##### 






UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K

(Mark One)



|  |  |                                                 
|- |  | ------------------------------------------------
|x |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]


For the fiscal year ended September 30, 2001



|  |  |                                                     
|- |  | ----------------------------------------------------
|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]


For the transition period
from                     to

Commission file number 000-23953

OMEGA WORLDWIDE, INC.

(Exact name of Registrant as specified in its
charter)


|                                                                                          |  |                                                 
|----------------------------------------------------------------------------------------- |  | ------------------------------------------------
|                                                                                         
|                                                                                         
|                                                                                         
|                                                                                         
|Maryland                                                                                  |  |                                                 
|(State or other jurisdiction
	of incorporation or organization)                           |  | 38-3382537
	(I.R.S. Employer Identification No.)
|                                                                                         
|900 Victors Way, Suite 345
	Ann Arbor, Michigan
	(Address of Principal Executive Offices) |  | 48108
	(Zip Code)                               

Registrants telephone number, including area code:
734-887-0300

Securities Registered Pursuant to Section 12(b) of the
Act: None

Securities Registered Pursuant to Section 12(g) of the
Act:

Common Stock, $.10 Par Value

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

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be
contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to
this Form 10-K. o

The aggregate market value of
the voting stock of the registrant held by non-affiliates was
$13,210,504 based on the $1.60 closing price per share for such
stock on the NASDAQ National Market on December 14,
2001.

As of December 14, 2001,
there were 12,354,553 shares outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the
Registrants Proxy Statement for its Annual Meeting of
Shareholders which is expected to be filed with the Commission
on or about January 27, 2002, are incorporated herein by
reference as indicated herein.









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##### 





PART I


Item 1  Business of the Company

The business of the Company is to provide asset management
services and management advisory services, as well as equity and
debt capital, to the healthcare industry, particularly
residential healthcare services to the elderly. The Company has
established financing activities in the United Kingdom, the
Commonwealth of Australia and New Zealand. The Company also
operates nursing homes under leasehold rights in the United
Kingdom.

The Company has provided seed equity and debt capital to enable
the establishment of operating or financing firms, identifying
high quality management personnel and providing financial
support to such companies. The objective of the Company is to
invest in equity positions in such firms, to provide continuing
support while such firms are not public, and to secure local
capital as the major source of the growth capital for expansion
and development of such firms. The result is to enable such
firms to access capital markets in the locales in which services
are provided.

The Company was established in November 1997 by Omega
Healthcare Investors, Inc. (Omega Healthcare), a
publicly traded REIT, which owns and finances healthcare
operating facilities in the United States. The Company began
initial operation as a separate entity on April 2, 1998,
when Omega Healthcare distributed shares of the Companys
common stock to Omega Healthcares existing shareholders.
At the same time, the Company undertook a primary offering and
Omega Healthcare undertook a secondary offering of shares of the
Companys common stock. Omega Healthcare distributed
5.2 million shares, sold 2.8 million shares (of which
500,000 shares were sold for the account of the Company) and
retained approximately 9.9% of the common shares then
outstanding, together with 260,000 preferred shares, in exchange
for the contribution to the Company of the following assets:



| |     |                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) | 33.375% of the ordinary shares in Principal Healthcare Finance
	Limited (Principal-UK), a Jersey corporation which
	is engaged in investing in long-term care facilities in the
	United Kingdom;



| |                                                                                 
| | --------------------------------------------------------------------------------
| | (b) Warrants to purchase 10,556,361 shares of Principal-UK;                     
|
| | (c) A subordinated debt note of Principal-UK in the amount
	of £15 million; and 
|
| | (d) Miscellaneous other net assets stated at a net carrying
	amount of $150,000.

Principal-UK is, as of the date of this report, the owner of 231
long-term care facilities, primarily nursing homes, subject to
long-term, triple-net leases to 13 operating companies in the
United Kingdom. Principal-UKs revenues for the year ending
August 31, 2001 totaled $67.8 million, assets totaled
$532.0 million and net earnings totaled $4.4 million.
Principal-UK has employed fixed-rate financing in which it
attempts to match the term of assets and liabilities. Its rental
agreements provide annual increases in rentals in 30-year terms,
generally in accordance with the British consumer price index.
Principal-UK has financed its activities through the issuance of
long-term, fixed-rate securitized debt. Its initial
securitization was issued in December 1997 in the amount of
£150.0 million, repayable in the years 2025 and 2027.
In March 1999, a second securitization was issued in the
amount of £122.0 million, repayable in the years 2027
and 2029. Pursuant to a contract expiring on December 31,
2002 and asset management agreements continuing for the terms of
the securitizations, the Company provides management services to
Principal-UK for a fee equal to 0.9% of assets managed. Both
securitizations have maturities that are consistent with the
term of the leases with respect to the facilities financed.

As of August 31, 2001, Principal-UK has $69.1 million
of mortgage, loan and subordinated notes payable past due,
including $27.6 million due to the Company and an
additional $11.8 million due by January 31, 2002.
Principal-UK is currently in negotiations with its lenders,
including the Company, to extend the maturity dates and terms of
the notes. If Principal-UK is unable to extend the maturity
dates and terms with these lenders, Principal-UK will look to
(1) obtain alternative financing from other financial
institutions, or (2) the potential sale of certain assets
as sources of cash to repay the amounts outstanding under such

1



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##### 





In June 1998, the Company acquired 100% of the units of
Assisted Living Unit Trust from FAI Insurances Limited, a life
and health insurer in Australia, and its subsidiary, Premier
Care Australia (Holdings) Pty Limited, and changed the name of
the trust to Principal Healthcare Finance Trust
(Principal-Australia). Principal-Australia is an
Australian Unit Trust which owned, as of the date of acquisition
by the Company, long-term nursing homes and assisted living
units in New South Wales. Initial long-term financing of
A$127.9 million was completed in October 1999. The
amount is repayable in quarterly installments through 2027.

Principal-Australia triple-net leased its nursing homes and
assisted living units to an affiliate of Moran Health Care Group
Pty Limited (Moran-Australia), the largest operator
of long-term care and assisted living facilities in Australia,
for an initial term of 30 years. On November 12, 1998,
Principal-Australia completed the first phase of a purchase and
leaseback transaction, also with Moran-Australia, which
encompassed 30 long-term care facilities in Victoria, New South
Wales and Western Australia. In phase one of the transaction, an
affiliate of Moran-Australia sold 25 homes to
Principal-Australia for A$80.0 million and immediately
leased them back for an initial 30-year term. Simultaneously,
phase two of the agreement called for Principal-Australia to
acquire, upon completion and rent-up to stabilized occupancy,
five additional Victoria facilities from an affiliate of
Moran-Australia for an aggregate purchase price of
A$10.5 million. Phase two was completed in March 1999.
As of September 30, 2001, Principal-Australia owns and
leases 45 nursing facilities and 483 assisted living facilities
in Australia and New Zealand. Pursuant to a contract expiring
December 31, 2007 and an asset management agreement
continuing for the term of the long-term financing referred to
above, the Company provides management services to
Principal-Australia for a fee equal to 0.9% of assets managed.

On October 31, 1999 the Company, through its wholly-owned
subsidiary, Idun Health Care Limited (Idun),
acquired the operating subsidiaries of Tamaris, plc, a nursing
home operating company in the United Kingdom. The 48
subsidiaries acquired operated 119 nursing homes located
throughout England, Scotland and Northern Ireland. The
acquisition was accounted for under the purchase method of
accounting. The fair market value of the net assets at the date
of acquisition, in the opinion of management, was
$7.2 million. Fixed assets included in the
$7.2 million amount have been written down by $3.5 million
as prescribed by accounting principles generally accepted in the
United States, to report net assets equal to the purchase price.

The Company (until December 1, 2000) held approximately 47%
of the outstanding common shares of Essex Healthcare Corporation
(Essex) and an affiliate, Atrium Living Centers,
Inc. an Atlanta-based private operator of skilled nursing
facilities, which it acquired in connection with its initial
establishment. Essexs primary activities are in Ohio,
where it operates 68 long-term care and assisted living
facilities (approximately 4,200 beds). It also manages 55
facilities (approximately 2,800 beds) in Indiana, Wisconsin,
Michigan and Texas. As of December 1, 2000, the
Companys investment in Essex, was sold to Essex for
$325,000 in cash, which approximates its book value. The Company
accounted for this investment using the equity method.

In August 1998, the Company acquired from a subsidiary of
Principal-UK for £640,000 a 19.9% interest in Moran Health
Care (UK) Limited (Moran-UK), the sole
shareholder of Baneberry Healthcare (Baneberry), a
United Kingdom operating company engaged in the business of
providing healthcare services in Northern Ireland and leases its
facilities from Principal-UK. Baneberry was previously financed
by

2



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##### 





Employees

At December 14, 2001, the Company employed eleven persons
in its operating office in London, England, three persons in its
operating office in Sydney, Australia, and two persons at the
Companys executive offices in Ann Arbor, Michigan. Idun
employs approximately 7,800 employees in the nursing home
operations throughout the United Kingdom. The Company believes
that its relationship with its employees is satisfactory.

Services Agreements

Pursuant to the provisions of a services agreement between Omega
Healthcare and the Company in the years 2000 and 1999, indirect
costs incurred by Omega Healthcare, including compensation of
shared executive officers and related support personnel, and
costs incurred by Omega Healthcare for rent, insurance,
telephone, utilities, supplies, maintenance and travel, were
allocated to the Company based upon the relationship of assets
under the Companys management to the combined total of
those assets and Omega Healthcares assets. Assets and
costs in the formula were on a one-quarter lag basis. Such
allocations were based on estimates and formulas that management
believed to be reasonable. In July 2000, the Company and Omega
Healthcare had negotiated a new arrangement for a quarterly fee
of $37,500 which excludes previously provided services, most
significantly, those of shared executives. This quarterly fee
was amended again in November 2000 to $32,500 per quarter.
Incurred expenses for the years ending September 30, 2001,
2000 and 1999 were approximately $132,000, $544,000 and $768,000
respectively.

Investment Objectives

The investment objectives of the Company continue to be:



| |                                                                                                     
| | ----------------------------------------------------------------------------------------------------
| | 1. To extend its franchise value by providing and financing
	long-term care services to the elderly.



| |    |                                                                                                                                                                                                                                  
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | To expand its asset management business by establishing new
	financing entities and establishing relationships with strong
	operating companies to extend and expand assets under management.                                    
|
| | 3. | To expand the Companys ability to provide financial
	capital to develop, expand and consolidate nursing home
	operating companies, primarily outside the United States.                                                         
|
| | 4. | To grow the capital value of the Company through prudent use of
	leverage, extension of its franchise value and the application
	of the intellectual capital of the Company to investment
	opportunities in Europe and Australia.

As previously announced, the Company has undertaken a process of
exploring strategic alternatives, and has initiated discussions
with Principal-UK regarding a possible business combination
between the two companies. There can be no assurance any such
transaction will be arranged. There is no expectation or intent
in the near-term to pay a dividend on common stock.

Financial information about foreign and domestic
operations.

The information required by this item is incorporated herein by
reference to Note 13 the Business Segment
Information on page F-19 of the Companys
consolidated financial statements.

3



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##### 



Regulation of the Healthcare Industry

The Company will invest in entities which own healthcare
facilities principally outside of the United States.
Accordingly, the Company does not intend to diversify its
investments to reduce the risks associated with investment in
the healthcare industry. Future investments by the Company may
be on terms or conditions less favorable than the terms
applicable to the Companys current investments. The
operation of healthcare facilities is subject to substantial
regulation. In addition to other laws and regulations with which
the Company will be required to comply, the Company will be
subject to laws that govern financial arrangements between
healthcare providers. Any failure to comply with these laws or
regulations could have an adverse effect on the operations of
the Company.

Healthcare is an area of extensive governmental regulation and
frequent regulatory change. Operating companies in which the
Company invests, as well as the lessees and mortgagors of
Principal-UK, Principal-Australia and similar companies are and
will continue to be subject to extensive regulation. Changes in
laws or regulations or new interpretations of existing laws or
regulations can have a dramatic effect on the healthcare
industry with respect to methods of doing business, costs of
doing business and revenues. Principal-UK and
Principal-Australia are attempting to develop and market a
method of financing for healthcare properties which is not, at
present, widely accepted in the United Kingdom, Australia or
elsewhere, and the business of the Company may not develop and
grow as the Company anticipates.

The operating results of the healthcare facilities underlying
the investments of Principal-UK, Principal-Australia and
operating companies in which the Company invests will depend on
various factors over which the Company will have no control and
which may affect the present or future cash flows of the
Company. Those factors include, without limitation, general
economic conditions, changes in supply of, or demand for,
competing long-term healthcare facilities, changes in occupancy
levels, the ability of the lessees and mortgagors of
Principal-UK, Principal-Australia and similar companies in which
the Company invests through rate increases or otherwise to
absorb increases in operating expenses, changes in governmental
regulations and changes in planning (zoning) regulations.

A significant portion of the revenues of operating companies,
including the lessees of Principal-UK, Principal-Australia and
similar companies in which the Company invests, will be
dependent upon payments from third party payors, including
private insurers and local and national governments. The levels
of revenues and profitability of such lessees, mortgagors and
operating companies may be affected by the continuing efforts of
third party payors to contain or reduce the cost of healthcare.
Medical advances and changes in the method of providing
long-term healthcare services may significantly change the
healthcare needs of the elderly and thereby reduce the demand
for long-term healthcare facilities. Likewise, such advances and
changes may make obsolete the healthcare properties owned or
financed by Principal-UK, Principal-Australia and similar
companies in which the Company invests.

Although Principal-UK plans to increase the number of healthcare
operators it finances, currently over 50% of Principal-UKs
rents are derived from rent payments received from four
operators, including Idun and Moran-UK. Principal-Australia also
plans to increase the number of healthcare operators it
finances, but presently most of its assets are operated by and
leased to affiliates of Moran-Australia. Thus, the results of
operations and financial condition of Principal-UK and
Principal-Australia will be dependent upon the ability of these
tenants to meet their obligations under their agreements with
Principal-UK and Principal-Australia.

