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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  FORM 10-KSB


                                   (Mark One)

  [ ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
           ACT OF 1934 For the fiscal year ended _______________; or

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

       For the Transition period from July 1, 2003 to December 31, 2003.

                         Commission File Number 0-23511
                                ________________

                            FIRST DELTAVISION, INC.
                 ----------------------------------------------
                 (Name of Small Business Issuer in its Charter)

           Nevada                                            87-0412182
 --------------------------                             ----------------------
  (State of incorporation)                               (I.R.S. Employer
                                                          Identification No.)

   695 Town Center Drive, Suite 260, Costa Mesa, California        92626
   --------------------------------------------------------    --------------
           (Address of principal executive offices)              (Zip Code)

       Registrant's telephone number, including area code: (714) 434-9191

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

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

                         Common Stock, $.0001 par value
                                (Title of Class)
                                ________________

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. [X]

State issuer's revenues for its most recent fiscal year.  $0

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified  date within the past 60 days.  (See  definition  of affiliate in Rule
12b-2 of the Exchange Act.)  $2,761,600 as of April 2, 2004

State the number of shares outstanding of each of the issuer's classes of
      common equity, as of the latest practicable date.  19,580,000

                      DOCUMENTS INCORPORATED BY REFERENCE:

No portions of other documents are incorporated by reference into this Report.

Transitional Small Business Disclosure Format (Check one): Yes ____; No _X_

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<PAGE>

                            FIRST DELTAVISION, INC.

                                  FORM 10-KSB

    TRANSITION REPORT FOR THE PERIOD FROM JULY 1, 2003 TO DECEMBER 31, 2003

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             Page
           PART I
<S>        <C>                                                                                <C>
Item 1.    Description of Business......................................................       2
Item 2.    Description of Property......................................................       6
Item 3.    Legal Proceedings............................................................       6
Item 4.    Submission of Matters to a Vote of Security Holders..........................       6
           PART II
Item 5.    Market for Equity and Related Stockholder Matters............................       7
Item 6.    Management's Discussion and Analysis or Plan of Operation....................       8
Item 7.    Financial Statements.........................................................       9
Item 8.    Changes in and Disagreements with Accountants on Accounting and Financial
           Disclosure
Item 8A.   Controls and Procedures......................................................       9
           PART III
Item 9.    Directors,  Executive Officers,  Promoters and Control Persons;  Compliance
           with Section 16(a) of the Exchange Act.......................................       9
Item 10.   Executive Compensation.......................................................      10
Item 11.   Security  Ownership of Certain Beneficial Owners and Management and Related
           Stockholder
           Matters......................................................................      11
Item 12.   Certain Relationships and Related Transactions...............................      12
Item 13.   Exhibit and Reports on Form 8-K..............................................      12
Item 14.   Principal Accountant Fees and Services.......................................      13

           Signatures...................................................................      14
           Financial Statements.........................................................     F-1
           Exhibits..................................................................... (follows financial statements)
</TABLE>

                                     PART I

      This annual  report  contains  forward-looking  statements as that term is
defined  in  the  Private  Securities  Litigation  Reform  Act  of  1995.  These
statements relate to future events or our future financial performance.  In some
cases, you can identify forward-looking statements by terminology such as "may",
"will", "should", "expects", "plans",  "anticipates",  "believes",  "estimates",
"predicts",  "potential"  or  "continue" or the negative of these terms or other
comparable terminology.  These statements are only predictions and involve known
and unknown risks,  uncertainties and other factors,  including the risks in the
section entitled "Risk Factors",  that may cause our company's or our industry's
actual results, levels of activity, performance or achievements to be materially
different  from  any  future  results,   levels  of  activity,   performance  or
achievements expressed or implied by these forward-looking statements.

      Although we believe that the expectations reflected in the forward-looking
statements  are  reasonable,  we  cannot  guarantee  future  results,  levels of
activity,  performance or  achievements.  Except as required by applicable  law,
including the securities  laws of the United States,  we do not intend to update
any of the  forward-looking  statements  to conform  these  statements to actual
results.

      As used in this annual report,  the terms "we", "us", "our", "the Company"
or "First Deltavision" mean First Deltavision, Inc., unless otherwise indicated.

ITEM 1.  BUSINESS

CORPORATE HISTORY

      First Deltavision,  Inc. was originally incorporated under the laws of the
State of Utah on July 31,  1984  under the name  "Aquachlor  Marketing  Inc." On
December 23, 1988, the Company  reincorporated in the State of Nevada. From 1989
until 2003, the Company pursued a number of potential business opportunities but
was mostly dormant and had no material assets, revenues or business operations.

      On November 18, 2003, three  individuals,  Bruce Mogel, Larry B. Anderson,
and James T. Ligon,  purchased a controlling  interest in First Deltavision with
the  objective  of  transforming   the  Company  into  a  leading   provider  of
high-quality,  cost-effective  healthcare through the acquisition and management
of financially distressed and/or under performing hospitals and other healthcare
facilities.  On January 1, 2004, the Company  acquired Mogel  Management  Group,
Inc.,  an operating  company  owned by Messrs.  Mogel,  Anderson and Ligon,  for
promissory notes with an aggregate  principal  amount of $60,000.  The notes are
due on December 31, 2004 and bear interest at the rate of six percent. We intend
to conduct our operations through this wholly-owned subsidiary.

      On January  16,  2004,  the Board of  Directors  determined  to change the
Company's  fiscal  year end from June 30 to  December  31. The Company is filing
this Transition Report on Form 10-KSB covering the transition period.

      In the first quarter of 2004, the Board of Directors and  shareholders  of
the Company  approved a change in the Company's name to  "Integrated  Healthcare
Holdings, Inc." to better reflect the Company's planned new business operations.
The name  change is not yet  effective,  but we  anticipate  that it will become
effective during the second quarter of 2004.

      Our  principal  executive  offices are  located at 695 Town Center  Drive,
Suite 260,  Costa Mesa,  California  92626,  and our  telephone  number is (714)
434-9191.

                                       1
<PAGE>

      We are currently a development  stage  company.  We have not yet begun our
principal operations and no revenues from operations have been generated.

OUR STRATEGY

      Our business  strategy is to acquire  hospitals and healthcare  facilities
throughout  the  United  States  by  targeting  hospitals  that are  financially
distressed  and  underperforming  and whose  owners are seeking to sell or lease
their  operations.  We have  assembled  a team of  professionals  with  critical
experience in hospital and healthcare system  management,  operations,  finance,
legal,  human  resources,  risk  management,  medical  relations,  marketing and
reimbursement.

      We have  identified a number of hospitals  and  healthcare  facilities  as
potential  acquisition targets. We are currently exploring,  among other things,
the possible  acquisition  of one or more of the hospital  assets that are being
divested by Tenet  Healthcare  Corporation.  We believe  that there are now more
hospital  assets on the market than at any time in the past several  years,  and
some of these will likely meet our criteria.  As of the date of this report,  we
have no current agreements relating to acquisitions.

      Our typical  acquisition target will provide  healthcare  services such as
internal   medicine,   general  surgery,   cardiology,   oncology,   obstetrics,
orthopedics,  neurosurgery, cancer treatment, spinal surgery, bariatric surgery,
pain  management,  rehabilitation,   subacute  care,  diagnostic  and  emergency
services.  In addition,  these  hospitals may provide  outpatient  and ancillary
healthcare   services  such  as  outpatient  surgery,   laboratory,   radiology,
respiratory therapy, home healthcare and physical therapy.

      We  intend  to  finance  our  acquisitions  of  hospitals  and  healthcare
facilities  through a combination of cash raised  through  equity  offerings and
borrowings, and stock issued by the Company (which may or may not be issued in a
registered  offering).  Our strategy also includes the possibility of partnering
with one or more  external  real estate  investors  to help fund the real estate
component of acquisitions.  Under such an arrangement,  the real estate investor
would  acquire and manage the real estate  assets which  typically  are acquired
along with a facility. The investor may self-finance the real estate acquisition
or bring in  outside  investors  in a  tax-advantaged  structure  such as a real
estate  investment  trust or "REIT".  Management  feels that  partnering with an
external  real estate  investor may allow us to undertake  acquisitions  that we
could  not  otherwise  finance,  and to focus on  management's  core  skills  in
hospital and healthcare management.

      If we are  successful  in acquiring  one or more  hospitals,  we intend to
implement  a  number  of  strategies   designed  to  improve   their   financial
performance.   The  main  components  of  our  strategies  include  implementing
stringent cost control systems,  improving  accounts  receivable  processing and
government aid and  reimbursement  processes,  improving  cash flow  management,
implementing  human  resources and compliance  initiatives  and improving  labor
negotiations and practices. Over the longer term, we intend to develop a network
of  healthcare  facilities  that  we own or  manage,  allowing  us to  integrate
economies   of   scale   and   focus   on   profitable    programs,    specialty
inpatient/outpatient surgical procedures and improved management,  financial and
operational procedures.

