------------         ------------      -----------      ----------
<S>                   <C>                   <C>                     <C>               <C>                    <C>
Accent Optical        Optoelectronics       585,366 Shares,         $  1,200,000      $ 1,200,000            80.5%
  Technologies,                               Unregistered
  Inc.                                        Series A Preferred
                                              Stock
Bigfoot               E-Marketing           177,815 Shares,              518,364          185,369            12.4%
  Interactive, Inc.   Services                Unregistered
                                              Series B Preferred
                                              Stock
                                            127,901 Shares,
                                              Unregistered
                                              Series C Preferred
                                              Stock
Comdial               Communication         352,000 Shares,              103,680           75,429             5.1%
  Corporation (a)                             Common Stock
Commerce One,         Enterprise            25,401 Shares,               295,359           42,420             2.8%
  Inc. (a)            Procurement             Common Stock
                      Software              33,112 Shares,               499,998           55,297             3.7%
                                              Common Stock
Creative Foods,       Specialty               Warrant to Purchase             --              886             0.1%
  Inc. (a)            Baking                  Common Stock
divine, inc. (b)      Collaboration,        12,342 Shares,               500,000               --             0.0%
                      Interaction &           Common Stock
                      Knowledge             3,918 Shares,              1,274,422               --             0.0%
                      Solutions               Common Stock
Engenia               Collaborative         418,680 Shares,            2,600,002        1,300,002            87.2%
  Software, Inc.      Services                Unregistered Series
                      Software                C Preferred Stock
etang.com, Inc.       Internet              11,306 Shares,               412,504               --             0.0%
                      Service                 Unregistered Common
                      Provider                Stock
Evoke Software        Data                  1,219,512 Shares,          2,500,000        1,250,000            83.8%
  Corporation         Management              Unregistered Series
                      Software                E Preferred Stock
                                            2,151,470 Shares,             47,840           47,840             3.2%
                                              Unregistered Series
                                              AA Preferred Stock
                                            6,454,409 Shares,             59,087           59,087             4.0%
                                              Unregistered Series
                                              AA Preferred Stock
Hewlett-Packard       Computer              27,818 Shares,               491,882          432,570            29.0%
  Company (a)         Hardware &              Common Stock
                      Storage
</TABLE>
---------------------------------
(a) Publicly traded at March 31, 2003
(b) Delisted at March 31, 2003

                                      F-23
<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2003

Equity Interests
<TABLE>
<CAPTION>
                                                                      Cost or
                                                                    Contributed          Fair           % of Net
Company Name             Industry            No. of Shares             Value             Value           Assets
--------------        --------------        ---------------         ------------      -----------      ----------
<S>                   <C>                   <C>                     <C>               <C>                   <C>
Homepoint             Home                  10,875 Shares,          $    682,852      $   105,000             7.0%
  Corporation         Furnishings             Unregistered Series
                      Management              B Preferred Stock
                      Software
Horizon Medical       Medical Devices       312,500 Shares,                3,125           41,625             2.8%
  Products, Inc. (a)                          Common Stock
InfoSpace.com,        Internet              4,011 Shares,                400,129           43,439             2.9%
  Inc. (a)            Infrastructure          Common Stock
                      Services              501 Shares,                   50,000            5,426             0.4%
                                              Common Stock
Independence          Brewing               949,941 Shares,                4,755               --             0.0%
  Brewing Co. (b)                             Common Stock
J. L. French          Automotive            227,869 Warrants to            2,800            2,800             0.0%
  Automotive                                  Purchase Common
  Castings, Inc.                              Stock
MarketFirst           E-Marketing           938,881 Shares,              999,908               --             0.2%
  Software, Inc.      Solutions               Unregistered Series
                                              D Preferred Stock
myGeek.com, Inc.      On-Line Personal      287,969 Shares,            1,000,000          100,000             6.7%
                      Shopper                 Unregistered Series
                                              A Preferred Stock
NeoPlanet, Inc.       Branding              62,448 Shares,               750,000           19,689             1.3%
                      Solutions               Unregistered Series
                                              B Preferred Stock
Open Solutions,       Electronic            281,116 Shares,            2,620,000        3,490,000           234.1%
  Inc. (a)            Commerce Banking        Unregistered Series
                      & Enterprise            F Preferred Stock
                      Processing
                      Applications
Petroleum Place,      Energy Internet       25,372 Shares,             1,499,992        1,499,992           100.6%
  Inc.                Marketplace and         Unregistered Series
                      Portal                  C Preferred Stock
Pinnacor Inc. (a)     Digital Content       133,333 Shares,              470,400          138,266             9.3%
                      Network                 Common Stock
                                            31,849 Shares,               185,043           38,856             2.6%
                                              Common Stock
Primedia, Inc. (a)    Special Interest      27,667 Shares,               500,000           67,784             4.5%
                      Magazine Publisher      Common Stock
Streaming Media       Rich Media            586,667 Shares,            2,200,000               --             0.0%
  Corporation         Delivery                Unregistered Series
                                              A Preferred Stock
</TABLE>

                                      F-24
<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2003

Equity Interests
<TABLE>
<CAPTION>
                                                                      Cost or
                                                                    Contributed          Fair           % of Net
Company Name             Industry            No. of Shares             Value             Value           Assets
--------------        --------------        ---------------         ------------      -----------      ----------
<S>                   <C>                   <C>                     <C>                    <C>               <C>
U.S. Wireless         Internet-based        83,333 Shares,          $    500,000           18,332            1.2%
  Data, Inc. (a)      Wireless                Common Stock
                      Transaction
                      Processing                                    ------------      -----------      ----------

    Total Equity Interests                                          $ 22,372,142      $10,220,109           685.4%
                                                                    ============      ===========      ==========
</TABLE>
---------------------------------
(a) Publicly traded at March 31, 2003
(b) Delisted at March 31, 2003
                                      F-25

<PAGE>

                             WINFIELD CAPITAL CORP.
                      PORTFOLIO OF INVESTMENTS (CONTINUED)
                                 MARCH 31, 2003


Assets Acquired in Liquidation

<TABLE>
<CAPTION>
                                                                     March 31, 2003
                                                     --------------------------------------------
                                                                        Fair           % of Net
                                                         Cost           Value           Assets
                                                     ------------    ------------    ------------
Company Name
------------
<S>                                                  <C>             <C>                      <C>
Suburban Enterprises, Inc.                           $     24,707    $         --             0.0%
                                                     ------------    ------------    ------------

    Total Assets Acquired in Liquidation             $     24,707    $         --             0.0%
                                                     ============    ============    ============
</TABLE>
                                      F-26