Healthcare services, particularly those for the elderly outside
the United States, often have been provided by government or by
not-for-profit organizations, and the ability of the Company to
extend its financing and investment activities is premised upon
additional changes in the way in which healthcare services for
the elderly will be provided in such countries as the Company
may invest. While the United Kingdom and the Commonwealth of
Australia have been advanced in permitting and encouraging the
private for-profit sector to develop healthcare services, there
is no assurance that such encouragement and permission will be
available in other countries in which the Company may desire to
invest.

No assurance can be given that a lessee will exercise any option
to renew its lease upon the expiration of its term. In such an
instance, the Company may not be able to locate a qualified
purchaser or qualified

4



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##### 





Directors and Executive Officers of Omega Worldwide

Set forth below is information as of December 18, 2001
regarding (i) current Directors of the Company, who will
serve until the term expires at the indicated annual meeting of
shareholders or until their successors are elected, and
(ii) the current executive officers of the Company, who are
elected to serve at the discretion of the Board of Directors.

|                      |  |         |      |     |  |           |    |  |  |                                   
|--------------------- |  | ------- | ---- | --- |  | --------- | -- |  |  | ----------------------------------
|                      |  | Term    |      |     |  |          
|Name                  |  | Expires |      | Age |  | Positions
|                      |  |         |      |     |  |          
|Essel W. Bailey, Jr.  |  |         | 2002 |     |  |           | 57 |  |  | Director                          
|                     
|                     
|                     
|                     
|James A. Eden         |  |         | 2003 |     |  |           | 64 |  |  | Chairman of the Board of Directors
|                     
|                     
|                     
|                     
|James P. Flaherty     |  |         | 2001 |     |  |           | 54 |  |  | Director                          
|                     
|                     
|                     
|                     
|Thomas F. Franke      |  |         | 2001 |     |  |           | 72 |  |  | Director                          
|                     
|                     
|                     
|                     
|Anil K. Gupta         |  |         | 2003 |     |  |           | 52 |  |  | Director                          
|                     
|                     
|                     
|                     
|Mark D. Gosling       |  |         |     |     |  |           | 37 |  |  | Vice President and Treasurer      
|                     
|                     
|                     
|                     
|Harold J. Kloosterman |  |         | 2002 |     |  |           | 59 |  |  | Director                          
|                     
|                     
|                     
|                     
|Bernard J. Korman     |  |         | 2003 |     |  |           | 70 |  |  | Director                          
|                     
|                     
|                     
|                     
|John Storey           |  |         |     |     |  |           | 33 |  |  | Vice President and Secretary      

Mr. Bailey was the Chief Executive Officer and President of
the Company from April 1998 to July 2000. Mr. Bailey has
been a Director of the Company since its formation in November
1997. Mr. Bailey served as President and Chief Executive
Officer of Omega Healthcare until June 2000, as well as a
Director of Omega Healthcare since its formation in 1992, until
June 2000, and he served as Chairman of the Board of Directors
of Omega Healthcare from 1995 to June 2000. Prior to forming
Omega Healthcare, he was a Managing Director of Omega Healthcare
Capital, a healthcare investment partnership, from 1986 to 1992.
Mr. Bailey was formerly a Director of Evergreen Healthcare,
Inc., which was a NYSE listed company engaged in the operation
of long-term healthcare facilities, and of Vitalink Pharmacy
Services, Inc., a NYSE listed company, and the operator of
institutional pharmacies serving the long-term care industry in
the United States.

Mr. Eden has been a Director of the Company since
April 1998. He was elected Chairman of the Board of the
Company in July 2000. He is President and principal owner of
Eden & Associates, Inc., which provides consulting
services to the senior living and long-term care industries. He
is also President and principal owner of Senior Living
Properties, LLC, and serves as Chairman and Chief Executive
Officer of Oakwood Living Centers, Inc., which owns and operates
7 nursing homes in Massachusetts and Virginia. From 1976 to
1992, he held various positions in healthcare at Marriott
Corporation ultimately, as Executive Vice President and General
Manager of its Senior Living Services Division. Mr. Eden is
also a Director of Alliance for Aging Research and United
Vanguard Homes. Mr. Eden was a Director Omega Healthcare
until July 2000.

Mr. Flaherty joined Omega Healthcare in 1996 and was
appointed Vice President-International of Omega Healthcare and
Chief Executive of Omega (UK) Limited in January 1997.
Mr. Flaherty was appointed Chief Operating Officer of the
Company in April 1998 and President from July 2000, until
September 2001, when he ceased to be an employee. He has been a
Director of the Company since July 2000. Before he joined Omega
Healthcare, Mr. Flaherty was Chairman of Black Rock Capital
Corporation, a leasing and merchant banking firm he founded in
1994. From April 1991 until December 1993, Mr. Flaherty was
Managing Partner of Pareto Partners, a London based investment
management firm. Prior to 1991, he was employed by American
Express Bank Ltd. in London and Geneva in a number of senior
management capacities and by State National Bank of Connecticut
and its successor, The Connecticut Bank & Trust Co.

Mr. Franke has been a Director of the Company since
April 1998. He is Chairman and principal owner of Cambridge
Partners, Inc., an owner, developer and manager of multifamily
housing in Grand Rapids and Ann Arbor, Michigan. He is also the
principal owner of private healthcare firms operating in the
United States and the United Kingdom and a private hotel firm in
the United Kingdom. Mr. Franke has been a Director of

5



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##### 





Dr. Anil K. Gupta has been a Director of the Company since
July 7, 1998. He is Professor of Strategy, Organization and
International Business at the Robert H. Smith School of
Business, The University of Maryland. He holds a Doctor of
Business Administration from Harvard Business School.
Dr. Gupta served as a director of Vitalink Pharmacy
Services, Inc. from 1992 to 1998. Recipient of numerous
scholarly awards, he also provides consulting and executive
training to a number of multinational companies.

Mr. Gosling joined the Company in June 1999 as Finance
Director of Omega (UK) Limited. From 1999 to 2001 he was also
was also Finance Director of Idun. He was appointed Vice
President and Treasurer in April 2001. From 1995 to 1999 he was
Group Corporate Finance Manager at Heron International, a large
UK private property group. Previously he was with NM Rothschild
& Sons, a UK investment bank, and Price Waterhouse.

Mr. Kloosterman has been a Director of the Company since
April 1998. He also has been a Director of Omega Healthcare
since its formation in 1992 and was a Managing Director of Omega
Healthcare Capital from 1986 to 1992. Mr. Kloosterman has
been involved in the acquisition, development and management of
commercial and multi-family properties since 1978. He has been a
senior officer of LaSalle Partners, Inc., and in 1985 he formed
Cambridge Partners, Inc., where he serves as President. At
Cambridge, he has been involved in the development and
management of commercial, apartment and condominium projects in
Grand Rapids and Ann Arbor, Michigan and in the Chicago area.

Mr. Korman has been a Director of the Company since
April 1998. He is Chairman of the Board of Trustees of
Philadelphia Health Care Trust, a private foundation. He
formerly was President, Chief Executive Officer and Director of
MEDIQ Incorporated (health care services) from 1977 to 1995.
Mr. Korman has been a Director of Omega Healthcare since
1993 and also is a Director of the following public companies:
The New America High Income Fund (financial services), The Pep
Boys, Inc. (auto supplies), and Kramont Realty Trust (real
estate investment trust), and NutraMax Products, Inc. (consumer
health care products).

Mr. Storey joined the Company in January 1998 as Director
for Omega (UK) Limited. He was appointed Vice President and
Secretary in April 2001. Previously he was a senior lawyer in
the commercial property department of Simmons &
Simmons, Principal-UKs legal advisor and one of
Londons largest law firms.

Todd P. Robinson was appointed Chief Executive Officer and
Director on July 25, 2001 and resigned as Chief Executive
Officer and Director on December 17, 2001. The Company is
currently conducting a review of candidates for a new Chief
Executive Officer.

The Company believes that all filings required to be made
pursuant to Section 16(a) of the Securities Exchange Act of
1934 were timely made.

Item 2  Properties

At September 30, 2001, the Companys owned property
consists of two purchased nursing homes located in the United
Kingdom, operated by subsidiaries of Idun. Subsidiaries of Idun
are the tenants of 127 nursing homes located throughout the
United Kingdom.

Item 3  Legal Proceedings

There were no legal proceedings pending as of September 30,
2001, or as of the date of this report, to which the Company is
a party or to which the properties are subject, other than those
incurred in the normal course of operating the Idun nursing
homes. In the opinion of management, the resolution of these
cases will not result in a material adverse impact to the
Company.

Item 4  Submission of Matters to a Vote of
Security Holders

No matters were submitted to shareholders during the last
quarter of the year covered by this report.

6



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##### 





PART II


Item 5  Market for Registrants Common
Equity and Related Shareholder Matters

The Companys shares of common stock are traded on the
NASDAQ National Market System under the symbol OWWI. The
following tables sets forth, for the periods shown, the high and
low closing prices reported on the NASDAQ National Market System:

|                                      |        |      |  |                                       |       |  |  |         |       |      |  |     |  |  |        |  |  |   |       |  |  |   |       | 
|------------------------------------- | ------ | ---- |  | ------------------------------------- | ----- |  |  | ------- | ----- | ---- |  | --- |  |  | ------ |  |  | - | ----- |  |  | - | ----- | 
|                                      |        |      |  |                                      
|Fiscal Year Ending September 30, 2001 |        |      |  | Fiscal Year Ending September 30, 2000
|                                      |        |      |  |                                      
|Quarter                               |        | High |  | Low                                   |       |  |  | Quarter |       | High |  | Low
|                                      |        |      |  |                                       |       |  |  |         |       |      |  |    
|                                      | First  |      |  | $                                     | 2.625 |  |  | $       | 1.750 |      |  |     |  |  | First  |  |  | $ | 4.656 |  |  | $ | 3.625 | 
|                                      | Second |      |  | $                                     | 2.438 |  |  | $       | 1.750 |      |  |     |  |  | Second |  |  | $ | 5.063 |  |  | $ | 4.188 | 
|                                      | Third  |      |  | $                                     | 2.900 |  |  | $       | 2.300 |      |  |     |  |  | Third  |  |  | $ | 4.688 |  |  | $ | 3.625 | 
|                                      | Fourth |      |  | $                                     | 2.260 |  |  | $       | 1.750 |      |  |     |  |  | Fourth |  |  | $ | 3.875 |  |  | $ | 2.125 | 

The closing price quoted on the NASDAQ National Market System on
December 14, 2001 was $1.60 per share. As of
December 14, 2001, there are 12,354,553 shares of common
stock outstanding with 2,000 registered holders and
approximately 12,000 beneficial owners. The Company did not pay
any dividends on its common stock during fiscal year 2001 or
fiscal year 2000. The Company does not expect to pay any
dividends in the near term on its common stock.

7



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##### 



Item 6  Selected Financial Data

The following selected financial data should be used in
conjunction with the Companys consolidated financial
statements appearing elsewhere herein (In thousands, except per
share data):

|                                                                           |  |                          |         |      |  |      |         |  |  |   |        |  
|-------------------------------------------------------------------------- |  | ------------------------ | ------- | ---- |  | ---- | ------- |  |  | - | ------ | -
|                                                                           |  |                         
|                                                                           |  | Year Ended September 30,
|                                                                           |  |                         
|                                                                           |  | 2001                     |         | 2000 |  | 1999
|                                                                           |  |                          |         |      |  |     
|Revenues                                                                   |  | $                        | 151,164 |      |  | $    | 145,609 |  |  | $ | 14,753 |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Operating income (loss)                                                    |  |                          | (303    | )    |  |      | 1,428   |  |  |   | 7,852  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Equity in earnings of Principal Healthcare
        Finance Limited         |  |                          | 1,404   |      |  |      | 1,468   |  |  |   | 1,223  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Equity in earnings of Principal Healthcare
        Finance Trust           |  |                          | 346     |      |  |      | 485     |  |  |   | 484    |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Equity in earnings (loss) of Essex
        Healthcare, Inc.                |  |                          | 26      |      |  |      | 10      |  |  |   | (282   | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Loss on disposal of plant, property and equipment
        by subsidiary    |  |                          | (408    | )    |  |      |        |  |  |   |       |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Recognized impairment of investment (Moran-UK)                             |  |                          | (2,665  | )    |  |      |        |  |  |   |       |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Gain on dilution of interest in Principal
        Healthcare Finance Trust |  |                          |        |      |  |      |        |  |  |   | 951    |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Recognized impairment of investment (Tamaris plc)                          |  |                          |        |      |  |      |        |  |  |   | (938   | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Income tax (provision) benefit                                             |  |                          | (800    | )    |  |      | 18      |  |  |   | (2,389 | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Net earnings (loss)                                                        |  |                          | (1,103  | )    |  |      | 1,446   |  |  |   | 5,463  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Net earnings (loss) available to common
        shareholders               |  |                          | (1,311  | )    |  |      | 1,238   |  |  |   | 5,255  |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Earnings (loss) per common share, basic                                    |  |                          | (0.11   | )    |  |      | 0.10    |  |  |   | 0.43   |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Earnings (loss) per common share, diluted                                  |  |                          | (0.11   | )    |  |      | 0.10    |  |  |   | 0.43   |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Average shares outstanding, basic                                          |  |                          | 12,343  |      |  |      | 12,297  |  |  |   | 12,261 |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Average shares outstanding, diluted                                        |  |                          | 12,343  |      |  |      | 12,345  |  |  |   | 12,262 |  

|                            |  |               |        |      |  |   |        | 
|--------------------------- |  | ------------- | ------ | ---- |  | - | ------ | 
|                            |  |              
|                            |  | September 30,
|                            |  |              
|                            |  | 2001          |        | 2000
|                            |  |               |        |     
|Balance Sheet Data          |  |               |        |      |  |   |        | 
|                           
|                           
|                           
|                           
|Current assets              |  | $             | 21,596 |      |  | $ | 16,990 | 
|                           
|                           
|                           
|                           
|Total assets                |  |               | 86,168 |      |  |   | 92,500 | 
|                           
|                           
|                           
|                           
|Total current liabilities   |  |               | 19,893 |      |  |   | 24,097 | 
|                           
|                           
|                           
|                           
|Long-term debt              |  |               | 1,587  |      |  |   | 2,323  | 
|                           
|                           
|                           
|                           
|Other long-term liabilities |  |               | 208    |      |  |   | 322    | 
|                           
|                           
|                           
|                           
|Total shareholders equity  |  |               | 64,480 |      |  |   | 65,758 | 

Item 7  Managements Discussion and
Analysis of Financial Condition and Results of Operations

Safe Harbor Statement Under the United States
Private Securities Litigation Reform Act of 1995. Statements
that are not historical facts contained in Managements
Discussion and Analysis are forward-looking statements that
involve risks and uncertainties that could cause actual results
to differ from projected results. Some of the factors that could
cause actual results to differ materially include: The financial
strength of the operators of the facilities owned by the
Companys investees as it affects their continuing ability
to meet their obligations under the terms of the lease
agreements; changes in the operators or ownership of operators;
government policy relating to the healthcare industry, including
changes in the reimbursement levels; Iduns and other
operators continued eligibility to participate in the
government-sponsored payment programs; changes in reimbursement
by other third-party payors; occupancy levels at the facilities;
the availability and cost of capital of the Company and its
investees; the strength and financial resources of competitors
of the Company and investees; the ability of investees to make
additional real estate investments at attractive yields; and the
ability of investees to obtain debt and equity capital at
reasonable costs.