      When it is appropriate to do so, we plan to structure our operations  into
four functional groups to maximize our resources,  operational functionality and
capital requirements:

      o     Operations - handling  integration  and management of our systems in
            acquired facilities
      o     Finance  -  funding  controls  over  real  estate,   equipment,  and
            operations
      o     Leasing - purchase and management of leased hospital equipment
      o     Real Estate - identification and acquisition of buildings and land

                                       2
<PAGE>

MANAGEMENT

      We have a three-person  management team with substantial senior management
experience in business and government settings and the healthcare field.

      Our Chief Executive Officer is Bruce Mogel. Mr. Mogel has over 25 years of
experience in operational  management and has held several lead executive  roles
in the healthcare  field.  Most recently,  from  1999-2002,  Mr. Mogel served as
Executive Vice President of Operations for Doctors'  Community  Healthcare Corp,
where he was responsible for the operations and profitability of five acute care
hospitals and one psychiatric hospital,  and managed a team of six hospital CEOs
and other senior management members.  While serving in this position,  Mr. Mogel
led a team that turned around a large  Midwestern  hospital.  That team turned a
large multi-million dollar annual negative cash flow into a break even operation
in less than 6 months.

      Larry B.  Anderson,  our  President,  has over 20  years of  senior  level
executive experience in an enterprise with over $65 billion per year in sales. A
California licensed attorney since 1975, Mr. Anderson  specializes in employment
and business law matters, including collective bargaining,  arbitrations, unfair
labor practices and court cases as well as  transactional  work in contracts and
due diligence. From 2002-2003, as the Executive Vice President,  Human Resources
and General Counsel, Litigation, Mr. Anderson managed all litigation for a seven
hospital chain in Southern California.

      James T. Ligon is our Chief Financial Officer.  Mr. Ligon has launched and
operated several successful businesses, including JAMAR Associates, a California
healthcare  consulting company. He also has over 30 years of hospital experience
in California,  having been in charge of the Finance and Accounting functions at
Robert  F.  Kennedy  Medical  Center,  Brotman  Medical  Center  and  Bellflower
Hospitals,  among others. Mr. Ligon has substantial experience in, and knowledge
of,  hospital  finance,  accounting  and  administration.  He is leading our due
diligence team in reviewing potential acquisition candidates.

      As of  March  31,  2004,  we  had a total  of  four  full-time  employees,
including the three management members discussed above.

REGULATORY ISSUES

      We expect to face substantial regulatory compliance requirements if we are
successful  in  acquiring  hospital or  healthcare  facilities.  The  healthcare
industry  is  subject  to  extensive  and  complex  federal  and state  laws and
regulations related to professional licensure, conduct of operations,  ownership
of  facilities,  physician  relationships,  addition of facilities and services,
payment  for  services  and payment for  referrals.  In order to maintain  their
operating  licenses,  health care facilities  must comply with strict  standards
concerning  medical care,  equipment and hygiene.  Various  licenses and permits
also are required in order to dispense  narcotics,  operate  pharmacies,  handle
radioactive materials and operate certain equipment. Health care operations also
generate  medical  waste that must be disposed of in  compliance  with  federal,
state and local environmental laws, rules and regulations.

      Changes  in the  Medicare  and  Medicaid  programs  and  other  government
programs,  hospital  cost-containment  initiatives by public and private payers,
proposals  to  limit  payments  and  health  care  spending,  and  industry-wide
competitive  factors  are highly  significant  to the health care  industry.  In
addition,   Medicare  and  Medicaid   anti-kickback  and  anti-fraud  and  abuse
amendments  codified  under  Section  1128B(b) of the Social  Security  Act (the
"Anti-kickback    Amendments")   prohibit   certain   business   practices   and
relationships  that might affect the  provision and cost of health care services
payable under the Medicare and Medicaid programs and other government  programs,

                                       3
<PAGE>

including  the payment or receipt of  remuneration  for the referral of patients
whose care will be paid for by such programs.

      Section  1877 of the Social  Security  Act  (commonly  referred  to as the
"Stark" law) generally restricts referrals by physicians of Medicare or Medicaid
patients to entities with which the physician or an immediate  family member has
an ownership interest or other specified  financial  arrangement,  unless one of
several  exceptions  applies.  The referral  prohibition  applies to a number of
statutorily defined  "designated health services," such as clinical  laboratory,
physical therapy and radiology services.

      The  Health  Insurance  Portability  and  Accountability  Act,  or  HIPAA,
mandates  the  adoption  of  industry  standards  for  the  exchange  of  health
information in an effort to encourage overall administrative  simplification and
enhance the  effectiveness  and  efficiency of the health care  industry.  HIPAA
requires that health  providers and other "covered  entities," such as insurance
companies  and  other  third-party  payers,  adopt  uniform  standards  for  the
electronic  transmission of medical  records,  billing  statements and insurance
claims forms.  HIPAA also  establishes new federal rules  protecting the privacy
and  security  of  personal  health   information.   The  privacy  and  security
regulations address the use and disclosure of individual health care information
and the rights of patients to  understand  and control how such  information  is
used and disclosed. The law provides both criminal and civil fines and penalties
for covered entities that fail to comply with HIPAA.

RISK FACTORS

      An  investment  in our common  stock  involves a high degree of risk.  You
should consider carefully the following  information about these risks, together
with the other  information  contained in this report,  before you decide to buy
our common stock. The risks and  uncertainties  described below are not the only
ones we face.  Additional risks and  uncertainties  not presently known to us or
that we currently deem immaterial may also impair our operations.  If any of the
following risks actually occur, our business would likely suffer and our results
could differ materially from those expressed in any  forward-looking  statements
contained in this report.  In such case,  the trading  price of our common stock
could  decline,  and you may lose all or part of the  money  you paid to buy our
common stock.

      o     WE MAY  FACE  DIFFICULTIES  INTEGRATING  OUR  ACQUISITIONS  AND  OUR
            ACQUISITIONS   MAY  BE   UNSUCCESSFUL,   INVOLVE   SIGNIFICANT  CASH
            EXPENDITURES OR EXPOSURE TO UNFORESEEN LIABILITIES

      We continually evaluate  opportunities to acquire hospitals and healthcare
facilities and frequently have preliminary  acquisition discussions with some of
these companies. These acquisitions involve numerous potential risks, including:

            o     potential  loss of key  employees  and  management of acquired
                  companies;
            o     difficulties   integrating  acquired  personnel  and  distinct
                  cultures;
            o     difficulties  integrating acquired companies into our proposed
                  operating, financial planning and financial reporting systems;
            o     diversion of management attention; and
            o     assumption   of   liabilities   and  exposure  to   unforeseen
                  liabilities of acquired companies,  including  liabilities for
                  their failure to comply with healthcare regulations.

      These acquisitions may also involve  significant cash  expenditures,  debt
incurrence and integration  expenses that could  seriously  strain our financial
condition.  We may fail to achieve expected efficiencies and synergies,  and any
acquisition  may ultimately have a negative impact on our business and financial
condition.  In  addition,  since we will likely issue our equity  securities  as
consideration in one or more acquisitions,  existing stockholders will likely be

                                       4
<PAGE>

diluted by our acquisitions, which could affect the market price of our stock.

      o     COMPETITION  FOR ACQUISITION  OPPORTUNITIES  MAY RESTRICT OUR FUTURE
            GROWTH BY LIMITING OUR ABILITY TO MAKE  ACQUISITIONS  AT  REASONABLE
            VALUATIONS

      Our  core  business  strategy  is  to  acquire  hospitals  and  healthcare
facilities. We face intense competition for these acquisitions. Such competition
could  limit our  ability to grow by  acquisitions  or could raise the prices of
acquisitions and make them less attractive to us.

      o     OUR ABILITY TO EXECUTE OUR  ACQUISITION  STRATEGY WILL REQUIRE US TO
            OBTAIN ADDITIONAL WORKING CAPITAL

      Our business  strategy will require  substantial  capital  investment  and
adequate   financing  for  the  completion  of  acquisitions,   development  and
integration of operations and technology as needed.  In the event that we cannot
obtain the necessary  capital to fund our operations as planned,  we may need to
limit our operations and development  activities.  We cannot guarantee that such
capital  investment  will  be  available  to us at  all  or on  terms  that  are
acceptable to us. Our failure to obtain the necessary  amount of working capital
to fund our operations as currently  anticipated could have a material,  adverse
effect upon our capacity to grow or continue our operations.

      o     THE MEANS BY WHICH WE RAISE  ADDITIONAL  WORKING CAPITAL COULD CAUSE
            SUBSTANTIAL  DILUTION  TO  STOCKHOLDERS  OR  RESULT  IN  SIGNIFICANT
            INTEREST EXPENSE OR RESTRICTIVE COVENANTS

      Our ability to fund our planned  operations  will  require  that we obtain
substantial  capital investment and financing.  We may raise these funds through
public or private debt or equity  offering.  Depending  on the terms  negotiated
with  potential  investors,  such  securities may be issued at a price per share
significantly  less than the trading  prices  listed for our common stock on the
OTC  Bulletin  Board  and  thus may be  significantly  dilutive  to our  current
stockholders.  In addition,  such dilution could likely have a depressive effect
on the market price of our common stock, should a public market continue for our
shares of common  stock.  In addition,  any debt  financing  that we are able to
obtain,  if  any,  may  involve  significant  interest  expense  or  restrictive
covenants that may limit our operations.

      o     THE  ABILITY TO ATTRACT AND RETAIN  HIGHLY  QUALIFIED  PERSONNEL  TO
            OPERATE AND MANAGE OUR  OPERATIONS  IS EXTREMELY  IMPORTANT  AND OUR
            FAILURE TO DO SO COULD ADVERSELY AFFECT US

      Presently,  we are dependent  upon the personal  efforts of our management
team. The loss of any of our officers or directors could have a material adverse
effect  upon  our  business  and  future  prospects.  We do not  presently  have
key-person  life  insurance  upon the life of any of our officers or  directors.
Additionally,  as we continue our planned expansion of commercial operations, we
will  require the  services of  additional  skilled  personnel.  There can be no
assurance that we can attract persons with the requisite  skills and training to
meet our future needs or, even if such persons are  available,  that they can be
hired on terms favorable to us.

      o     WE OPERATE IN A REGULATED  INDUSTRY  AND CHANGES IN  REGULATIONS  OR
            VIOLATIONS OF REGULATIONS MAY RESULT IN INCREASED COSTS OR SANCTIONS
            THAT COULD HARM OUR FINANCIAL CONDITION

      The  healthcare  industry is subject to extensive and complex  federal and
state  laws and  regulations  related  to  professional  licensure,  conduct  of
operations, payment for services and payment for referrals. If we fail to comply
with the laws and regulations that are directly  applicable to our business,  we
could suffer civil and/or  criminal  penalties or be subject to  injunctions  or
cease and desist orders.

                                       5
<PAGE>

      o     HEALTHCARE    REFORM   COULD   NEGATIVELY    IMPACT   OUR   BUSINESS
            OPPORTUNITIES, REVENUES AND MARGINS.

      The U.S.  government and various state governments have undertaken efforts
to control  increasing  healthcare  costs through  legislation,  regulation  and
voluntary  agreements  with medical care  providers and drug  companies.  In the
recent past, the U.S. Congress has considered several  comprehensive  healthcare
reform  proposals.  The proposals were generally  intended to expand  healthcare
coverage  for  the  uninsured   and  reduce  the  growth  of  total   healthcare
expenditures.  While the U.S.  Congress did not adopt any  comprehensive  reform
proposals, members of Congress may raise similar proposals in the future. If any
of these proposals are approved,  the profitability and operating results of any
healthcare facilities that we acquire could be seriously harmed.

      o     THERE IS A LACK OF AN ACTIVE PUBLIC MARKET FOR OUR COMMON STOCK

      Our common  stock is listed for trading on the OTC Bulletin  Board.  There
can be no assurance that a market will develop or continue for our common stock.
Our common  stock may be thinly  traded,  if traded at all,  even if we commence
full  operations and generate  operating  revenues,  and is likely to experience
significance price fluctuations.  In addition,  our stock is defined as a "penny
stock" under Rule 3a51-1 adopted by the Securities and Exchange Commission under
the  Securities  Exchange Act of 1934, as amended.  In general,  a "penny stock"
includes  securities of companies  which are not listed on the  principal  stock
exchanges or the National  Association of Securities Dealers Automated Quotation
System  ("NASDAQ") or National Market System ("NASDAQ NMS") and have a bid price
in the market of less than $5.00; and companies with net tangible assets of less
than $2,000,000  ($5,000,000 if the issuer has been in continuous  operation for
less than three years),  or which have recorded revenues of less than $6,000,000
in the last three years. "Penny stocks" are subject to rule 15g-9, which imposes
additional  sales  practice   requirements  on  broker-dealers  that  sell  such
securities  to  persons  other  than   established   customers  and  "accredited
investors"  (generally,  individuals  with net worth in excess of  $1,000,000 or
annual incomes exceeding  $200,000,  or $300,000 together with their spouses, or
individuals who are officers or directors of the issuer of the securities).  For
transactions  covered  by  Rule  15g-9,  a  broker-dealer  must  make a  special
suitability  determination  for the purchaser and have received the  purchaser's
written consent to the transaction  prior to sale.  Consequently,  this rule may
adversely  affect the ability of  broker-dealers  to sell our common stock,  and
therefore,  may adversely  affect the ability of our stockholders to sell common
stock in the public market.

ITEM 2.  PROPERTIES

      We  currently  are using  approximately  3,400 square feet of office space
within an office  facility  that is leased to Mogel  Management,  LLC, a company
owned by our senior management team, Bruce Mogel,  Larry B. Anderson,  and James
T. Ligon. The Company  reimburses Mogel Management,  LLC for its use of space in
the amount of $5,717 per month beginning in 2004.

ITEM 3.  LEGAL PROCEEDINGS

      We are not a party to any legal proceedings.

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

      There were no matters  submitted to a vote of our security  holders during
the period from July 1, 2003 through December 31, 2003.

                                       6
<PAGE>

                                    PART II

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

      There is no organized or established trading market for our Company Stock.
The Company's common stock is listed for trading on the OTC Bulletin Board under
the symbol  "FTDV.BB".  There  currently is a very limited public market for the
Company's  common stock and no assurance can be given that a large public market
will develop in the future. The trading market for the Common Stock is extremely
thin. In view of the lack of an organized or established  trading market for the
Common Stock and the extreme  thinness of whatever trading market may exist, the
prices  reflected  on the chart as  reported  on the  Bulletin  Board may not be
indicative of the price at which any prior or future transactions were or may be
effected in the Common Stock.  Stockholders  are cautioned  against  drawing any
conclusions from the data contained  herein, as past results are not necessarily
indicative of future stock performance.

      The  following  table  sets  forth  the  high  and low bid  price  for the
Company's Common Stock for each quarter for the period from July 1, 2003 through
December  31,  2003,  as quoted on the  Over-the-Counter  Bulletin  Board.  Such
over-the-counter  market quotations reflect inter-dealer prices,  without retail
mark-up,  mark-down  or  commission  and may not  necessarily  represent  actual
transactions.

                                                 HIGH           LOW
                                                 ----           ---

      QUARTER ENDED SEPTEMBER 30, 2003          $2.00          $0.40
      QUARTER ENDED DECEMBER 31, 2003           $3.15          $0.60

      As of the date of this report, there were approximately 196 record holders
of the  Company's  common stock;  this number does not include an  indeterminate
number of  stockholders  whose shares may be held by brokers in street name. The
Company has not paid and does not expect to pay any  dividends  on its shares of
common stock for the  foreseeable  future,  as any earnings will be retained for
use in the business.

      The  Company  currently  has no  compensation  plans  under  which  equity
securities of the Company are authorized for issuance.

      On November 18, 2003,  the Company sold an aggregate of 16,128,000  shares
of common  stock to Bruce  Mogel,  Larry B.  Anderson  and James T. Ligon for an
aggregate  purchase price of $100,000.  Messrs.  Mogel,  Anderson and Ligon each
paid $33,333.33 for these shares.

      On January 6, 2004,  we  completed a private  placement of an aggregate of
1,660,000 shares of our common stock. We received  $415,000 in gross proceeds in
the offering.  The shares were sold at $0.25 per share,  representing a discount
of 87.5% from the average of the closing prices for the ten consecutive  trading
days up to and including January 1, 2004. We did not pay any placement agent fee
in connection with this private placement.

      During  the  first  quarter  of  2004,  we  completed  additional  private
placements  of an  additional  150,000  shares of our common  stock at $1.00 per
share.

      All of the  foregoing  offers  and  sales of stock  were  exempt  from the
registration  requirements  of  Section  5 of the  Securities  Act of  1933,  as
amended, pursuant to Section 4(2) thereof and Rule 506 promulgated thereunder.

                                       7
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

      Our plan of operation over the next 12 months is to acquire  hospitals and
healthcare facilities by targeting hospitals that are financially distressed and
underperforming  and whose owners are seeking to sell or lease their operations.
We intend to finance  our  acquisitions  through a  combination  of cash  raised
through equity  offerings and borrowings,  and stock issued by the Company.  Our
strategy also includes the  possibility of partnering  with one or more external
real estate  investors to help fund the real estate  component of  acquisitions.
Under such an arrangement, the real estate investor would acquire and manage the
real estate  assets  which  typically  are acquired  along with a facility.  The
investor  may  self-finance  the real  estate  acquisition  or bring in  outside
investors in a tax-advantaged  structure such as a real estate  investment trust
or "REIT".  Management  feels  that  partnering  with an  external  real  estate
investor  may allow us to  undertake  acquisitions  that we could not  otherwise
finance,  and to focus on  management's  core skills in hospital and  healthcare
management.