Following is a discussion and analysis of the Companys
consolidated results of operations, financial condition and
liquidity and capital resources. The discussion should be read
in conjunction with the audited consolidated financial
statements and notes thereto.

8



---



##### 



Results of Operations

When the Company was formed, it generated revenues from three
primary sources: (1) fee income from providing investment
advisory and management services; (2) interest income from
providing financing to companies in the healthcare and
healthcare financing industries; and (3) equity in earnings
of companies in the healthcare and healthcare financing
industries. In the first quarter of fiscal year 2000, the
Company added a fourth significant source of revenue when it
acquired, through its wholly-owned subsidiary, Idun, then 119
nursing homes in the United Kingdom. Company results for the
year ended September 30, 2001 include a full year of
Iduns operations, while results for the year ended
September 30, 2000 include eleven months of Iduns
operations since the date of acquisition.

Prior to April 1, 1999, Principal-Australia was reported on
a consolidated basis; currently Principal-Australia is 47% owned
by the Company, and is reported under the equity method.

Revenues

Patient services revenue from Iduns operations for the
fiscal year 2001 was $140.2 million and $134.7 million
for the eleven-months ending September 30, 2000. Occupancy
grew to 90.7% at year-end compared to 90.5% last year-end. The
improvement is the result of the continued improvement in the
occupancy rate of the homes located in England, which have
historically had lower occupancy than those homes in Scotland
and Northern Ireland. Idun is committed to its marketing efforts
and improving the operations of the homes under management in
order to become profitable in the near future.

Fee income from Principal-UK was $4.2 million for the
fiscal year 2001, compared to $5.0 million and
$4.9 million, respectively, for the two prior fiscal years.
The terms of the Companys agreement with Principal-UK call
for a fee equal to 90 basis points multiplied by the value of
Principal-UK invested assets under management by the Company as
computed using UK GAAP. Average assets under management at
Principal-UK were £303.0 million,
£305.0 million and £283.0 million for fiscal
years 2001, 2000 and 1999, respectively. The decrease in fees in
the current year is the result of the reduced value of the
British pound sterling versus the US dollar. At year-end, assets
under management stood at £282.0 million. The fee
agreement with Principal-UK is scheduled to expire on
December 31, 2002. The Companys underlying asset
management and advisory contracts with the Trustees of
Principal-UKs bonds continue on similar terms to the fee
arrangement with Principal-UK until maturity of the bonds
between 2025 and 2029.

Fee income from Principal-Australia was $1.2 million for
the fiscal year 2001, compared to $1.0 million for the
fiscal year 2000 and $405,000 for the fiscal year 1999. Prior to
April 1, 1999, Principal-Australia fees were eliminated as
a result of consolidation. The terms of
Principal-Australias agreement call for a fee equal to 90
basis points multiplied by the value of
Principal-Australias assets under management by the
Company, as computed under Australian GAAP. Average assets under
management in Australia increased to A$221.0 million, for
the year, compared to A$180.0 million and
A$119.0 million for the previous two years.
Principal-Australias assets under management at year-end
were A$225.0 million.

Interest income from Principal-UK was $3.7 million for
fiscal year 2001, compared to $4.6 million and
$4.8 million, respectively, for the two prior fiscal
periods. Interest income is earned on £15.0 million of
subordinated debt and temporary cash advances as required by
Principal-UK. The subordinated debt with Principal-UK matured on
June 29, 2001 and the Company is currently in negotiations
to extend the maturity date and terms of the subordinated debt.
Additionally since June 29, 2001, the interest rate for the
subordinated debt has been 15.93%. Prior to June 29, 2001,
the interest rate was at 12.93% from July 1, 2000 to
June 29, 2001, and 12.55% from July 1, 1999 to
June 30, 2000. Commencing March 5, 2001 the interest
on temporary advances is at 9.00% on the first
£4.3 million of advances (approximately
$6.1 million) and 15% on the advances in excess of
£4.3 million, with the maximum temporary advance limit
of £7.0 million (approximately $10.0 million).
Prior to March 5, 2001, interest on the temporary advances
was fixed at 9.25%. Average balances outstanding were
£5.1 million, £10.2 million and
£11.0 million for the fiscal years 2001, 2000 and
1999, respectively.

9



---



##### 



During 2001, the Company terminated one of its currency hedges
resulting in net gains of $528,000, while the underlying
receivables and cash, which were no longer hedged, required a
write-up adjustment of $179,000, resulting in a net foreign
currency exchange gain of $707,000. There are no material
amounts of exchange gains or losses during the fiscal years
ended September 30, 2000 and 1999, respectively.

During 2001, the Company recognized a $438,000 gain as a result
of recording the fair value of its foreign currency forward
contracts, as of September 30, 2001. This gain is included
in other income.

Rental income in fiscal year 1999 relates to the period when
Principal-Australia was a consolidated entity. The rental income
was a result of the consolidation of six-months of
Principal-Australia activity in fiscal year 1999.

Expenses

Cost of patient services is incurred in running the Idun nursing
homes in the United Kingdom. For the fiscal year 2001 it was
$142.4 million and for the eleven-months ended
September 30, 2000 was $139.7 million. Minimum wage
increases and increased costs of temporary employee services and
overtime have pushed costs up faster than government-determined
fees. In addition, the long-term nature of the Companys
operating leases, with scheduled rent increases, results in
significant ($3.4 million and $3.6 million for fiscal
years 2001 and 2000, respectively) non-cash rent expense under
accounting principles generally accepted in the United States
(US GAAP). The Idun nursing homes were unprofitable
under previous management. The Company has made progress during
the last twenty-three months and expects to further streamline
operations and improve management practices in the year ahead.
Under accounting principles generally accepted in the United
Kingdom (UK GAAP), Idun in fiscal year 2001 had an
operating profit (before interest) of £979,000
(approximately $1.4 million).

The total direct cost of asset management, declined by $91,000
from the comparable period last year. The increase in general,
administrative and other expenses in the current year is
$1.4 million from the comparable period last year. This
years increase was attributable to four areas:
(1) Increase in legal expense of $643,000 was due to the
legal expenses incurred in negotiations between the Company and
Principal-UK and other potential purchasers of the
Companys assets; (2) Increase in consulting expenses
of $494,000 as the Company hired an investment banker to provide
financial advice in connection with the potential sale, merger,
consolidation or other business combinations during the current
year; (3) Increase in audit and tax expense of $244,000 due
to their involvement in advising on the potential restructuring
of the Companys corporate and tax structure during the
year; and (4) Increase in Director fees and director
expenses of $315,000, due to the increased number of meetings
during the year. These increases were partially offset by the
decline of expenses allocated to the Company from Omega
Healthcare in the current year of $412,000. This decline was the
result of certain services previously provided by shared
executives, legal counsel and personnel, which were eliminated
or reduced significantly last July 1, 2000.

Interest expense in the current year decreased as the result of
the Company paying off its $4.8 million bank credit
agreement in June 2001.

Non-recurring expenses in the current year were $924,000,
compared to $497,000 in the prior year. Non-recurring expenses
represent costs incurred in pursuing strategic alternatives and
analyzing issues associated with the previously announced offer
of a third-party to purchase the Companys investment in
Principal-UK, which has subsequently been withdrawn.

Other

Equity earnings of Principal-UK decreased to $1.4 million
in the current year from $1.5 million in the prior year.
The Companys ownership percentage in Principal-UK has
remained constant at 33.375%. The decreased in income is due to
the widening losses in Principal-UKs care home operation
subsidiary and the decline in value during fiscal year 2001 of
the British pound sterling in relation to the U.S. dollar.
Equity earnings of Principal-Australia decreased to $346,000 in
the current year from $485,000 in the prior year. The
Companys ownership percentage in Principal-Australia has
remained at 47% in fiscal year 2001 and 2000.

10



---



##### 





During the current year, Idun disposed of two of its healthcare
properties resulting in a loss of $408,000. Also in fiscal year
2001, the Company evaluated the recoverability of its 19.9%
investment in Moran-UK, which is accounted for under the cost
method. Moran-UK operated nursing home facilities leased from
Principal-UK and located in the United Kingdom. Based on an
analysis of the future cash flow expected to be received from
Moran-UK, the Company expensed the carrying value of its
investment in Moran-UK of $2.7 million.

The Companys effective tax rate on a year-to-date basis
varies from the federal statutory rate of 34% due to the benefit
available from foreign tax credits on equity in earnings of
Principal-UK which is reported after UK tax expense.

Liquidity and Capital Resources

All of the Companys $4.1 million of outstanding debt
at year-end is the obligation of Idun. The Company repaid in
full its $4.8 million debt with Fleet Bank, NA, and Harris
Trust and Savings Bank on June 29, 2001 and has no other
debt outstanding as of September 30, 2001. The Company
anticipates the need to invest approximately $1.6 million
of additional capital in Idun in order to cover operations and
fund required capital improvements over the next fiscal year.
The Company has sufficient cash on hand and expects cash from
fees and interest income net of expense to be approximately
$4.1 million on an annual basis.

As of August 31, 2001, Principal-UK has $69.1 million
of mortgage, loan and subordinated notes payable past due,
including $27.6 million due to the Company and an
additional $11.8 million due by January 31, 2002.
Principal-UK is currently in negotiations with its lenders,
including the Company, to extend the maturity dates and terms of
the notes. If Principal-UK is unable to extend the maturity
dates and terms with these lenders, Principal-UK will look to
(1) obtain alternative financing from other financial
institutions, or (2) the potential sale of certain assets
as sources of cash to repay the amounts outstanding under such
mortgage, loan and notes payable. Although Principal-UK
continues to maintain its periodic payments requirements under
the original terms of the above indebtedness, there can be no
assurance that one or all of the affected lenders will not
demand payment of such indebtedness immediately. This condition
raises doubt about the Principal-UKs ability to continue
as a going concern. The Companys financial statements do
not include any adjustments to reflect the possible future
effects on the recoverability of investment in advances made to
Principal-UK of $36.7 million at September 30, 2001
that may result from the outcome to the above uncertainty. The
realization of the subordinated loans to and the Companys
investment in Principal-UK is dependent upon the resolution of
this uncertainty.

The Company does not anticipate any changes in the availability
or terms of its financing in the near future. In addition, the
Company does not anticipate any increase in costs or change in
the availability in its insurance coverage.

Impact of Recently Issued Accounting Standards

In July 2001, the Financial Accounting Standards Board
(FASB) issued Statements of Financial Accounting
Standards No. 141, Business Combinations(FAS
141), and No. 142, Goodwill and Other Intangible
Assets(FAS 142). FAS 141 eliminated the
use of the pooling-of-interests method of accounting for
business combinations initiated after June 30, 2001 and is
effective for any business combination accounted for by the
purchase method that is completed after June 30, 2001.
FAS 142, which includes the requirements to test goodwill
and indefinite lived intangible assets for impairment rather
than amortize them, will be effective for fiscal years beginning
after December 15, 2001. The Company will adopt the
FAS 142 effective October 1, 2001 and does not expect
a material impact on the consolidated financial statements.

In October 2001, the FASB issued Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets(FAS 144). FAS 144 supersedes FASB
Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, however it retains the

11



---



##### 





Item 7a. Quantitative and Qualitative Disclosure
about Market Risk

The Company is exposed to various market risks. Market risk is
the potential loss arising from adverse changes in market
interest rates and prices, such as short-term borrowing and
foreign currency exchange rates. The Company does not enter into
derivatives or other financial instruments for trading or
speculative purposes. The Company enters into forward foreign
currency contracts, principally to protect against currency
fluctuations in its investments denominated in foreign
currencies, thereby limiting the Companys risk that would
otherwise result from changes in exchange rates. At
September 30, 2001, the Company had outstanding a British
pound sterling forward currency contract to exchange
£20.0 million for $31.8 million to mature on
October 15, 2007, and an Australian dollar forward currency
contract to exchange A$11.0 million for $6.7 million
to mature on July 3, 2003. From time to time, the Company
also may obtain forward currency contracts for its foreign
currency exposure relative to temporary loans to Principal-UK
and Idun, however at September 30, 2001, the Company had no
such forward currency contracts. Because of the Companys
foreign exchange contracts, its sensitivity to foreign exchange
currency exposure is considered partially mitigated. Most
components of the Companys income are earned in currencies
other than the dollar and are subject to fluctuation.