      During the six months  ended  December  31,  2003,  the Company  earned no
revenues.

      Over the next twelve  months we will require  additional  cash  financing,
whether or not we complete an acquisition of a healthcare facility. If we do not
acquire a facility,  we estimate that we can satisfy our cash  requirements  for
approximately five months following the date of this report, after which we will
need to raise  additional  funds.  If we acquire a  facility,  we expect to seek
additional financing in connection with the acquisition. There are no assurances
that we will be able to obtain funds required for our continued  operations.  In
such event that we do not raise sufficient funds, we may be forced to scale down
or cease our operations.

      Currently  there are four full time  employees of our  company.  We do not
expect any material  changes in the number of employees over the next 12 months,
unless we are successful in acquiring a healthcare  facility,  in which case our
employment base will increase significantly.

      As of the date of this report and as of December 31, 2003, the Company had
no  off-balance  sheet  arrangements,  as defined  by  Securities  and  Exchange
Commission Regulation S-B Item 303(c).

ITEM 7.  FINANCIAL STATEMENTS

The following financial  statements are filed as a part of this report beginning
on page F-1 and are incorporated by reference herein.

      Auditors Report of Ramirez International dated April 13, 2004;

      Balance Sheet as of December 31, 2003;

      Statement of Operations and  Consolidated  Statement of Operations for the
      six  months  ended  December  31,  2003  and  2002,  and  cumulative  from
      inception, July 31, 1984, through December 31, 2003;

      Statement of Shareholders'  Equity from Inception,  July 31, 1984, through
      December 31, 2003; and

      Statement  of Cash Flow for the six months  ended  December  31,  2003 and
      2002, and from Inception, July 31, 1984, through December 31, 2003.

      Notes to Financial Statements.

                                       8
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

      None.

ITEM 8A.  CONTROLS AND PROCEDURES

      The Company maintains disclosure controls and procedures that are designed
to ensure that  information  required to be disclosed in the Company's  Exchange
Act reports is recorded,  processed,  summarized  and  reported  within the time
periods  specified in the SEC's rules and forms,  and that such  information  is
accumulated and  communicated to the Company's  management,  including its Chief
Executive Officer and Chief Financial Officer,  as appropriate,  to allow timely
decisions  regarding  required  disclosure  based  closely on the  definition of
"disclosure controls and procedures" in Rule 15d-15(e). The Company's disclosure
controls and procedures are designed to provide a reasonable  level of assurance
of reaching the Company's desired  disclosure control  objectives.  In designing
and evaluating the disclosure  controls and  procedures,  management  recognized
that any controls and procedures,  no matter how well designed and operated, can
provide only reasonable  assurance of achieving the desired control  objectives,
and management  necessarily was required to apply its judgment in evaluating the
cost-benefit  relationship of possible  controls and  procedures.  The Company's
certifying  officers have concluded that the Company's  disclosure  controls and
procedures are effective in reaching that level of assurance.

      As of the end of the period of this  report,  the  Company  carried out an
evaluation,  under the supervision and with the  participation  of the Company's
management,  including the Company's Chief  Executive  Officer and the Company's
Chief Financial Officer, of the effectiveness of the design and operation of the
Company's  disclosure  controls  and  procedures.  Based on the  foregoing,  the
Company's Chief Executive Officer and Chief Financial Officer concluded that the
Company's disclosure controls and procedures were effective.

      There have been no significant  changes in the Company's internal controls
or in other  factors  that  could  significantly  affect the  internal  controls
subsequent to the date the Company completed its evaluation.

                                    PART III
                                    --------

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

      The following  information  is set forth below  concerning  our directors,
each of whom became a director on November 18, 2003:

        NAME                AGE        POSITION WITH
                                         THE COMPANY
Bruce  Mogel........        46            Director and CEO
Larry B. Anderson ..        55            Director and President
James T. Ligon......        62            Director and CFO

      BRUCE MOGEL,  who is Chief Executive  Officer and director of the Company,
has over 25 years of experience in  operational  management and has held several
lead executive roles in the healthcare field. Most recently, from 1999-2002, Mr.
Mogel served as Executive Vice  President of Operations  for Doctors'  Community
Healthcare Corp,  where he was responsible for the operations and  profitability
of five acute care hospitals and one psychiatric hospital, and managed a team of
six hospital  CEOs and other  senior  management  members.  Mr. Mogel earned his

                                       9
<PAGE>

Bachelor's degree from The State University of New York at Buffalo with a degree
in English.

      LARRY B. ANDERSON,  who is President and director of the Company, has over
20 years of senior level  executive  experience in an  enterprise  with over $65
billion per year in sales.  A  California  licensed  attorney  since  1975,  Mr.
Anderson   specializes  in  employment  and  business  law  matters,   including
collective bargaining,  arbitrations,  unfair labor practices and court cases as
well as transactional  work in contracts and due diligence.  From 2002-2003,  as
the Executive Vice President,  Human Resources and General Counsel,  Litigation,
Mr.  Anderson  managed all  litigation  for a seven  hospital  chain in Southern
California. Mr. Anderson earned his Bachelor of Arts degree in Political Science
from California  State  University,  Long Beach,  and his law degree from Loyola
University.

      JAMES T.  LIGON,  who is  Chief  Financial  Officer  and  director  of the
Company,  launched and operated several successful  businesses,  including JAMAR
Associates,  a California  healthcare  consulting  company.  He also has over 30
years of hospital experience in California, having been in charge of the Finance
and Accounting  functions at Robert F. Kennedy Medical  Center,  Brotman Medical
Center  and  Bellflower  Hospitals,  among  others.  Mr.  Ligon has  substantial
experience   in,  and   knowledge   of,   hospital   finance,   accounting   and
administration.  Mr.  Ligon  has a BBA  degree in  Accounting and an MBA Degree.

      All of our executive  officers also serve as officers of Mogel Management,
Inc.

      The Company  does not  currently  have an Audit  Committee of the Board of
Directors or a Nominating Committee.  The entire Board of Directors performs the
functions of those committees. None of the members of the Board of Directors are
"independent"  under the  description  of  independence  used for  Nasdaq-listed
companies.  The Board of Directors has determined  that James Ligon is an "audit
committee financial expert" as defined in the SEC rules.

CODE OF ETHICS

      We have adopted a Code of Business  Conduct and Ethics that applies to our
employees  (including our principal  executive officer,  chief financial officer
and  controller) and directors.  Our Code of Business  Conduct and Ethics can be
obtained free of charge by sending a request to our  Corporate  Secretary to the
following  address:  First  Deltavision,  Inc.,  Attn:  James T. Ligon, 695 Town
Center Drive, Suite 260, Costa Mesa, California 92626.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

      Section 16(a) of the Securities Exchange Act of 1934 requires our officers
and  directors,  and persons who own more than 10% of a registered  class of our
equity  securities,  to file reports of ownership and changes in ownership  with
the SEC.  Officers,  directors and greater than 10% stockholders are required by
SEC regulation to furnish us with copies of all Section 16(a) reports they file.

      Based solely upon the copies of Section  16(a)  reports  which we received
from  such  persons  or  written   representations  from  them  regarding  their
transactions in our common stock,  we believe that,  during the period from July
1, 2003  through  December  31,  2003,  all Section  16(a)  filing  requirements
applicable to our officers,  directors  and greater than 10%  beneficial  owners
were met in a timely manner.

ITEM 10.  EXECUTIVE COMPENSATION

      No cash compensation,  deferred  compensation or long-term  incentive plan
awards were issued or granted to the  Company's  executive  officers  during the
period  from  July 1, 2003  through  December  31,  2003.  Further,  none of the
Company's  executive  officers has been granted any option or stock appreciation
right;  accordingly,  no tables relating to such items have been included within
this Item.

                                       10
<PAGE>

      There  are no  standard  arrangements  pursuant  to  which  the  Company's
directors are compensated for any services  provided as director.  No additional
amounts are payable to the Company's  directors for committee  participation  or
special assignments.

EMPLOYMENT CONTRACTS, SEVERANCE AGREEMENTS AND CHANGE OF CONTROL ARRANGEMENTS

      Effective January 1, 2004, we entered into employment agreements with each
of our  executive  officers,  Messrs.  Mogel,  Anderson  and  Ligon,  with  each
agreement on the following terms (except where noted differently):

      o     Base salary of $250,000 per year;
      o     Bonus of $50,000 per year, payable quarterly;
      o     50% of salary and bonus will be deferred until the Company  receives
            at least $5 million in gross revenue from all sources;
      o     Five year term of employment agreement;
      o     Standard medical and dental insurance;
      o     Up to four weeks vacation annually;
      o     Auto allowance of $1,000 monthly and use of cellular telephone;
      o     For Mr. Mogel, reimbursement for office space in Arizona; and
      o     Six  months   severance  pay  upon  termination  for  disability  or
            resignation of employee upon breach by the Company.

ITEM  11.  SECURITY  OWNERSHIP OF CERTAIN  BENEFICIAL  OWNERS AND MANAGEMENT AND
           RELATED STOCKHOLDER MATTERS

      The following table sets forth information known to us with respect to the
beneficial  ownership  of our  common  stock as of  December  31,  2003,  unless
otherwise noted, by:

      o     each stockholder known to us to own beneficially more than 5% of our
            common stock;
      o     each of our directors and executive officers; and
      o     all of our current directors and executive officers as a group.

      Except as  otherwise  noted  below,  the  address of each person or entity
listed on the table is 695 Town Center Drive, Suite 260, Costa Mesa,  California
92626.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                 AMOUNT AND
                                                                 NATURE OF
                                                                 BENEFICIAL    PERCENTAGE
                      NAME AND ADDRESS                           OWNERSHIP(1)   OF TOTAL
   ----------------------------------------------------------    ------------  ----------
DIRECTORS, EXECUTIVE OFFICERS AND 5% STOCKHOLDERS

<S>                                                              <C>             <C>
     Bruce Mogel............................................      5,376,000      27.2%
     Larry B. Anderson......................................      5,376,000      27.2%
     James T. Ligon.........................................      5,376,000      27.2%
All current directors and executive officers as a group (3
  persons)..................................................      16,128,000     81.6%
</TABLE>

ITEM 12.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      On November 18, 2003,  the Company sold an aggregate of 16,128,000  shares
of common  stock to Bruce  Mogel,  Larry B.  Anderson  and James T. Ligon for an
aggregate  purchase price of $100,000.  Messrs.  Mogel,  Anderson and Ligon each
paid $33,333.33 for these shares.

      In January 2004, the Company began reimbursing  Mogel Management,  LLC for
leased  office  space.  This  transaction  is  described  above  under  Item  2.
Properties.

      On January 1, 2004, the Company acquired Mogel Management Group,  Inc., an
operating  company owned by Messrs.  Mogel,  Anderson and Ligon,  for promissory
notes  with an  aggregate  principal  amount  of  $60,000.  The notes are due on
December 31, 2004 and bear interest at the rate of six percent per year.

      On January 1, 2004, Messrs.  Mogel, Ligon and Anderson executed Employment
Agreements with the Company,  which are described above under Item 10. Executive
Compensation, and also filed as Exhibits 10.1, 10.2 and 10.3 to this Report.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits required to be filed are listed below and except where incorporated
by reference,  immediately follow the Financial  Statements.  Each management or
compensation plan is marked with an asterisk (*).

            Exhibit
            Number      Description
            ------      -----------

            3.1   Articles of Incorporation are incorporated herein by reference
                  from  Exhibits  3.3,  3.4 and 3.6 to Form  10-SB  filed by the
                  Registrant on December 16, 1997.
            10.1  Employment Agreement with Bruce Mogel, dated January 1, 2004*
            10.2  Employment Agreement with Larry B. Anderson,  dated January 1,
                  2004*
            10.3  Employment  Agreement  with James T. Ligon,  dated  January 1,
                  2004*
            10.4  Stock Purchase Agreement by and among First Deltavision,  Inc.
                  and the Purchasers dated as of November 18, 2003, incorporated
                  herein by reference from Exhibit 2.1 to the Company's  Current
                  Report on Form 8-K filed with the  Commission  on  December 5,
                  2003
            21.1  Subsidiaries  - the  only  subsidiary  of the  Company  is its
                  wholly-owned  subsidiary,  Mogel  Management  Group,  Inc.,  a
                  Nevada corporation
            31.1  Certification  of Chief Executive  Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002
            31.2  Certification  of Chief Financial  Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002


                                       12
<PAGE>

            32.1  Certification  of Chief Executive  Officer Pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002
            32.2  Certification  of Chief Financial  Officer Pursuant to Section
                  906 of the Sarbanes-Oxley Act of 2002

   (b) Reports on Form 8-K.

      On December 5, 2003,  the Company filed a Form 8-K reporting  under Item 1
that,  on November 18, 2003,  it issued an  aggregate  of  16,128,000  shares of
common stock to Bruce Mogel, Larry B. Anderson and James T. Ligon.


ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The  following  table sets forth the  aggregate  fees that we incurred for
audit and non-audit services provided by Ramirez  International,  which acted as
independent  auditors for the six months ended  December 31, 2003 and  performed
audit services for us during this period.  The audit fees include only fees that
are customary under generally  accepted auditing standards and are the aggregate
fees that we incurred for  professional  services  rendered for the audit of our
financial statements for the six months ended December 31, 2003.

        NATURE OF FEES           DECEMBER 31, 2003

Audit Fees (Financial)               $ 12,500
Audit Related Fees                   $      0
Tax Fees                             $      0
Other Fees                           $      0


The full Board of Directors  pre-approves  all audit and  permissible  non-audit
services to be performed by the independent auditors.


                                       13
<PAGE>

                                   SIGNATURES

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


                                    FIRST DELTAVISION, INC.

  Dated: April 15, 2004             By:  /s/ Bruce Mogel
                                       --------------------------
                                         Bruce Mogel
                                         Chief Executive Officer
                                         (Principal Executive Officer)

  Dated: April 15, 2004             By:  /s/ Larry B. Anderson
                                       --------------------------
                                         Larry B. Anderson
                                         President

  Dated: April 15, 2004             By:  /s/ James T. Ligon
                                       --------------------------
                                         James T. Ligon
                                         Chief Financial Officer and Secretary
                                         (Principal Financial Officer)

      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: April 15, 2004             By:  /s/ Bruce Mogel
                                       --------------------------
                                         Bruce Mogel
                                         Director

  Dated: April 15, 2004             By:  /s/ Larry B. Anderson
                                       --------------------------
                                         Larry B. Anderson
                                         Director

  Dated: April 15, 2004             By:  /s/ James T. Ligon
                                       --------------------------
                                         James T. Ligon
                                         Director


                                       14
<PAGE>



                       Financial Statements and Report of
                    Independent Certified Public Accountants

                             FIRST DELTAVISION, INC.
                        (A Development Stage Enterprise)

                           December 31, 2003 and 2002





                                      F-1
<PAGE>


                                Table of Contents







Report of Independent Certified Public Accountants........................... 3

Financial Statements

         Balance Sheet....................................................... 4

         Statement of Operations............................................. 5

         Statement of Shareholders' Equity................................... 6

         Statement of Cash Flows............................................. 8

         Notes to Financial Statements....................................... 9





                                      F-2
<PAGE>



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To:      The Board of Directors of
         First Deltavision, Inc.

We have audited the accompanying  balance sheet of First Deltavision,  Inc. (the
"Company")  (a  Development  Stage  Enterprise)  as of December 31, 2003 and the
related  statements of operations,  stockholders'  equity and cash flows for the
six month period ended  December 31, 2003.  These  financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on  these  statements  based  on our  audit.  The  Company's  financial
statements  as of June  30,  2003 and for the  period  July  31,  1984  (date of
incorporation)  through  June 30,  2003 were  audited  by other  auditors  whose
report,  dated  September  8, 2003,  expressed  an  unqualified  opinion with an
explanatory  paragraph  regarding the  Company's  ability to continue as a going
concern.  The other auditors'  report has been furnished to us, and our opinion,
insofar as it relates to the amounts  included for such period,  is based solely
on the report of such other auditors.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  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.  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,  based on our audit  and the  report  of other  auditors,  such
financial statements referred to above present fairly, in all material respects,
the financial  position of First  Deltavision,  Inc. as of December 31, 2003 and
the  results of its  operations  and cash flows for the six month  period  ended
December 31, 2003, and for the period from July 31, 1984 (date of incorporation)
to December 31, 2003 in conformity with accounting principles generally accepted
in the United States of America.


RAMIREZ INTERNATIONAL
Financial & Accounting Services, Inc.