Iduns lease expense is subject to annual inflation
adjustments, which would be partially offset by increased equity
in earnings of Principal-UK as most of its leases have annual
inflation adjustments and Idun leases a number of its facilities
from Principal-UK.

The following table provides information about the
Companys notes payable and the sensitivity to changes in
interest rates:

|                                   |  |                                       |       |      |  |      |      |      |  |      |      |            |  |       |      |   |  |   |      |   |  |   |       |   |  |   |       |  
|---------------------------------- |  | ------------------------------------- | ----- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---------- |  | ----- | ---- | - |  | - | ---- | - |  | - | ----- | - |  | - | ----- | -
|                                   |  |                                      
|                                   |  | Principal Amount by Expected Maturity
|                                   |  | Average Interest Rate                
|                                   |  |                                      
|                                   |  | 2002                                  |       | 2003 |  | 2004 |      | 2005 |  | 2006 |      | Thereafter |  | Total
|                                   |  |                                       |       |      |  |      |      |      |  |      |      |            |  |      
|                                   |  |                                      
|                                   |  | (Dollar amount in thousands)         
|                                  
|                                  
|                                  
|                                  
|Variable rate amount               |  | $                                     | 2,514 |      |  | $    | 133  |      |  | $    | 99   |            |  | $     | 99   |   |  | $ | 99   |   |  | $ | 1,157 |   |  | $ | 4,101 |  
|                                  
|                                  
|                                  
|                                  
|Weighted-average interest rate (1) |  |                                       | 8.08  | %    |  |      | 7.33 | %    |  |      | 7.33 | %          |  |       | 7.33 | % |  |   | 7.33 | % |  |   | 7.33  | % |  |   | 7.79  | %



|    |                                                                                                                                                                                                                                                                                                                                   
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The weighted average interest rates are based upon the rates in
	effect as of September 30, 2001. See Note 8 to the
	Companys consolidated financial statements for additional
	information. If the interest rate increased on our variable rate
	debt by one percentage point, the annual interest expense would
	increase $410.

Item 8  Financial Statements and
Supplementary Data

The consolidated financial statements and report of independent
auditors are filed as part of this report on pages F-1 through
F-21.

Item 9  Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

None.

12



---



##### 





PART III


Item 10  Directors and Executive Officers of
the Registrant

Located in Part I as permitted by Instruction 3 to
Item 401(b) of Regulation S-K.

Item 11  Executive Compensation

The information required by this item is incorporated by
reference to the Companys definitive proxy statement for
the 2001 Annual Meeting of Shareholders, which is expected to be
filed on or about January 27, 2002 with the Securities and
Exchange Commission pursuant to Regulation 14A.

Item 12  Security Ownership of Certain
Beneficial Owners and Management

The information required by this item is incorporated by
reference to the Companys definitive proxy statement for
the 2001 Annual Meeting of Shareholders, which is expected to be
filed on or about January 27, 2002 with the Securities and
Exchange Commission pursuant to Regulation 14A.

Item 13  Certain Relationships and Related
Transactions

The information required by this item is incorporated by
reference to the Companys definitive proxy statement for
the 2001 Annual Meeting of Shareholders which is expected to be
filed on or about January 27, 2002 with the Securities and
Exchange Commission pursuant to Regulation 14A.



PART IV


Item 14  Exhibits, Financial Statements,
Financial Statement Schedules and Reports on Form 8-K.

(a)(1) Listing of Consolidated Financial Statements

|                                                                                                       |  |        |     | 
|------------------------------------------------------------------------------------------------------ |  | ------ | --- | 
|                                                                                                       |  | Page  
|Title of Document                                                                                      |  | Number
|                                                                                                       |  |       
|Report of Independent Auditors                                                                         |  |        | F-1 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Consolidated Balance Sheets as of
	September 30, 2001 and September 30, 2000                           |  |        | F-2 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Consolidated Statements of Operations for the
	years ended September 30, 2001, 2000 and 1999           |  |        | F-3 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Consolidated Statements of Shareholders
	Equity for the years ended September 30, 2001, 2000 and 1999 |  |        | F-4 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Consolidated Statements of Cash Flows the year
	ended September 30, 2001, 2000 and 1999                |  |        | F-5 | 
|                                                                                                      
|                                                                                                      
|                                                                                                      
|                                                                                                      
|Notes to Consolidated Financial Statements                                                             |  |        | F-6 | 



| |        |                                                                                                                                                                                                                                                                                 
| | ------ | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a)(2) | Listing of Financial Statement Schedules. All schedules for
	which provision is made in the applicable accounting regulation
	of the Securities and Exchange Commission are not required under
	the related instructions or are inapplicable and, therefore,
	have been omitted.

(a)(3) Listing of Exhibits  See Index to
Exhibits beginning on Page 15 of this report.

(b) Reports on Form 8-K  none filed in the
quarter ended September 30, 2001.

(c) Exhibits  See Index to Exhibits beginning on
Page 15 of this report.



| |     |                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------
| | (d) | Financial Statement Schedules  The following
	consolidated financial statement schedule is included herein:
	None

13



---



##### 





SIGNATURES


Pursuant to the requirements of Sections 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
hereunto duly authorized.



| |                      
| | ---------------------
| | OMEGA WORLDWIDE, INC.



| |     |                                                                              
| | --- | -----------------------------------------------------------------------------
| | By: | /s/ JAMES E. EDEN 
	 _______________________________________ 
	 James E. Eden

| |                      
| | ---------------------
| | Chairman of the Board



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

|                                               |  |                                                                                              |  |      |                   | 
|---------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | ---- | ----------------- | 
|Signatures                                     |  | Title                                                                                        |  | Date
|                                               |  |                                                                                              |  |     
|/s/ JAMES E. EDENJames E. Eden                 |  | Chairman of the Board
	(Principal Executive Officer)                                         |  |      | December 28, 2001 | 
|                                              
|/s/ MARK D. GOSLINGMark D. Gosling             |  | Vice President and Treasurer
	(Principal Financial Officer and Principal Accounting Officer) |  |      | December 28, 2001 | 
|                                              
|/s/ JAMES P. FLAHERTYJames P. Flaherty         |  | Director                                                                                     |  |      | December 28, 2001 | 
|                                              
|/s/ THOMAS F. FRANKEThomas F. Franke           |  | Director                                                                                     |  |      | December 28, 2001 | 
|                                              
|/s/ ANIL K. GUPTAAnil K. Gupta                 |  | Director                                                                                     |  |      | December 28, 2001 | 
|                                              
|/s/ HAROLD J. KLOOSTERMANHarold J. Kloosterman |  | Director                                                                                     |  |      | December 28, 2001 | 
|                                              
|/s/ BERNARD J. KORMANBernard J. Korman         |  | Director                                                                                     |  |      | December 28, 2001 | 

14



---



##### 



Report of Independent Auditors

Board of Directors



We have audited the accompanying consolidated balance sheets of
Omega Worldwide, Inc. as of September 30, 2001 and 2000,
and the related consolidated statements of operations,
shareholders equity and cash flows for each of the three
years in the period ended September 30, 2001. These
financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards
generally accepted in the United States. 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 audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Omega Worldwide, Inc. at
September 30, 2001 and 2000, and the consolidated results
of their operations and their cash flows for each of the three
years in the period ended September 30, 2001, in conformity
with accounting principles generally accepted in the United
States.



| |                      
| | ---------------------
| | /s/ ERNST & YOUNG LLP

Chicago, Illinois



F-1



---



##### 





OMEGA WORLDWIDE, INC.


CONSOLIDATED BALANCE SHEETS

(In thousands, except par values)


|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |        |       |        | 
|-------------------------------------------------------------------------------------------------- | ------------------------------------- | ---------------------------------------------------------------------------------- | ------------------------------------------ | ------ | ----- | ------ | ------ | ------ | ----- | ------ | 
|                                                                                                   |                                       |                                                                                   
|                                                                                                   |                                       | September 30,                                                                     
|                                                                                                   |                                       |                                                                                   
|                                                                                                   |                                       | 2001                                                                               |                                            | 2000  
|                                                                                                   |                                       |                                                                                    |                                            |       
|ASSETS                                                                                             |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Current Assets:                                                                                    |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Cash and short-term investments       |                                                                                    | $                                          | 6,184  |       |        | $      | 3,415  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Restricted cash                       |                                                                                    |                                            | 2,211  |       |        |        | 2,786  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Patient receivables                   |                                                                                    |                                            | 9,602  |       |        |        | 7,763  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Prepaid expenses                      |                                                                                    |                                            | 2,577  |       |        |        | 2,991  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Other current assets                  |                                                                                    |                                            | 1,022  |       |        |        | 35     |      
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | Total Current Assets                       |        |       | 21,596 |        |        |       | 16,990 | 
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Plant, property and equipment, net of accumulated
	depreciation of $2,509 and $1,416, respectively |                                       |                                                                                    | 13,950                                     |        |       |        | 14,560 |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Investments in and advances to Principal
	Healthcare Finance Limited                               |                                       |                                                                                    | 36,689                                     |        |       |        | 42,735 |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Investments in Principal Healthcare Finance Trust                                                  |                                       |                                                                                    | 6,523                                      |        |       |        | 6,930  |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Prepaid rent                                                                                       |                                       |                                                                                    |                                           |        |       |        | 4,031  |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Rent deposits                                                                                      |                                       |                                                                                    | 3,670                                      |        |       |        | 3,657  |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Other assets                                                                                       |                                       |                                                                                    | 3,740                                      |        |       |        | 3,597  |       
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | 64,572                                     |        |       |        | 75,510 |       
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | Total Assets                               |        | $     | 86,168 |        |        | $     | 92,500 | 
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                  
|LIABILITIES AND SHAREHOLDERS
	EQUITY                                                              |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Current Liabilities:                                                                               |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Short-term debt                       |                                                                                    | $                                          | 2,514  |       |        | $      | 7,755  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Accounts payable and accrued expenses |                                                                                    |                                            | 16,270 |       |        |        | 15,190 |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Accrued income taxes                  |                                                                                    |                                            | 82     |       |        |        | 80     |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Deferred income                       |                                                                                    |                                            | 1,027  |       |        |        | 1,072  |      
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | Total Current Liabilities                  |        |       | 19,893 |        |        |       | 24,097 | 
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Long-term debt                                                                                     |                                       |                                                                                    | 1,587                                      |        |       |        | 2,323  |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Other long-term liabilities                                                                        |                                       |                                                                                    | 208                                        |        |       |        | 322    |       
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | Total Liabilities                          |        |       | 21,688 |        |        |       | 26,742 | 
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|Shareholders Equity:                                                                              |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Preferred Stock $1.00 par value:      |                                                                                    |                                            |        |       |        |        |        |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                       | Authorized  10,000 shares Outstanding
	260 Class B shares at liquidation value    |                                            |        | 2,600 |        |        |        | 2,600 |       
|                                                                                                   | Common stock $.10 par value           |                                                                                    |                                            |        |       |        |        |        |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   |                                       | Authorized  50,000 shares
	Outstanding  12,355 shares in 2001 and 12,341 in 2000 |                                            |        | 1,236 |        |        |        | 1,234 |       
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Additional paid-in capital            |                                                                                    |                                            | 53,181 |       |        |        | 53,157 |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Retained earnings                     |                                                                                    |                                            | 7,761  |       |        |        | 8,864  |      
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                   | Accumulated other comprehensive loss  |                                                                                    |                                            | (298   | )     |        |        | (97    | )    
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | Total Shareholders Equity                 |        |       | 64,480 |        |        |       | 65,758 | 
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       
|                                                                                                   |                                       |                                                                                    | Total Liabilities and Shareholders Equity |        | $     | 86,168 |        |        | $     | 92,500 | 
|                                                                                                   |                                       |                                                                                    |                                            |        |       |        |        |       

See notes to consolidated financial statements.

F-2



---



##### 



OMEGA WORLDWIDE, INC.



CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share amounts)


|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |       |       | 
|------------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------ | ------- | ------- | ----- | ---- | ------- | ------- | ----- | - | ------ | ----- | ----- | 
|                                                                    |                                                    |                                     
|                                                                    |                                                    | Year Ended September 30,            
|                                                                    |                                                    |                                     
|                                                                    |                                                    | 2001                                 |         | 2000    |       | 1999
|                                                                    |                                                    |                                      |         |         |       |     
|Revenues:                                                           |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Patient services revenue                           |                                      | $       | 140,234 |       |      | $       | 134,656 |       |   | $      |      |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Fee income  Principal Healthcare
	Finance Limited |                                      |         | 4,246   |       |      |         | 5,040   |       |   |        | 4,918 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Fee income  Principal Healthcare
	Finance Trust   |                                      |         | 1,211   |       |      |         | 1,013   |       |   |        | 405   |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Interest Income:                                   |                                      |         |         |       |      |         |         |       |   |        |       |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                    | Principal Healthcare Finance Limited |         |         | 3,721 |      |         |         | 4,628 |   |        |       | 4,761 | 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    |                                                    | Short-term investments               |         |         | 570   |      |         |         | 250   |   |        |       | 663   | 
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Foreign currency exchange gain                     |                                      |         | 707     |       |      |         |        |       |   |        |      |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Rent income                                        |                                      |         |        |       |      |         |        |       |   |        | 3,908 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Other income                                       |                                      |         | 475     |       |      |         | 22      |       |   |        | 98    |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|                                                                    |                                                    |                                      | 151,164 |         |       |      | 145,609 |         |       |   | 14,753 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Expenses:                                                           |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Direct cost of patient services                    |                                      |         | 142,438 |       |      |         | 139,704 |       |   |        |      |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Direct costs of asset management                   |                                      |         | 2,706   |       |      |         | 2,797   |       |   |        | 2,494 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | General, administrative and other expenses         |                                      |         | 3,557   |       |      |         | 2,183   |       |   |        | 3,160 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Imputed and other interest expense                 |                                      |         | 545     |       |      |         | 963     |       |   |        | 2,685 |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|                                                                    | Non-recurring expenses                             |                                      |         | 924     |       |      |         | 497     |       |   |        |      |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|                                                                    |                                                    |                                      | 150,170 |         |       |      | 146,144 |         |       |   | 8,339  |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Earnings (loss) before equity earnings and
	income taxes            |                                                    |                                      | 994     |         |       |      | (535    | )       |       |   | 6,414  |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Equity in earnings of Principal Healthcare
	Finance Limited         |                                                    |                                      | 1,404   |         |       |      | 1,468   |         |       |   | 1,223  |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Equity in earnings of Principal Healthcare
	Finance Trust           |                                                    |                                      | 346     |         |       |      | 485     |         |       |   | 484    |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Equity in earnings (loss) of Essex
	Healthcare Corporation          |                                                    |                                      | 26      |         |       |      | 10      |         |       |   | (282   | )    
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Loss on disposal of plant, property and equipment
	by subsidiary    |                                                    |                                      | (408    | )       |       |      |        |         |       |   |       |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Recognized impairment of investment (Moran-UK)                      |                                                    |                                      | (2,665  | )       |       |      |        |         |       |   |       |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Gain on dilution of interest in Principal
	Healthcare Finance Trust |                                                    |                                      |        |         |       |      |        |         |       |   | 951    |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Recognized impairment of investment (Tamaris plc)                   |                                                    |                                      |        |         |       |      |        |         |       |   | (938   | )    
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Operating income (loss)                                             |                                                    |                                      | (303    | )       |       |      | 1,428   |         |       |   | 7,852  |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Income tax (provision) benefit                                      |                                                    |                                      | (800    | )       |       |      | 18      |         |       |   | (2,389 | )    
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Net earnings (loss)                                                 |                                                    |                                      | (1,103  | )       |       |      | 1,446   |         |       |   | 5,463  |      
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Net earnings (loss) allocated to preferred
	stock dividends         |                                                    |                                      | (208    | )       |       |      | (208    | )       |       |   | (208   | )    
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Net earnings (loss) available to common
	shareholders               |                                                    | $                                    | (1,311  | )       |       | $    | 1,238   |         |       | $ | 5,255  |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Earnings (loss) per common share, basic                             |                                                    | $                                    | (0.11   | )       |       | $    | 0.10    |         |       | $ | 0.43   |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Earnings (loss) per common share, diluted                           |                                                    | $                                    | (0.11   | )       |       | $    | 0.10    |         |       | $ | 0.43   |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Average shares outstanding, basic                                   |                                                    |                                      | 12,343  |         |       |      | 12,297  |         |       |   | 12,261 |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Average shares outstanding, diluted                                 |                                                    |                                      | 12,343  |         |       |      | 12,345  |         |       |   | 12,262 |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      
|Total comprehensive income (loss), net of income
	taxes             |                                                    | $                                    | (1,304  | )       |       | $    | 1,347   |         |       | $ | 5,456  |      
|                                                                    |                                                    |                                      |         |         |       |      |         |         |       |   |        |      

See notes to consolidated financial statements.

F-3



---



##### 



OMEGA WORLDWIDE, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY

(In thousands, except per share amount)


|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |   |   | 
|---------------------------------------- | ----------------------------------------------------------------------- | ------------------------------------------------------------------------ | ----- | ---------- | - | --------- | ------ | -------- | --- | ------------- | ----- | - | - | - | ------ | - | - | - | ---- | - | - | 
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     | Accumulated  
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     | Other        
|                                         |                                                                         |                                                                          |       | Additional |   |           |        |          |     | Comprehensive
|                                         |                                                                         | Common Stock                                                             |       | Paid-In    |   | Preferred |        | Retained |     | Income       
|                                         |                                                                         | Par Value                                                                |       | Capital    |   | Stock     |        | Earnings |     | (Loss)       
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     |              
|Balance at October 1, 1998               |                                                                         | $                                                                        | 1,226 |            |   | $         | 52,861 |          |     | $             | 2,600 |   |   | $ | 1,955  |   |   | $ | 9    |  
|                                        
|                                        
|                                        
|                                        
|Issuance of stock:                       |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  
|                                        
|                                        
|                                        
|                                        
|                                         | Grants of restricted stock (8 shares at an
	average of $4.09 per share) |                                                                          |       | 1          |   |           |        | 32       |     |               |       |  |   |   |        |  |   |   |      |  |  
|                                        
|                                        
|                                        
|                                        
|Net earnings                             |                                                                         |                                                                          |      |            |   |           |       |          |     |               |      |   |   |   | 5,463  |   |   |   |     |  
|                                        
|                                        
|                                        
|                                        
|Foreign currency translation adjustments |                                                                         |                                                                          |      |            |   |           |       |          |     |               |      |   |   |   |       |   |   |   | (7   | )
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  
|Balance at September 30, 1999            |                                                                         |                                                                          | 1,227 |            |   |           | 52,893 |          |     |               | 2,600 |   |   |   | 7,418  |   |   |   | 2    |  
|                                        
|                                        
|                                        
|                                        
|Issuance of stock:                       |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                         | Grants of restricted stock (75 shares at an
	average of $3.64 per share) |       |            | 7 |           |        |          | 264 |               |       |   |  |   |        |   |  |   |      |   |  | 
|                                        
|                                        
|                                        
|                                        
|Net earnings                             |                                                                         |                                                                          |      |            |   |           |       |          |     |               |      |   |   |   | 1,446  |   |   |   |     |  
|                                        
|                                        
|                                        
|                                        
|Foreign currency translation adjustments |                                                                         |                                                                          |      |            |   |           |       |          |     |               |      |   |   |   |       |   |   |   | (99  | )
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  
|Balance at September 30, 2000            |                                                                         |                                                                          | 1,234 |            |   |           | 53,157 |          |     |               | 2,600 |   |   |   | 8,864  |   |   |   | (97  | )
|                                        
|                                        
|                                        
|                                        
|Issuance of stock:                       |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  
|                                        
|                                        
|                                        
|                                        
|                                         |                                                                         | Grants of restricted stock (14 shares at an
	average of $1.85 per share) |       |            | 2 |           |        |          | 24  |               |       |   |  |   |        |   |  |   |      |   |  | 
|                                        
|                                        
|                                        
|                                        
|Net loss                                 |                                                                         |                                                                          |      |            |   |           |       |          |     |               |      |   |   |   | (1,103 | ) |   |   |     |  
|                                        
|                                        
|                                        
|                                        
|Foreign currency translation adjustments |                                                                         |                                                                          |      |            |   |           |       |          |     |               |      |   |   |   |       |   |   |   | (201 | )
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  
|Balance at September 30, 2001            |                                                                         | $                                                                        | 1,236 |            |   | $         | 53,181 |          |     | $             | 2,600 |   |   | $ | 7,761  |   |   | $ | (298 | )
|                                         |                                                                         |                                                                          |       |            |   |           |        |          |     |               |       |   |   |   |        |   |   |   |      |  

See notes to consolidated financial statements.

F-4



---



##### 



OMEGA WORLDWIDE, INC.



CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                                                                                 |                                                                                            |                          |        |        |   |      |        |         |   |   |         |        |  
|---------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------ | ------------------------ | ------ | ------ | - | ---- | ------ | ------- | - | - | ------- | ------ | -
|                                                                                                                 |                                                                                            |                         
|                                                                                                                 |                                                                                            | Year Ended September 30,
|                                                                                                                 |                                                                                            |                         
|                                                                                                                 |                                                                                            | 2001                     |        | 2000   |   | 1999
|                                                                                                                 |                                                                                            |                          |        |        |   |     
|Operating activities:                                                                                            |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Net earnings (loss)                                                                                              |                                                                                            | $                        | (1,103 | )      |   | $    | 1,446  |         |   | $ | 5,463   |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Adjustments to reconcile net earnings to cash
	(used in) provided by operating activities: |                          |        |        |   |      |        |         |   |   |         |        |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Equity in earnings of Principal Healthcare
	Finance Limited                                |                          |        | (1,404 | ) |      |        | (1,468  | ) |   |         | (1,223 | )
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Equity in earnings of Principal Healthcare
	Finance Trust                                  |                          |        | (346   | ) |      |        | (485    | ) |   |         | (484   | )
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Equity in (earnings) loss of Essex Healthcare
	Corporation                                 |                          |        | (26    | ) |      |        | (10     | ) |   |         | 282    |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Straight-line rent adjustment                                                              |                          |        | 3,391  |   |      |        | 3,622   |   |   |         |       |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Depreciation and amortization                                                              |                          |        | 1,196  |   |      |        | 1,553   |   |   |         | 903    |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Other non-cash charges                                                                     |                          |        | (645   | ) |      |        | 392     |   |   |         | 402    |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Recognized impairment of investment (Moran-UK)                                             |                          |        | 2,665  |   |      |        |        |   |   |         |       |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Recognized impairment of investment (Tamaris, plc)                                         |                          |        |       |   |      |        |        |   |   |         | 938    |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Gain on dilution of interest in Principal
	Healthcare Finance Trust                        |                          |        |       |   |      |        |        |   |   |         | (951   | )
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Imputed interest                                                                           |                          |        |       |   |      |        |        |   |   |         | 1,146  |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Write-off of investment in AVC Holdings                                                    |                          |        |       |   |      |        |        |   |   |         | 281    |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Net change in operating assets and liabilities                                             |                          |        | 50     |   |      |        | (12,268 | ) |   |         | 73     |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                 | Foreign currency translation                                                               |                          |        | (429   | ) |      |        | (99     | ) |   |         | 7      |  
|                                                                                                                 |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|Net cash provided by (used in) operating
	activities                                                             |                                                                                            |                          | 3,349  |        |   |      | (7,317 | )       |   |   | 6,837   |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Cash flows from financing
	activities:                                                                           |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Proceeds from revolving credit facility with bank                                                                |                                                                                            |                          | (4,850 | )      |   |      | 4,850  |         |   |   |        |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Proceeds from (repayment of) revolving warehouse
	facility drawn by subsidiary                                   |                                                                                            |                          | (301   | )      |   |      | (2,564 | )       |   |   | 34,502  |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Repayment of long-term borrowings by subsidiary                                                                  |                                                                                            |                          | (454   | )      |   |      | (1,227 | )       |   |   |        |       
|                                                                                                                 |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|Net cash provided by (used in) financing
	activities                                                             |                                                                                            |                          | (5,605 | )      |   |      | 1,059  |         |   |   | 34,502  |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Cash flows from investing
	activities:                                                                           |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Repayments from (temporary advances to) Principal
	Healthcare Finance Limited                                    |                                                                                            |                          | 5,096  |        |   |      | 7,575  |         |   |   | (9,989  | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Decrease (increase) in restricted cash                                                                           |                                                                                            |                          | 575    |        |   |      | (2,397 | )       |   |   | 5,831   |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Acquisition of plant, property and equipment by
	subsidiaries                                                    |                                                                                            |                          | (2,076 | )      |   |      | (2,302 | )       |   |   | (49,288 | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Disposal of plant, property and equipment by
	subsidiaries                                                       |                                                                                            |                          | 1,047  |        |   |      |       |         |   |   |        |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Dividends from affiliates                                                                                        |                                                                                            |                          | 183    |        |   |      | 174    |         |   |   | 272     |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Proceeds from sale of Essex Healthcare
	Corporation investments                                                  |                                                                                            |                          | 325    |        |   |      |       |         |   |   |        |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Cash received in acquisition of operating
	companies by Idun Health Care Limited net of cash consideration
	paid |                                                                                            |                          |       |        |   |      | 727    |         |   |   |        |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Proceeds from repayment of secured loan                                                                          |                                                                                            |                          |       |        |   |      | 263    |         |   |   | 102     |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Repayment of temporary advances from Principal
	Healthcare Finance Trust                                         |                                                                                            |                          |       |        |   |      |       |         |   |   | 13,631  |       
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Investment in Tamaris, plc stock                                                                                 |                                                                                            |                          |       |        |   |      |       |         |   |   | (2,842  | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Investment in Principal Healthcare Finance Trust                                                                 |                                                                                            |                          |       |        |   |      |       |         |   |   | (1,108  | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Investment in Moran-UK                                                                                           |                                                                                            |                          |       |        |   |      |       |         |   |   | (1,622  | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Loan to Moran-UK                                                                                                 |                                                                                            |                          |       |        |   |      |       |         |   |   | (228    | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Loan to an enterprise                                                                                            |                                                                                            |                          |       |        |   |      |       |         |   |   | (465    | )     
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Other                                                                                                            |                                                                                            |                          | (125   | )      |   |      | (105   | )       |   |   | (176    | )     
|                                                                                                                 |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|Net cash provided by (used in) investing
	activities                                                             |                                                                                            |                          | 5,025  |        |   |      | 3,935  |         |   |   | (45,882 | )     
|                                                                                                                 |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       
|Increase (decrease) in cash and short-term
	investments                                                          |                                                                                            | $                        | 2,769  |        |   | $    | (2,323 | )       |   | $ | (4,543  | )     
|                                                                                                                 |                                                                                            |                          |        |        |   |      |        |         |   |   |         |       

See notes to consolidated financial statements.