/s/ Ramirez International
April 13, 2004
Irvine, CA



                                      F-3
<PAGE>


                             FIRST DELTAVISION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                                  BALANCE SHEET
                                  DECEMBER 31,

<TABLE>
<CAPTION>
                                                        2003         2002
                                                     ----------   ----------
                                                                  (Unaudited)
                                     ASSETS
<S>                                                  <C>          <C>
Current assets
    Cash and cash equivalents                        $ 265,000    $      --

Property and equipment:
    Office equipment                                    26,537           --
    Furniture and fixtures                              21,095           --
                                                     ---------    ---------
                                                        47,632           --

Accumulated depreciation                                  (651)          --
                                                     ---------    ---------
                                                        46,981           --
Intangible asset, net of accumulated
    amortization of $6,424                              96,366           --

Due from shareholders                                   60,000           --
                                                     ---------    ---------
    Total assets                                     $ 468,347    $      --
                                                     =========    =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
    Accounts payable                                 $  15,727    $      --
    Accounts payable - related party                        --       49,007
    Due to officers                                         --       38,031
    Note payable                                       100,000           --
                                                     ---------    ---------
      Total current liabilities                        115,727       87,038

Commitments and contingencies                               --           --

Stockholders' equity:
    Common stock, $0.001 par value; 100,000,000 shares
      authorized; 19,380,000 and 1,342,000 shares issued
      and outstanding, respectively                     19,380        1,342
    Additional paid in capital                         551,021      101,269
    Deficit accumulated during the development stage  (217,781)    (189,649)
                                                     ---------    ---------
      Total stockholders' equity                       352,620      (87,038)
                                                     ---------    ---------
Total liabilities and stockholders' equity           $ 468,347    $      --
                                                     =========    =========
</TABLE>


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



                                      F-4
<PAGE>

                             FIRST DELTAVISION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                             STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>

                                                                            Six Months Ended
                                             Cumulative from        --------------------------------
                                           inception (July 31,
                                             1984) through           December 31,     December  31,
                                            December 31, 2003           2003               2002
                                          ---------------------     -------------    ---------------
                                                                                         (Unaudited)
<S>                                       <C>                       <C>
Revenue                                   $                  -      $           -                  -

General and administrative expenses                     217,781             8,335             15,365
                                          ---------------------     -------------    ---------------
Loss from operations before provision
  for income taxes                                     (217,781)           (8,335)           (15,365)

Provision for income taxes                                    -                -                   -
                                          ---------------------     -------------    ---------------
Net loss                                  $            (217,781)    $      (8,335)      $    (15,365)
                                          =====================     =============    ===============
Basic and diluted net loss per share                                $       (0.00)      $      (0.01)

Weighted average shares outstanding                                     5,599,178          1,342,000
</TABLE>


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


                                      F-5
<PAGE>

                            FIRST DELTAVISION, INC.
                         (A DEVELOPMENT STAGE COMPANY)
                       STATEMENT OF SHAREHOLDERS' EQUITY
            FROM INCEPTION (JULY 31, 1984) THROUGH DECEMBER 31, 2003


<TABLE>
<CAPTION>
                                                                                                    Deficit
                                                           Common Stock           Additional   Accumulated During
                                                    --------------------------      Paid-in      the Development
                                                      Shares          Amount        Capital           Stage            Total
                                                    -----------    -----------    -----------    ---------------    -----------
<S>                                                 <C>            <C>            <C>            <C>                <C>
Balance, July 31, 1984                                       --    $        --    $        --    $            --    $        --

Issuance of common stock for
  cash at $0.629576                                      91,452             91         57,485                 --         57,576

Capital contributed by shareholder                           --             --          3,580                 --          3,580

Issuance of common stock for
  cash at $0.0124172                                     96,640             97          1,103                 --          1,200

Issuance of common stock for
  services rendered at $0.02101
  per share                                             611,908            612         37,388                 --         38,000

Issuance of common stock for
  services rendered at $0.008838
  per share                                             142,000            142          1,113                 --          1,255

Issuance of common stock for
  relief of debt at $0.0025 per share                   400,000            400            600                 --          1,000

Shares repurchased and cancelled
  at $0.334855 per share                               (746,592)          (747)      (249,253)                --       (250,000)

Shares issued to acquire KyoMedix                    15,166,000         15,166        (15,166)                --             --

Shares cancelled in rescission of
  KyoMedix acquisition                              (15,166,000)       (15,166)        15,166                 --             --

Shares reissued in recission of
  KyoMedix acquisition                                  746,592            747        249,253                 --        250,000

Net loss                                               (189,649)      (189,649)
                                                    -----------    -----------    -----------    ---------------    -----------
Balance, December 31, 2002 (Unaudited)                1,342,000    $     1,342    $   101,269    $      (189,649)   $   (87,038)
                                                    ===========    ===========    ===========    ===============    ===========
</TABLE>


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



                                      F-6
<PAGE>

                             FIRST DELTAVISION, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                        STATEMENT OF SHAREHOLDERS' EQUITY
            FROM INCEPTION (JULY 31, 1984) THROUGH DECEMBER 31, 2003
                                   (CONTINUED)


<TABLE>
<CAPTION>
                                                                                                     Deficit
                                                          Common Stock            Additional    Accumulated During
                                                    --------------------------      Paid-in       the Development
                                                      Shares         Amount         Capital           Stage             Total
                                                    -----------    -----------    -----------    ---------------    -----------
<S>                                                   <C>          <C>            <C>            <C>                <C>
Balance, December 31, 2002                            1,342,000    $     1,342    $   101,269    $      (189,649)   $   (87,038)

Issuance of common stock for
  relief of debt at $0.0062                          16,128,000         16,128         83,872                 --        100,000

Issuance of common stock for
  letter of indemnification at
  $0.0062 per share                                     450,000            450          2,340                 --         2,790

Issuance of common stock for
  cash at $0.25 per share                             1,460,000          1,460        363,540                 --        365,000

Net loss                                                     --             --             --            (28,132)       (28,132)
                                                    -----------    -----------    -----------    ---------------    -----------
Balance, December 31, 2003                           19,380,000    $    19,380    $   551,021    $      (217,781)   $   352,620
                                                    ===========    ===========    ===========    ===============    ===========
</TABLE>



                                      F-7
<PAGE>


                            FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)
                            STATEMENT OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                   Six Months Ended
                                                               --------------------------
                                            Cumulative From
                                           Inception (July 31,
                                              1984) Through    December 31,   December 31,
                                            December 31, 2003     2003           2002
                                            -----------------  ------------   -----------
                                                                              (Unaudited)
<S>                                            <C>             <C>             <C>
Cash flows from operating activities:
Net loss                                       $(217,781)      $  (8,335)      $ (15,365)
Adjustments to reconcile net loss to cash
  used in operating activities:
  Depreciation and amortization expense            7,075           7,075              --
  Noncash expense                                 39,255              --              --
  Stock issued for relief of debt                  1,000              --              --
  Increase (decrease) in accounts
      payable                                     15,727          15,227          (1,230)
  Increase (decrease) in accounts
    payable - related party                           --         (65,467)          9,690
  Increase (decrease) in due to officers              --         (40,868)          6,905
                                               ---------       ---------       ---------
    Net cash used by operating activities       (154,724)        (92,368)             --
                                               ---------       ---------       ---------
Cash flows from investing activities:
  Purchase of property and equipment             (47,632)        (47,632)             --

Cash flows from financing activities:
  Proceeds from issuance of stock                523,776         465,000              --
  Advance to shareholders                        (60,000)        (60,000)             --
  Capital contributions                            3,580              --              --
                                               ---------       ---------       ---------
    Net cash provided by financing
      activities                                 467,356         405,000              --

Net increase in cash                             265,000         265,000              --
Cash and cash equivalents, beginning
  of period                                           --              --              --
                                               ---------       ---------       ---------
Cash and cash equivalents, end of period       $ 265,000       $ 265,000       $      --
                                               =========       =========       =========

Supplemental Schedule of Noncash Financing
    Activities:
  Issuance of a promissory note in exchange
    for a letter of indemnification            $ 100,000       $ 100,000       $      --

Issuance of common stock in exchange
    for a letter of indemnification            $   2,790       $   2,790       $      --
</TABLE>


                                      F-8
<PAGE>

                             FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2003


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization - First  Deltavision,  Inc. ("the Company") was organized under the
laws of the  State  of Utah  on  July  31,  1984  under  the  name of  Aquachlor
Marketing.  The Company never engaged in business  activities  and was suspended
for  failure to file annual  reports and tax  returns.  In  December  1988,  all
required  reports and tax returns were filed and the Company was  reinstated  by
the State of Utah. In December 1988, the Company merged with Aquachlor,  Inc., a
Nevada  corporation  incorporated  on December 20, 1988. The Nevada  corporation
became the surviving  entity and changed its name to Deltavision,  Inc. In March
1997,  the Company  received a  Certificate  of Revival from the State of Nevada
using the name First Deltavision, Inc.

Company Operations - The Company has not engaged in any business activities that
have produced revenues and, therefore, is considered a development stage company
as defined in  Statement of Financial  Accounting  Standards  No. 7. The Company
seeks to acquire,  own, and operate hospitals and surgical  services  throughout
the United States.

The  accompanying  financial  statements  have been  prepared on a going concern
basis,   which   contemplates  the  realization  of  assets  and  settlement  of
obligations in the normal course of business.  The Company generated losses from
continuing  operations  of $8,335  and  $217,781  during  the six  months  ended
December 31, 2003 and from inception (July 31, 1984) through  December 31, 2003.
In  addition,  the Company had working  capital of $149,273 at December 31, 2003
and the Company  did not pay any  compensation  to its  officers  and  directors
during the six months ended  December 31, 2003.  These  factors,  among  others,
raise doubt about the  Company's  ability to  continue as a going  concern.  The
Company has raised a total of $565,000  through  stock sales from  December 2003
through March 2004. Management believes the Company has sufficient funds and the
ability to raise additional  capital to meet its continuing  obligations for the
foreseeable future.