F-5



---



##### 



OMEGA WORLDWIDE, INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


September 30, 2001 and 2000

(Dollars in thousands, except for per share amounts)


NOTE 1  ORGANIZATION AND SIGNIFICANT ACCOUNTING
POLICIES

Organization

Omega Worldwide, Inc. (the Company) was formed to
provide investment advisory and management services as well as
equity and debt capital to the healthcare industry, primarily in
Europe and the Pacific Rim. On April 2, 1998, the
Companys registration statement became effective, and it
offered 3,750,000 shares of common stock to the public at $7.50
per share. The Company received $27,375, net of issuance costs
of $750. Shares offered included 500,000 shares in a primary
offering and 3,250,000 shares in a rights offering. Operations
commenced upon the effectiveness of the initial public offering.
Except for $1 invested by Omega Healthcare Investors, Inc.
(Omega Healthcare) at the date of formation
(November 1997), there were no cash flow activities of the
Company from the date of formation to the date operations
commenced.

Immediately prior to the offering of shares by the Company,
Omega Healthcare contributed substantially all of its investment
in Principal Healthcare Finance Limited
(Principal-UK) to the Company. Assets contributed by
Omega Healthcare, which were recorded by the Company at Omega
Healthcares accounting basis, included a $23,805
subordinated loan to Principal-UK, 33.375% of the common stock
of Principal-UK with a carrying value of $5,297, 10,556,361
warrants and other net assets totaling $150. Omega Healthcare
also assigned its interest in a management agreement with
Principal-UK in which the Company receives an annual fee of 0.9%
of Principal-UKs assets (as defined) for providing certain
advisory services, which expire December 31, 2002. The
Companys underlying asset management and advisory
contracts in respect of Principal-UKs securitized assets
continues through 2029. In exchange, Omega Healthcare received
8,500,000 shares of common stock and 260,000 shares of
Class B preferred stock. Of the common stock received by
Omega Healthcare, approximately 5,200,000 shares were
distributed pro rata to Omega Healthcares shareholders,
and approximately 2,300,000 were sold pursuant to the
Companys registration statement. As of the date of the
stock distribution, Omega Healthcare retained approximately 9.9%
of the Companys common stock then outstanding.

Consolidation

The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries after elimination
of all material inter-company accounts and transactions. As
described in Note 4, the Companys wholly-owned subsidiary,
Idun began its operations on October 31, 1999 and its
financial results have been included in the consolidated
statements of the Company from that date.

Prior to April 1, 1999, the Company owned 100% of Principal
Healthcare Finance Trust (Principal-Australia). As
more fully explained in Note 3, newly issued shares of
Principal-Australia were issued to independent investors in 1999
resulting in the dilution of the Companys ownership to
47%. Principal-Australias financial results prior to
April 1, 1999 are included in the Companys results on
a consolidated basis, while Principal-Australias results
after April 1, 1999 are included in the Companys
results using the equity method of accounting.

The Company reports the results of its equity investments
for which it has over 20% ownership, but in which it does not
hold a majority interest, using the equity method of accounting,
using a one-month lag. Investments in companies over which the
Company does not exercise control are recorded on the cost
method.

Certain prior year amounts have been reclassified to correspond
with the current years presentation.

Cash and Short-Term Investments

Short-term investments consist of highly liquid investments with
a maturity date of three months or less when purchased. These
investments are stated at cost, which approximates fair value.

F-6



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Restricted Cash

The Companys wholly-owned subsidiary Idun has restricted
cash of $1,822 supporting its debt (See Note 8). In
addition, the Company has $389 of other restricted cash.

Plant, Property and Equipment

Plant, property and equipment owned by Idun is stated at cost.
Depreciation expense is calculated using the straight-line
method for financial reporting purposes over the estimated
useful lives of the depreciable asset. Estimated useful lives of
depreciable assets range from 3 to 7 years for furniture,
fixtures and equipment, and 40 years for buildings.
Depreciation expense related to Idun amounted to approximately
$1,125 and $1,476 for fiscal years 2001 and 2000, respectively,
and is included in direct cost of patient services in the
consolidated statements of operations. During 2001, Idun
disposed of two of its healthcare properties resulting in a loss
of $408.

Revenue Recognition

Patient services revenue of Idun is recorded as the services are
provided. Fee income is recognized as earned and is based on
assets under management. Rental income is recognized on a
straight-line basis over the initial terms of the related master
lease. Such income includes periodic increases based upon
predetermined formulas as defined in the master lease.

Direct Cost of Patient Services

Direct cost of patient services directly supports patient
service revenue and includes all operating expenses, including
depreciation, of Idun.

Straight-Line Rent Expense

Certain of the Companys subsidiaries are the lessees of
several long-term leases. Rent expense differs from cash rental
payments and is recognized as the total rent payable over the
initial term of the related lease amortized on a straight-line
basis. Such expense includes the adjustment in the rental
payments based upon predetermined minimum formulas as defined in
the master lease and is reported as a component of direct cost
of patient services

Non-Recurring Expense

As previously announced, the Company is actively exploring ways
to boost shareholder value. The cost of legal advice related to
the process and analyzing the previously announced offer by a
third party to purchase the Companys investment in
Principal Healthcare Finance Limited totaled $924 and $497 for
fiscal years ended September 30, 2001 and 2000,
respectively.

Translation

Translation of currencies for foreign subsidiary financial
information is computed pursuant to the provisions of Financial
Accounting Standards Board Statement No. 52, which provides
that balance sheet amounts are translated at the year end
exchange rate and income statement amounts are translated at the
average-period exchange rate. Gains and losses from settled
foreign currency transactions are included in the determination
of net income. To offset the risk of future currency
fluctuations on receivables due from foreign subsidiaries and
investments, the Company may enter into foreign exchange
contracts to sell or buy currencies at specific rates and
specific dates. During 2001, the Company terminated one of its
currency hedges resulting in net gains of $528, while the
underlying receivables and cash, which were no longer hedged,
required a write-

F-7



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

up adjustment of $179, resulting in a net foreign currency
exchange gain of was $707. There are no material amounts of
exchange gains or losses during the fiscal years ended
September 30, 2000 and 1999, respectively.

Financial Instruments

In June 1998, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 133, Accounting for Derivative Instruments
and Hedging Activities, as amended by SFAS No. 137
and SFAS No. 138, which established new accounting and
reporting standards for derivative instruments
(FAS 133). These rules require that all
derivative instruments be reported in the consolidated financial
statements at fair value. The fair value for all derivative
contracts is included in other assets or other liabilities and
will be recorded each period in earnings or other comprehensive
income, depending on whether the derivative is designated and
effective as part of a hedged transaction, and on the type of
hedge transaction. Gains or losses on derivative instruments
reported in other comprehensive income must be reclassified as
earnings in the period in which earnings are affected by the
underlying hedged item, and the ineffective portion of all
hedges is recognized in other income (expense) in the statements
of earnings in the current period. These new standards may
result in additional volatility in reported earnings, other
comprehensive income (loss) and accumulated other comprehensive
income (loss). These rules became effective for the Company on
October 1, 2000 and did not have a significant effect on
the Companys consolidated results of operations or
financial position upon adoption.

The Company is exposed to market risk from changes in foreign
currency exchange rates. The Company manages its exposure to
these market risks through its operating, financing and
investing activities and, when deemed appropriate, through the
use of forward foreign exchange contracts.

The Company enters into forward foreign exchange contracts with
in order to manage exposure related to certain investments
denominated in British pound sterling and Australian dollars.
The Company records changes in fair value of its forward foreign
exchange contracts in other income or expense. The
Companys forward foreign exchange contracts are
marked-to-market and unrealized gains and losses are included in
current period net income (loss) and a component of other income
(expense).

Prior to the adoption of FAS 133, the Company reported any gains
or losses, on the contracts as offsets to any losses or gains,
respectively, on certain investments dominated in British pound
sterling and Australian dollars.

Stock Based Compensation

The Company grants stock options to employees and directors with
an exercise price equal to the value of the shares at the date
of the grant. In accordance with the provisions of APB Opinion
No. 25, Accounting for Stock Issued to Employees,
compensation expense is not recognized for these stock option
grants, because the exercise price of the options equals the
market price of the underlying shares at the date of grant.

Accounting Estimates

The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
(GAAP) requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of the revenues and expenses during the period. Actual results
could differ from those estimates.

Risks and Uncertainties

The Companys results of operations are significantly
dependent on the overall health of the long-term care industry
in the United Kingdom. The long-term care industry is subject to
external factors such as

F-8



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

government regulation, inflation, death rates and other health
related issues. A decline in the long-term care industry could
reduce occupancy rates, revenues and cash flow, which could
adversely affect the operating results of the Company.

Impact of Recently Issued Accounting Standards

In July 2001, FASB issued Statements of Financial
Accounting Standards No. 141, Business Combinations
(FAS 141), and No. 142, Goodwill and
Other Intangible Assets(FAS 142).
FAS 141 eliminated the use of the pooling-of-interests
method of accounting for business combinations initiated after
June 30, 2001 and is effective for any business combination
accounted for by the purchase method that is completed after
June 30, 2001. FAS 142, which includes the
requirements to test goodwill and indefinite lived intangible
assets for impairment rather than amortize them, will be
effective for fiscal years beginning after December 15,
2001. The Company will adopt the FAS 142 effective
October 1, 2001 and does not expect a material impact on
the consolidated financial statements.

In October 2001, the FASB issued Statement No. 144,
Accounting for the Impairment or Disposal of Long-Lived
Assets (FAS 144). FAS 144 supersedes
FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed
Of, however it retains the fundamental provisions of that
statement related to the recognition and measurement of the
impairment of long-lived assets to be held and used.
In addition, FAS 144 provides more guidance on estimating
cash flows when performing a recoverability test, requires that
a long-lived asset to be disposed of other than by sale (e.g.
abandoned) be classified as held and used until it
is disposed of, and establishes more restrictive criteria to
classify an asset as held for sale. FAS 144 is
effective for year-ends beginning after December 15, 2001,
but the Company will adopt the FAS 144 effective October 1,
2001 and does not expect a material impact on the consolidated
financial statements.

Comprehensive Income

Comprehensive income consists of the Companys earnings
before preferred stock dividends adjusted for the unrealized
gains or losses on investments, net of tax and foreign currency
translation adjustments.

NOTE 2  PRINCIPAL HEALTHCARE FINANCE LIMITED
(PRINCIPAL-UK)

As described in Note 1, the Company acquired 33.375% of
Principal-UKs voting ordinary shares in connection with
the Omega Healthcare distribution/exchange. The Company accounts
for its interest in Principal-UK using the equity method.
Principal-UK has a fiscal year end of August 31; therefore,
the equity in earnings of Principal-UK is recognized on a
one-month lag. Principal-UK has real estate investments in
long-term care facilities located in the United Kingdom that are
operated by independent operators, subsidiaries of Principal-UK
and Idun (see Note 4) and Moran Health Care (UK) Ltd.
(Moran-UK) (see Note 5) through long-term
leases.

The Company has a British pound sterling denominated
subordinated loan receivable of $22.0 million and
$23.8 million at September 30, 2001 and 2000,
respectively from Principal-UK that were due June 29, 2001,
and are now past due. The loan bears interest at a rate of
15.93% (12.93% through June 29, 2001) at September 30,
2001. In addition temporary unsecured advances to Principal-UK
in the amount of $5,697, and $10,793, were outstanding at
September 30, 2001 and 2000, respectively, with interest at
9.00% payable monthly. Included in interest income for the years
ended September 30, 2001, 2000, and 1999 is $3,721, $4,628,
and $4,761, respectively, related to advances to Principal-UK.
The Company is currently in negotiations with Principal-UK to
extend the maturity date and terms of the subordinated note
receivable and temporary unsecured advances. The Companys
financial statements do not include any adjustments to reflect
the possible future effects on the recoverability of investments
in and advances made to Principal-UK of $36,689 at
September 30, 2001 that may result from the outcome to the
uncertainty of Principal-UKs ability

F-9



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

to continue as a going concern described below. The realization
of the subordinated loans to and the Companys investment
in Principal-UK is dependent upon the resolution of this
uncertainty.

The following summarizes selected financial information of
Principal-UK:

|                            |                                 |                       |                |         |         |        |        |         |         |        |        |         |         |        | 
|--------------------------- | ------------------------------- | --------------------- | -------------- | ------- | ------- | ------ | ------ | ------- | ------- | ------ | ------ | ------- | ------- | ------ | 
|                            |                                 |                      
|                            |                                 | Year Ended August 31,
|                            |                                 |                      
|                            |                                 | 2001                  |                | 2000    |         | 1999  
|                            |                                 |                       |                |         |         |       
|Selected Operating Results: |                                 |                       |                |         |         |        |        |         |         |        |        |        
|                           
|                           
|                           
|                           
|Revenues:                   |                                 |                       |                |         |         |        |        |         |         |        |        |        
|                           
|                           
|                           
|                           
|                            | Rent income                     |                       | $              | 54,962  |         |        | $      | 59,309  |         |        | $      | 55,693  |        
|                           
|                           
|                           
|                           
|                            | Patient service revenue         |                       |                | 8,233   |         |        |        | 9,833   |         |        |        |        |        
|                           
|                           
|                           
|                           
|                            | Interest income                 |                       |                | 4,597   |         |        |        | 6,445   |         |        |        | 6,107   |        
|                            |                                 |                       |                |         |         |        |        |         |         |        |        |        
|                            |                                 |                       | Total revenues |         |         | 67,792 |        |         |         | 75,587 |        |         |         | 61,800 | 
|                           
|                           
|                           
|                           
|Expenses:                   |                                 |                       |                |         |         |        |        |         |         |        |        |        
|                           
|                           
|                           
|                           
|                            | Interest expense                |                       |                | (35,949 | )       |        |        | (40,338 | )       |        |        | (39,149 | )      
|                           
|                           
|                           
|                           
|                            | Depreciation and amortization   |                       |                | (9,692  | )       |        |        | (11,078 | )       |        |        | (9,839  | )      
|                           
|                           
|                           
|                           
|                            | Direct cost of patient services |                       |                | (8,555  | )       |        |        | (10,218 | )       |        |        |        |        
|                           
|                           
|                           
|                           
|                            | General and administrative      |                       |                | (6,800  | )       |        |        | (6,607  | )       |        |        | (5,880  | )      
|                            |                                 |                       |                |         |         |        |        |         |         |        |        |        
|                            |                                 | Total expenses        |                |         | (60,996 | )      |        |         | (68,241 | )      |        |         | (54,868 | )     
|                            |                                 |                       |                |         |         |        |        |         |         |        |        |        
|Operating income            |                                 |                       | 6,796          |         |         |        | 7,346  |         |         |        | 6,932  |        
|                           
|                           
|                           
|                           
|Provision for income taxes  |                                 |                       | (2,346         | )       |         |        | (2,706 | )       |         |        | (3,053 | )      
|                            |                                 |                       |                |         |         |        |        |         |         |        |        |        
|Net Income                  |                                 | $                     | 4,450          |         |         | $      | 4,640  |         |         | $      | 3,879  |        
|                            |                                 |                       |                |         |         |        |        |         |         |        |        |        