Basis of  Presentation  - In January  2004,  the  Company's  board of  directors
changed  the  Company's  fiscal  year  end  from  June 30 to  December  31.  The
accompanying  financial  statements have been audited for the  transitional  six
month period ended December 31, 2003. The accompanying  financial  statements as
of and for the six months  ended  December  31,  2002 have been  prepared by the
Company  without audit.  In the opinion of management,  all  adjustments  (which
include  only normal  recurring  adjustments)  necessary  to present  fairly the
financial  position,  results of operations  and cash flows at December 31, 2003
and for the six months period then ended have been made.

Cash and Cash  Equivalents  - The  Company  considers  all  highly  liquid  debt
investments  purchased  with a  maturity  of  three  months  or  less to be cash
equivalents.

Accounting  Estimates - The  preparation  of financial  statements in conformity
with generally  accepted  accounting  principles in the United States of America
required  management to make estimates and assumptions  that effect the reported
amounts of assets and  liabilities,  the  disclosures  of contingent  assets and
liabilities at the date of the financial statements, and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimated by management.

Stock-Based  Compensation - Statement of Financial Accounting Standards No. 123,
Accounting  for Stock  Based  Compensation,  encourages,  but does not  require,
companies to record  compensation  cost for  stock-based  employee  compensation
plans  at fair  value.  The  Company  has  chosen  to  account  for  stock-based
compensation  using the intrinsic value method  prescribed in previously  issued
standards. Accordingly,  compensation cost for stock options issued to employees
is  measured as the excess,  if any, of the fair market  value of the  Company's



                                      F-9
<PAGE>

                             FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2003


stock at the date of grant over the amount an  employee  must pay to acquire the
stock.  Compensation  is charged to expense  over the  shorter of the service or
vesting period.  Stock options issued to non-employees  are recorded at the fair
value  of the  services  received  or the  fair  value  of the  options  issued,
whichever is more reliably  measurable,  and charged to expense over the service
period.

Fair  Value  of  Financial  Instruments  -  The  Company  considers  all  liquid
interest-earning investments with a maturity of three months or less at the date
of purchase to be cash  equivalents.  Short-term  investments  generally  mature
between  three  months  and six  months  from the  purchase  date.  All cash and
short-term  investments are classified as available for sale and are recorded at
market using the specific identification method; unrealized gains and losses are
reflected  in other  comprehensive  income.  Cost  approximates  market  for all
classifications of cash and short-term investments.

Net Loss per Common Share - Net loss per share is calculated in accordance  with
Statement of Financial  Accounting  Standards No. 128, Earnings Per Share. Basic
net loss per share is based upon the weighted  average  number of common  shares
outstanding.  Diluted net loss per share is based on the assumption that options
are included in the calculation of diluted earnings per share, except when their
effect  would be  anti-dilutive.  Dilution is computed by applying  the treasury
stock  method.  Under  this  method,  options  and  warrants  are  assumed to be
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds  obtained  thereby  were used to  purchase  common  stock at the
average market price during the period.

Impairment of Long-Lived  Assets - The Company  continually  monitors  events or
changes  in  circumstances  that  could  indicate  that the  carrying  amount of
long-lived assets to be held and used,  including  intangible assets, may not be
recoverable.  The  determination  of  recoverability  is based on an estimate of
undiscounted  future  cash  flows  resulting  from the use of the  asset and its
eventual  disposition.  When impairment is indicated for a long-lived asset, the
amount of  impairment  loss is the  excess of net book  value  over fair  value.
Long-lived assets to be disposed of are reported at the lower of carrying amount
or fair value less costs to sell.  As of  December  31,  2003,  the  Company has
determined that no impairment of its long-lived assets exists.

Goodwill and  Intangible  Assets - On July 20, 2001,  the  Financial  Accounting
Standards  Board  (FASB)  issued  Statement of  Financial  Accounting  Standards
("SFAS")  141,  Business  Combinations,  and SFAS 142,  Goodwill and  Intangible
Assets. Under these new standards,  all acquisitions subsequent to June 30, 2001
must be  accounted  for using the  purchase  method of  accounting.  The cost of
intangible  assets with indefinite  lives and goodwill are no longer  amortized,
but are subject to an annual impairment test based upon its fair value.

Goodwill and intangible assets  principally  result from business  acquisitions.
The Company  accounts for business  acquisitions by assigning the purchase price
to  tangible  and  intangible  assets  and  liabilities.   Assets  acquired  and
liabilities  assumed  are  recorded  at their  fair  values;  the  excess of the
purchase price over the net assets acquired is recorded as goodwill.

Recently  Enacted  Accounting  Standards -  Statement  of  Financial  Accounting
Standards  ("SFAS")  No.  144,  "Accounting  for the  Impairment  or Disposal of
Long-Lived  Assets,"  No. 146,  "Accounting  for Costs  Associated  with Exit or
Disposal  Activities",   SFAS  No.  147,   "Acquisitions  of  Certain  Financial
Institutions  - an  Amendment  of  FASB  Statements  No.  72 and  144  and  FASB
Interpretation No. 9", SFAS No. 148, "Accounting for Stock-Based  Compensation -
Transition and  Disclosure - an Amendment of FASB  Statement No. 123",  SFAS No.
149,  "Amendment  of  Statement  133  on  Derivative   Instruments  and  Hedging
Activities",  and SFAS No. 150,  "Accounting for Certain  Financial  Instruments



                                      F-10
<PAGE>

                             FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2003


with Characteristics of both Liabilities and Equity", were recently issued. SFAS
No. 144, 146, 147, 148, 149 and 150 have no current applicability to the Company
or their effect on the financial statements would not have been significant.

Restatement  - The  financial  statements  have been  restated  for all  periods
presented  to  reflect  a  4-for-1  forward  stock  split on April  4,  2002,  a
248.399-for-1  reverse stock split on April 23, 1997 and a 5-for-1 forward stock
split on December 9, 1988.


NOTE 2 - ACQUISITION AND RESCISSION OF ACQUISITION

On April 9, 2002,  the Company  entered  into a share  exchange  agreement  with
KyoMedix Corporation ("KyoMedix"). The agreement called for the Company to issue
15,166,550 shares of common stock to the shareholders of KyoMedix for all of the
issued and  outstanding  shares of common stock of KyoMedix.  The agreement also
called for the repurchase and cancellation of 746,592 shares of common stock for
a $250,000  note  payable  and  effecting a 4-for-1  forward  stock  split.  The
$250,000 note payable was due 90 days from signing and was secured by 13,916,000
shares of common  stock of the  Company.  Any unpaid  portion of the note was to
accrue  interest  at 10% per annum after the 90-day  term.  The  agreement  also
called for the resignation of the Company's officers and directors, the adoption
of the  2002  Stock  Plan of  KyoMedix,  changing  the  name of the  Company  to
KyoMedix,  Inc.  and the  grant  of  similar  options  to  replace  the  options
previously granted by KyoMedix.  The acquisition closed April 9, 2002;  however,
subsequently, former and current shareholders of the Company sued to rescind the
merger claiming that certain conditions of the agreement were not satisfied.  On
November 11, 2002, the Company signed a Compromise and Settlement  Agreement and
the Company cancelled the 15,166,550 shares of common stock that had been issued
to the  shareholders  of  KyoMedix.  As part of the  rescission  agreement,  the
Company reissued 746,592 shares of common stock to the previous  shareholder and
the $250,000 note payable was voided. As part of the rescission  agreement,  the
Company's former officers and directors were  re-appointed,  the adoption of the
2002 Stock Plan of KyoMedix  was voided and options  granted to KyoMedix  option
holders were cancelled.  The financial  statements have been restated to reflect
the acquisition as having been rescinded.

NOTE 3 - COMMON STOCK

The Company issued 91,452 shares of stock upon incorporation for $57,576.

During the year ended June 30, 1989,  the Company issued 96,640 shares of common
stock for $1,200.

During 1996,  the Company  issued  611,908 shares of common stock for consulting
fees valued at $38,000 (or $.062101 per share) resulting  in a change in control
of the Company.

During the year ended June 30, 1998, the Company issued 142,000 shares of common
stock for  services  rendered.  Total  proceeds  amounted to $1,255 (or $.008838
per share).  The Company  previously  reported the issuance as 140,000 shares of
common stock.  The financial  statements  have been restated for the years ended
June 30, 1999 and 1998 to reflect the issuance of an additional  2,000 shares of
common stock related to services previously rendered.

In January 2000, the board of directors  approved a compensation  agreement that
included  the  issuance  of a total of  400,000  shares of  common  stock to two
shareholders,  200,000 to each,  for  services  rendered  which  were  valued at
$1,000. The shares were issued in August 2000 for $.0025 per share.