|                                                                              |  |            |         |      |  |   |         |  |  |  |  | 
|----------------------------------------------------------------------------- |  | ---------- | ------- | ---- |  | - | ------- |  |  |  |  | 
|                                                                              |  |            |         |     
|                                                                              |  | August 31, |         |     
|                                                                              |  |            |         |     
|                                                                              |  | 2001       |         | 2000 |  |  
|                                                                              |  |            |         |      |  |  
|Selected Balance Sheet Information as
	of:                                    |  |            |         |      |  |   |         |  |  |  |  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Investments in real estate subject to triple-net
	leases, net of depreciation |  | $          | 371,917 |      |  | $ | 382,270 |  |  |  |  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Total assets                                                                  |  |            | 532,109 |      |  |   | 539,339 |  |  |  |  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Non-recourse debt borrowings (1)                                              |  |            | 440,795 |      |  |   | 445,887 |  |  |  |  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Total liabilities                                                             |  |            | 507,615 |      |  |   | 519,292 |  |  |  |  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Total stockholders equity                                                    |  |            | 24,494  |      |  |   | 20,047  |  |  |  |  | 



|    |                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------
|(1) | Substantially all of Principal-UKs real estate is pledged
	as collateral for Principal-UKs debt agreements.

As of August 31, 2001, Principal-UK has $69,141 of
mortgage, loan and subordinated notes payable past due,
including $27,648 due to the Company and an additional $11,779
due by January 31, 2002. Principal-UK is currently in
negotiations with its lenders, including the Company, to extend
the maturity dates and terms of the notes. If Principal-UK is
unable to extend the maturity dates and terms with these
lenders, Principal-UK will look to (1) obtain alternative
financing from other financial institutions, or (2) the
potential sale of certain assets as sources of cash to repay the
amounts outstanding under such mortgage, loan and notes payable.
This condition raises doubt about the Principal-UKs
ability to continue as a going concern. Principal-UKs
financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and
classifications of assets or the amounts and classifications of
liabilities that may result from the outcome to this uncertainty.

Although Principal-UK continues to maintain its periodic
payments requirements under the original terms of the above
indebtedness, there can be no assurance that one or all of the
affected lenders will not demand payment of such indebtedness
immediately. Additionally, there can be no assurance that
Principal-UK will be in compliance with its financial debt
covenants in future periods since Principal-UKs future

F-10



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

financial performance is subject to various risks and
uncertainties, including, but not limited to, the effects of
increases in market interest rates from current levels; the risk
of potential increases in vacancy rates and the resulting impact
on Principal-UKs revenue; and risks associated with
refinancing Principal-UKs current debt obligations or
obtaining new financing under terms as favorable as Principal-UK
has experienced in prior periods.

The effective tax rates are 35%, 37% and 44% for the years ended
August 31, 2001, 2000 and 1999, respectively. These rates
differ from the United Kingdom tax rate primarily because of the
early recognition of straight-line rent income and the deduction
of depreciation and amortization expense, which are not
permitted for tax purposes in the United Kingdom. The
Companys proportionate share of Principal-UKs
earnings for the years ended August 31, 2001, 2000, and
1999 are approximately $1,485, $1,549 and $1,296, respectively.
The Company has recorded a charge against its share of
Principal-UKs earnings of approximately $81, $81 and $73
for the years ended August 31, 2001, 2000 and 1999,
respectively, representing amortization over a ten-year period
of the excess of the Companys investment in Principal-UK
of approximately $771 over its proportionate share of
Principal-UKs underlying equity at the date of acquisition.

The Company has warrants to purchase 556,361 ordinary shares of
Principal-UK expiring July 31, 2002 at an exercise price of
£1.00 per share (approximately $1.46 per share at
September 30, 2001) per share. These warrants have no value
assigned at the date of issuance because the underlying
securities were issued at their fair value at that date.
However, the estimated fair value of these warrants at
September 30, 2001 approximates $195. In determining the
estimated fair value, the Company used a Black-Scholes pricing
model with the following assumptions: risk free interest rate of
6%; a volatility factor of 10%; and an average life of six years
from the date of grant.

NOTE 3  PRINCIPAL HEALTHCARE FINANCE TRUST
(PRINCIPAL-AUSTRALIA)

In June 1998 the Company acquired Assisted Living Unit Trust, an
Australian property trust that owns nursing homes, for a cash
investment of $3.0 million plus a loan of $6.2 million
and a guarantee of the entitys deferred purchase
obligation of $30.0 million. Concurrent with the
acquisition, the Assisted Living Unit Trusts name was
changed to Principal Healthcare Finance Trust
(Principal-Australia). The investment in facilities approximated
$30.0 million, which was paid in June 1999.

In April 1999, Principal-Australia sold 6,625,000 newly
issued shares to Omega Healthcare and AMP Life Limited, as well
as 875,000 additional shares to the Company. Prior to the
issuance of these shares, the Company owned 100% of
Principal-Australia. Issuance of the new shares reduced the
Companys ownership to 47% of shares outstanding. The
transaction created a one-time gain on dilution of interest in
Principal-Australia of $951, resulting in after tax earnings
available to common shareholders of $628 or $0.05 per share.

As described in Note 1, the financial results of
Principal-Australia prior to April 1, 1999 are included in
the Companys results on a consolidated basis, while
Principal-Australias results after April 1, 1999 are
included in the Companys results using the equity method
of accounting. Principal-Australia has a fiscal year end of
August 31; accordingly, the equity in earnings of
Principal-Australia is recognized on a one-month lag.

The Company provides management services to principal-Australia
and receives an annual fee of 0.9% of Principal-Australias
assets under management by the Company, as computed under
Australian GAAP.

F-11



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

The following summarizes selected financial information of
Principal-Australia:

|                            |                               |                       |     |        |         |      |       |        |         |   |       |        |        |  
|--------------------------- | ----------------------------- | --------------------- | --- | ------ | ------- | ---- | ----- | ------ | ------- | - | ----- | ------ | ------ | -
|                            |                               |                      
|                            |                               | Year Ended August 31,
|                            |                               |                      
|                            |                               | 2001                  |     | 2000   |         | 1999
|                            |                               |                       |     |        |         |     
|Selected Operating Results: |                               |                       |     |        |         |      |       |        |         |   |       |       
|                           
|                           
|                           
|                           
|Revenues:                   |                               |                       |     |        |         |      |       |        |         |   |       |       
|                           
|                           
|                           
|                           
|                            | Rent income                   |                       | $   | 12,056 |         |      | $     | 11,967 |         |   | $     | 9,592  |       
|                           
|                           
|                           
|                           
|                            | Interest and other income     |                       |     | 344    |         |      |       | 982    |         |   |       | 322    |       
|                            |                               |                       |     |        |         |      |       |        |         |   |       |       
|                            |                               | Total Revenues        |     |        | 12,400  |      |       |        | 12,949  |   |       |        | 9,914  |  
|                           
|                           
|                           
|                           
|Expenses:                   |                               |                       |     |        |         |      |       |        |         |   |       |       
|                           
|                           
|                           
|                           
|                            | Interest expense              |                       |     | (8,297 | )       |      |       | (8,742 | )       |   |       | (5,203 | )     
|                           
|                           
|                           
|                           
|                            | Depreciation and amortization |                       |     | (1,964 | )       |      |       | (1,974 | )       |   |       | (1,856 | )     
|                           
|                           
|                           
|                           
|                            | General and administrative    |                       |     | (1,354 | )       |      |       | (1,201 | )       |   |       | (932   | )     
|                            |                               |                       |     |        |         |      |       |        |         |   |       |       
|                            |                               | Total expenses        |     |        | (11,615 | )    |       |        | (11,917 | ) |       |        | (7,991 | )
|                            |                               |                       |     |        |         |      |       |        |         |   |       |       
|Net income                  |                               | $                     | 785 |        |         | $    | 1,032 |        |         | $ | 1,923 |       
|                            |                               |                       |     |        |         |      |       |        |         |   |       |       

|                                                                              |  |            |         |      |  |   |         | 
|----------------------------------------------------------------------------- |  | ---------- | ------- | ---- |  | - | ------- | 
|                                                                              |  |           
|                                                                              |  | August 31,
|                                                                              |  |           
|                                                                              |  | 2001       |         | 2000
|                                                                              |  |            |         |     
|Selected Balance Sheet Information as
	of:                                    |  |            |         |      |  |   |         | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Investments in real estate subject to triple-net
	leases, net of depreciation |  | $          | 92,508  |      |  | $ | 88,298  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Total assets                                                                  |  |            | 116,535 |      |  |   | 116,255 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Non-recourse debt borrowings                                                  |  |            | 91,243  |      |  |   | 94,546  | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Total liabilities                                                             |  |            | 102,686 |      |  |   | 102,261 | 
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Total unit holders equity                                                    |  |            | 13,849  |      |  |   | 13,994  | 

NOTE 4  IDUN HEALTH CARE LIMITED (IDUN)

On October 31, 1999 the Company, through its wholly-owned
subsidiary, Idun, acquired the operating subsidiaries of
Tamaris, plc. The 48 subsidiaries acquired operate 119 nursing
homes located throughout England, Scotland and Northern Ireland.
The acquisition was accounted for under the purchase method of
accounting. Purchase consideration was approximately $1,933
(£1,075) in cash and Tamaris, plc. shares valued at $1,903.
The fair market value of the net assets at the date of
acquisition was, in the opinion of management, $7.2 million
(gross assets of $45.1 million net of liabilities assumed
of $37.9 million). Fixed assets included in the
$7.2 million amount have been written down by
$3.5 million as prescribed by GAAP to report net assets
equal to the purchase price.

Public trading of the Tamaris stock was suspended on
September 25, 1999, and trading did not resume prior to
October 31, 1999 when shares were surrendered. Based on an
interpretation of FASB Statement No. 115, management
determined that the recording of the value of the Tamaris stock
relinquished in the acquisition should be based on the last
quoted price of the security rather than the fair value of the
assets acquired. To meet this technical interpretation, a charge
of $938 ($657, net of tax) was included in the Companys
income statement for the year ended September 30, 1999.

F-12



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Pro forma information for the Company, as if the Idun purchase
had been made as of October 1, 1999, is as follows:

Pro forma operating results for the year ended:

|                                              |  |               |         | 
|--------------------------------------------- |  | ------------- | ------- | 
|                                              |  | September 30,
|                                              |  | 2000         
|                                              |  |              
|Revenues                                      |  | $             | 157,846 | 
|                                             
|                                             
|                                             
|                                             
|Net earnings available to common shareholders |  |               | 1,000   | 
|                                             
|                                             
|                                             
|                                             
|Earnings per common share, basic              |  |               | 0.08    | 
|                                             
|                                             
|                                             
|                                             
|Earnings per common share, diluted            |  |               | 0.08    | 
|                                             
|                                             
|                                             
|                                             
|Average exchange rate ($ per £)               |  |               | 1.5658  | 

Iduns results are included in the Companys
consolidated results for the entire twelve-month period ended
September 30, 2001. Idun has a fiscal year-end of
August 31, 2001, therefore its results are recognized on a
one-month lag.

The functional currency of Idun is British pound sterling. In
accordance with FASB 52, the balance sheet amounts, are
translated at the period end exchange rate and the income
statement amounts are translated at the average exchange rate
for the period.

NOTE 5  OTHER INVESTMENTS

The Company (until December 1, 2000) held approximately 47%
of the outstanding common shares of Essex, an Atlanta-based
private operator of skilled nursing facilities. Essexs
primary activities are in Ohio. The Company accounted for this
investment using the equity method. On December 1, 2000,
the Company sold its interest in Essex for $325, which
approximated book value. The Companys proportionate share
of Essexs earnings for the years ended August 31,
2001 and 2000 are $26 and $10 respectively, and loss for the
year ended August 31, 1999 of $282.

On June 30, 2001, the Company evaluated the recoverability
of its 19.9% investment in Moran-UK, which is accounted for
under the cost method. Moran-UK operates nursing home facilities
leased from Principal-UK and located in the United Kingdom.
Based on an analysis of the future cash flow expected to be
received from Moran-UK, the Company expensed the carrying value
of its investment in Moran-UK of $2,665. In addition, the
Company had various loans and related accrued interest to
Moran-UK which were deemed to be unrecoverable for which the
Company provided a bad debt provision of $399 (included in
general, administrative and other expenses). On December 1,
2001, Principal-UK appointed Receivers to administer the
operations of certain subsidiaries of Moran-UK, when
Moran-Australia, the 80.1% shareholder, withdrew its financial
support. Principal-UK expects to assign to another nursing home
operator the leases on its facilities previously operated by
Moran-UK.