                                      F-11
<PAGE>

                             FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2003


In November  2003,  the board of directors  approved the issuance of  16,128,000
shares of common stock to three  individuals  ("the  Purchasers")  for $100,000,
pursuant to a certain Stock Purchase  Agreement.  In connection  with this stock
sale, the Company issued a promissory note for $100,000 to the former  president
and  director of the Company  and 450,000  shares of common  stock to the former
president  and director of the  Company,  and a  shareholder,  in exchange for a
certain  letter of  indemnification.  The  letter of  indemnification  holds the
Company and the Purchasers  harmless from and against any and all liabilities of
any type or nature, whatsoever, of the Company that existed prior to the closing
of the Stock Purchase Agreement, including fees of legal counsel for the Company
in  connection  with the  completion  of the Stock  Purchase  Agreement  and the
promissory note due to the former president and director of the Company.

In December  2003, the Company  issued  1,460,000  shares of its common stock at
$0.25 per share for cash  proceeds of  $365,000.  In January  2004,  the Company
issued an additional  200,000  shares of its common stock at $0.25 per share for
cash proceeds of $50,000.

In February  and March 2004,  the Company  issued  150,000  shares of its common
stock at $1.00 per share for cash proceeds of $150,000.

Stock Splits - On December 9, 1988, the Company effected a 5-for-1 forward stock
split.  On April 23, 1997, the Company  effected a  248.399-for-1  reverse stock
split. On April 4, 2002, the Company effected a 4-for-1 forward stock split. The
financial  statements  for all periods  presented  have been restated to reflect
these stock splits.


NOTE 4 - NOTE PAYABLE

In connection  with the Company's sale of 16,128,000  shares of its common stock
in November 2003, the Company issued a promissory  note to the former  president
and  director of the Company in the amount of $100,000.  The Company  received a
letter of  indemnification  which holds the Company and the Purchasers  harmless
from and against any and all liabilities of any type or nature,  whatsoever,  of
the Company that existed prior to the closing of the Stock  Purchase  Agreement,
including  fees of  legal  counsel  for  the  Company  in  connection  with  the
completion of the Stock Purchase  Agreement and the  promissory  note due to the
former president and director of the Company. The promissory note dated November
18, 2003 has a term of 90 days and bears interest at 10% per annum.  The Company
repaid the promissory note in full on February 18, 2004.


NOTE 5 - INTANGIBLE ASSET

In connection with the Company's  stock sale of 16,128,000  shares of its common
stock in November  2003,  the Company  issued a promissory  note of $100,000 and
450,000  shares of its common stock in exchange for a letter of  indemnification
from the Company's  former  President  and  shareholder.  The 450,000  shares of
common  stock were  valued by the  Company at $0.0062  per share.  The letter of
indemnification  holds the Company and the Purchasers  harmless from and against
any and all liabilities of any type or nature,  whatsoever,  of the Company that
existed prior to the closing of the Stock Purchase Agreement,  including fees of
legal  counsel for the Company in  connection  with the  completion of the Stock
Purchase  Agreement  and the  promissory  note due to the former  president  and
director of the Company.  The Company has recorded the letter of indemnification
as an intangible  asset of $102,790  based on the total fair market value of the
promissory  note  and  common  stock  issued.  The  Company  is  amortizing  the


                                      F-12
<PAGE>

                             FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2003


intangible asset using the straight-line method over the enforceable life of the
letter of indemnification of two years. During the six months ended December 31,
2003 and 2002, the Company incurred amortization expense of $6,424 and nil.


NOTE 6 - INCOME TAXES

The Company has not made a provision  for income taxes  because of its financial
statement  and tax losses  since its  inception  on July 31,  1984.  A valuation
allowance  has been used to offset the  recognition  of any  deferred tax assets
related to net operating  loss  carryforwards  due to the  uncertainty of future
realization.  The Company accounts for income taxes in accordance with Statement
of Financial  Accounting  Standards No. 109  "Accounting for Income Taxes" which
requires the liability approach for the effect of income taxes.

At  December  31,  2003  and  2002,  the  Company  had  unused   operating  loss
carryforwards of approximately $116,000 and $88,300, respectively,  which may be
applied  against future taxable income in various years through 2023. If certain
substantial  changes in the Company's  ownership should occur, there could be an
annual limitation on the amount of net operating loss carryforwards which can be
utilized.  The  amount of and  ultimate  realization  of the  benefits  from the
operating loss carryforwards for income tax purposes is dependent, in part, upon
the tax laws in effect,  the future  earnings of the  Company  and other  future
events,  the effects of which cannot be determined.  Because of the  uncertainty
surrounding  the  realization  of  the  loss  carryforwards,   the  Company  has
established  a  valuation  allowance  equal  to  the  tax  effect  of  the  loss
carryforwards, therefore, no deferred tax asset has been recognized for the loss
carryforwards.  The net  deferred  tax assets  were  approximately  $41,000  and
$27,100  at  December  31,  2003  and  2002,  respectively,  with an  offsetting
valuation  allowance of the same amount  resulting in a change in the  valuation
allowance  of  approximately  $4,200  and $2,300  during  the six  months  ended
December 31, 2003 and 2002, respectively.

NOTE 7 - RELATED PARTY TRANSACTIONS

Management  Compensation  - During the six months  ended  December  31, 2003 and
2002, the Company did not pay any compensation to its officers and directors.

Office  Space  -  The  Company  has  not  had  a  need  to  rent  office  space.
Officers/shareholders  of the  Company  are  allowing  the  Company to use their
office as a mailing address, as needed, at no expense to the Company.

Due to/from Shareholders and Officers - During the six months ended December 31,
2003 and 2002,  the Company's  President  paid expenses on behalf of the Company
totaling $1,518 and $6,905,  respectively.  During the six months ended December
31, 2003 and 2002, the Company  advanced $60,000 and nil,  respectively,  to the
officers and  majority  shareholders  of the  Company.  At December 31, 2003 and
2002,  the total  amount due to the  Company's  president  was nil and  $38,031,
respectively.  At  December  31,  2003 and 2002,  the total  amount due from the
Company's officers and majority shareholders was $60,000 and nil,  respectively.
The amounts due to/from  shareholders  and officers bear no interest and are due
when funds are available.

Accounts  Payable - A shareholder of the Company  provided legal services to the
Company.  At December 31, 2003 and 2002, the value of the services  rendered but
unpaid was nil and $49,007.  This amount bears no interest and is due when funds
are available.


                                      F-13
<PAGE>

                             FIRST DELTAVISION, INC.
                        (A DEVELOPMENT STAGE ENTERPRISE)

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 2003


NOTE 8 - LOSS PER SHARE

The  following  data show the amounts used in  computing  loss per share for the
periods presented:

                                                        Six Months Ended
                                                    ---------------------------
                                                       December        December
                                                       31, 2003        31, 2002
                                                    ---------------------------
                                                                    (Unaudited)
Loss from continuing operations available
to common shareholders (numerator)                  $    (8,335)   $    (15,365)

Weighted average number of common
shares used in loss per share during
the period (denominator)                              5,599,178       1,342,000


Dilutive  loss  per  share  was not  presented,  as the  Company  had no  common
equivalent shares for all periods presented that would effect the computation of
diluted loss per share.


NOTE 9 - COMMITMENTS AND CONTINGENCIES

Contingencies  - In the ordinary  course of business,  the Company is subject to
legal  proceedings  and claims.  The Company is not currently aware of any legal
proceedings  or claims that the Company  believes  are likely to have a material
adverse effect on the Company's financial position and results of operations.


NOTE 10 - SUBSEQUENT EVENTS

On January 1, 2004, the Company entered into a Securities Purchase Agreement and
Plan of Reorganization with Mogel Management Group, Inc. ("MMG"), an entity with
certain common  ownership  with the Company,  and the  shareholders  of MMG. The
Company  purchased  all of the issued and  outstanding  stock of MMG, 48 million
shares, in exchange for the issuance of three promissory notes with a total face
value of  $60,000.  The  notes  bear  interest  at 6% per  annum and are due and
payable on December 31, 2004.  MMG was organized  under the laws of the State of
Nevada on October 2, 2003 and has not engaged in any  business  activities  that
have produced any revenues  and,  therefore,  is considered a development  stage
company as defined in Statement of Financial Accounting Standards No. 7.

Effective  January 1, 2004, the Company entered into employment  agreements with
each of its three  officers  and an  employee.  Among other  terms,  the officer
employment  agreements  provide each officer an annual  salary of $250,000 and a
minimum  annual  bonus of $50,000.  Among other terms,  the employee  employment
agreement  provides  the  employee an annual  salary of $43,760.  For two of the
officer  agreements,  fifty  percent  of the  annual  salary  and bonus  will be
deferred  until the Company  receives at least $5 million in gross revenues from
all  sources.  For one of the officer  agreements,  one  hundred  percent of the
annual salary and bonus will be deferred until the Company  receives at least $5
million in gross revenues from all sources.  The officer  employment  agreements
have a term of five years terminating on December 31, 2008.

Effective March 4, 2004, the Company's board of directors  changed the Company's
name to "Integrated Healthcare Holdings, Inc."


                                      F-14