F-13



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 6  FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Companys
financial instruments are as follows:

|             |                                             |                |        |        |   |          |        |        |   |   |        |         |   |   |        |         |  
|------------ | ------------------------------------------- | -------------- | ------ | ------ | - | -------- | ------ | ------ | - | - | ------ | ------- | - | - | ------ | ------- | -
|             |                                             |               
|             |                                             | September 30, 
|             |                                             |               
|             |                                             |                |        |       
|             |                                             | 2001           |        | 2000  
|             |                                             |                |        |       
|             |                                             | Carrying       |        | Fair   |   | Carrying |        | Fair  
|             |                                             | Amount         |        | Value  |   | Amount   |        | Value 
|             |                                             |                |        |        |   |          |        |       
|             |                                             |               
|             |                                             | (In thousands)
|            
|            
|            
|            
|Assets:      |                                             |                |        |        |   |          |        |        |   |   |        |         |   |   |        |        
|            
|            
|            
|            
|             | Cash and short-term investments             |                | $      | 6,184  |   |          | $      | 6,184  |   |   | $      | 3,415   |   |   | $      | 3,415   |  
|            
|            
|            
|            
|             | Restricted cash                             |                |        | 2,211  |   |          |        | 2,211  |   |   |        | 2,786   |   |   |        | 2,786   |  
|            
|            
|            
|            
|             | Subordinated loan to Principal-UK           |                |        | 22,040 |   |          |        | 22,040 |   |   |        | 23,805  |   |   |        | 21,959  |  
|            
|            
|            
|            
|             | Temporary advances to Principal-UK          |                |        | 5,697  |   |          |        | 5,697  |   |   |        | 10,793  |   |   |        | 10,793  |  
|            
|            
|            
|            
|             | Warrants for 556,361 Principal-UK shares    |                |        |       |   |          |        | 195    |   |   |        |        |   |   |        |        |  
|            
|            
|            
|            
|             | Warrants for 10,556,361 Principal-UK shares |                |        |       |   |          |        |       |   |   |        |        |   |   |        | 161     |  
|            
|            
|            
|            
|             | Foreign currency forward contracts          |                |        | 3,418  |   |          |        | 3,418  |   |   |        | 3,210   |   |   |        | 3,210   |  
|            
|            
|            
|            
|Liabilities: |                                             |                |        |        |   |          |        |        |   |   |        |         |   |   |        |        
|            
|            
|            
|            
|             | Debt (short and long term)                  |                |        | (4,101 | ) |          |        | (4,101 | ) |   |        | (10,078 | ) |   |        | (10,078 | )
|             |                                             |                |        |        |   |          |        |        |   |   |        |         |   |   |        |        
|             |                                             | $              | 35,449 |        |   | $        | 35,644 |        |   | $ | 33,931 |         |   | $ | 32,246 |        
|             |                                             |                |        |        |   |          |        |        |   |   |        |         |   |   |        |        

Fair value estimates are subjective in nature and are dependent
on a number of important assumptions, including estimates of
future cash flows, risks, discount rates and relevant comparable
market information associated with each financial instrument.
The use of different market assumptions and estimation
methodologies may have a material effect on the reported
estimated fair value amounts. Accordingly, the estimates
presented above are not necessarily indicative of the amounts
the Company would realize in a current market exchange.

The Company has forward foreign exchange contracts to manage
currency risks associated with investments in Principal-UK and
Principal-Australia. Pursuant to a ten-year British pound
sterling currency swap agreement, the Company is obligated to
exchange £20,000 for $31,740 on October 15, 2007. The
Company is obligated to exchange A$11,000 at an average rate of
US$ 0.6135 on July 3, 2003.

F-14



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 7  INCOME TAXES

The components of pre-tax income and income tax provision
(benefit) were as follows:

|                                     |                                         |      |   |         |  |       |   |        |   |  |   |        |  
|------------------------------------ | --------------------------------------- | ---- | - | ------- |  | ----- | - | ------ | - |  | - | ------ | -
|                                     |                                         | U.S. |   | Foreign |  | Total
|                                     |                                         |      |   |         |  |      
|Fiscal year ended September 30, 2001 |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Pre tax income (loss)                   |      | $ | 3,064   |  |       | $ | (3,367 | ) |  | $ | (303   | )
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                     | Current income tax provision            |      | $ | 1,047   |  |       | $ | 198    |   |  | $ | 1,245  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income tax provision (benefit) |      |   |        |  |       |   | (445   | ) |  |   | (445   | )
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                     | Total provision                         |      | $ | 1,047   |  |       | $ | (247   | ) |  | $ | 800    |  
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|Fiscal year ended September 30, 2000 |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Pre tax income (loss)                   |      | $ | 7,123   |  |       | $ | (5,695 | ) |  | $ | 1,428  |  
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                     | Current income tax provision            |      | $ | 993     |  |       | $ | 139    |   |  | $ | 1,132  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income tax provision (benefit) |      |   | 925     |  |       |   | (2,075 | ) |  |   | (1,150 | )
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                     | Total provision (benefit)               |      | $ | 1,918   |  |       | $ | (1,936 | ) |  | $ | (18    | )
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|Fiscal year ended September 30, 1999 |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Pre tax income (loss)                   |      | $ | 7,540   |  |       | $ | 312    |   |  | $ | 7,852  |  
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                     | Current income tax provision            |      | $ | 1,614   |  |       | $ | 101    |   |  | $ | 1,715  |  
|                                    
|                                    
|                                    
|                                    
|                                     | Deferred income tax provision           |      |   | 674     |  |       |   |       |   |  |   | 674    |  
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       
|                                     | Total Provision                         |      | $ | 2,288   |  |       | $ | 101    |   |  | $ | 2,389  |  
|                                     |                                         |      |   |         |  |       |   |        |   |  |   |       

Income tax expense (benefit) differs from the amounts computed
by applying the U.S. Federal income tax rate of 34% to earnings
before taxes as follows for the years ended September 30,
2001, 2000 and 1999:

|                                                |                                      |      |      |      |  |      |      |     |   |   |       |       | 
|----------------------------------------------- | ------------------------------------ | ---- | ---- | ---- |  | ---- | ---- | --- | - | - | ----- | ----- | 
|                                                |                                      | 2001 |      | 2000 |  | 1999
|                                                |                                      |      |      |      |  |     
|Computed expected tax expense (benefit)         |                                      | $    | (103 | )    |  | $    | 484  |     |   | $ | 2,669 |      
|                                               
|                                               
|                                               
|                                               
|Tax effect of equity in earnings of investments |                                      |      | 420  |      |  |      | (503 | )   |   |   | (281  | )    
|                                               
|                                               
|                                               
|                                               
|Tax provision revaluation reserve               |                                      |      | 579  |      |  |      |     |     |   |   |      |      
|                                               
|                                               
|                                               
|                                               
|Other                                           |                                      |      | (96  | )    |  |      | 1    |     |   |   | 1     |      
|                                                |                                      |      |      |      |  |      |      |     |   |   |       |      
|                                                | Total income tax provision (benefit) |      | $    | 800  |  |      | $    | (18 | ) |   | $     | 2,389 | 
|                                                |                                      |      |      |      |  |      |      |     |   |   |       |      

The tax basis of assets transferred from Omega Healthcare to the
Company exceeded the book basis by approximately
$36.0 million, resulting in a deferred tax asset of
approximately $12.0 million. Due to the uncertainties in
realizing this benefit, management has provided a valuation
reserve against the full amount. As of September 30, 2001
net operating losses of $2,874 are available to offset future
taxable income of Idun subject to UK taxes. The Company has
recorded a deferred tax asset of $1,000 and $1,555 as of
September 2001 and 2000, respectively related to the above net
operating losses. During 2001, the Company recorded a valuation
reserve provision of $579 against the above tax asset because
the Company believes that they are not likely to be realized.
The Company believes that is more likely than not that the
remaining benefit of this loss carry over will be realized in
future years.

F-15



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 8  CREDIT FACILITIES

At September 30, 2001 and 2000, the Companys
outstanding indebtedness consists of the following:

|                                |  |               |        |      |  |   |        |  
|------------------------------- |  | ------------- | ------ | ---- |  | - | ------ | -
|                                |  |              
|                                |  | September 30,
|                                |  |              
|                                |  | 2001          |        | 2000
|                                |  |               |        |     
|(1) Credit agreement            |  | $             |       |      |  | $ | 4,850  |  
|                               
|                               
|                               
|                               
|(2) Loan due on demand          |  |               | 1,822  |      |  |   | 1,879  |  
|                               
|                               
|                               
|                               
|(3) Loan due February 2003      |  |               | 674    |      |  |   | 1,358  |  
|                               
|                               
|                               
|                               
|(4) Loan due February 2017      |  |               | 1,605  |      |  |   | 1,555  |  
|                               
|                               
|                               
|                               
|(5) Loan due September 30, 2001 |  |               |       |      |  |   | 436    |  
|                                |  |               |        |      |  |   |        |  
|                                |  |               | 4,101  |      |  |   | 10,078 |  
|                               
|                               
|                               
|                               
|Less current maturities         |  |               | (2,514 | )    |  |   | (7,755 | )
|                                |  |               |        |      |  |   |        |  
|Long-term debt                  |  | $             | 1,587  |      |  | $ | 2,323  |  
|                                |  |               |        |      |  |   |        |  



| |    |                                                                                                                                                                                                                                                                                                                                                                   
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 1) | The Companys bank credit agreement has been repaid in
	full. Interest on borrowings under the agreement was at LIBOR
	plus 3.25% (9.91% interest at September 30, 2000). Omega
	Healthcare provided a guarantee to the banks in consideration of
	a fee of 1%, plus an annual 25 basis point facility fee. No
	further borrowings were made under this agreement.
|
| | 2) | Idun has a loan with a bank that is secured by the business and
	assets of a nursing home subsidiary and bears an interest rate
	of 2.5% above the banks base lending rate (8.37% and 8.50%
	interest at September 30, 2001 and 2000, respectively).                                                                                                             
|
| | 3) | Idun has a loan with a bank that is secured by the business and
	assets of a nursing home company and bears a floating interest
	rate of LIBOR plus 2% (7.33% and 8.34% interest at
	September 30, 2001 and 2000 respectively). The loan
	requires quarterly principal and interest payments of
	approximately $160 through maturity.                             
|
| | 4) | Idun has a loan with a bank that is secured by the business and
	assets of a nursing home company and carries floating interest
	rate of LIBOR plus 2% (7.33% and 8.34% interest at
	September 30, 2001 and 2000, respectively). The loan
	requires quarterly principal and interest payments of
	approximately $25 through maturity.                             
|
| | 5) | Idun unsecured bank loan has been repaid in full. The interest
	on this loan is at the banks base rate less .5% (5.50%
	interest at September 30, 2000).                                                                                                                                                                                                         

The Company guarantees none of the loans of Idun. Substantially
all of the Companys plant, property and equipment and
restricted cash are collateral for the above loans. Cash of
$1,822 included in Restricted Cash will be used for partial
payment of an as yet undetermined combination of loans 2, 3 and
4 above.

The principal payments of each of the five years following
September 30, 2001 is set forth below:

|           |  |   |       | 
|---------- |  | - | ----- | 
|          
|          
|          
|          
|2002       |  | $ | 2,514 | 
|          
|          
|          
|          
|2003       |  |   | 133   | 
|          
|          
|          
|          
|2004       |  |   | 99    | 
|          
|          
|          
|          
|2005       |  |   | 99    | 
|          
|          
|          
|          
|2006       |  |   | 99    | 
|          
|          
|          
|          
|Thereafter |  |   | 1,157 | 
|           |  |   |       | 
|           |  | $ | 4,101 | 
|           |  |   |       | 

F-16



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 9  STOCK OPTIONS

Under the terms of the 1998 Stock Option and Restricted Plan
(the Plan), the Company reserved 750,000 shares of
common stock for grants to be issued during a period of up to
10 years. Directors, officers and key employees are
eligible in the Plan. Options for 280,000, 339,500, and 107,000
shares have been granted to eligible participants during the
years ended September 30, 2001, 2000 and 1999,
respectively. Additionally, during the years ended
September 30, 2001, 2000 and 1999, restricted shares of
14,000, 67,500, 8,000, respectively, have been granted under the
provisions of the Plan. The vesting period on restricted stock
varies from six months to eighteen months. Expense related to
the restricted stock grants are $26, $271, and $33, for the
years ended September 30, 2001, 2000 and 1999, respectively.

The following is a summary of activity under the Plan.

|                                  |                        |           |         |             |   |               |             |             |  |   |       |       | 
|--------------------------------- | ---------------------- | --------- | ------- | ----------- | - | ------------- | ----------- | ----------- |  | - | ----- | ----- | 
|                                  |                        | Number of |         | Exercise    |   | Weighted     
|                                  |                        | Shares    |         | Price       |   | Average Price
|                                  |                        |           |         |             |   |              
|                                  |                        |           |         | (per share) |   | (per share)  
|                                 
|                                 
|                                 
|                                 
|Outstanding at October 1, 1998    |                        |           | 606,000 |             |   | $             | 5.6887.500 |             |  | $ | 7.477 |      
|                                 
|                                 
|                                 
|                                 
|                                  | Granted during 1999    |           |         | 107,000     |   |               |             | 4.0004.688 |  |   |       | 4.458 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Forfeited              |           |         | (31,000     | ) |               |             | 4.6887.500 |  |   |       | 7.100 | 
|                                  |                        |           |         |             |   |               |             |             |  |   |       |      
|Outstanding at September 30, 1999 |                        |           | 682,000 |             |   |               | 4.0007.500 |             |  |   | 7.12  |      
|                                 
|                                 
|                                 
|                                 
|                                  | Granted during 2000    |           |         | 339,500     |   |               |             | 2.3754.875 |  |   |       | 3.951 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Forfeited and canceled |           |         | (383,500    | ) |               |             | 4.0007.500 |  |   |       | 7.484 | 
|                                  |                        |           |         |             |   |               |             |             |  |   |       |      
|Outstanding at September 30, 2000 |                        |           | 638,000 |             |   |               | 2.3757.500 |             |  |   | 5.116 |      
|                                 
|                                 
|                                 
|                                 
|                                  | Granted during 2001    |           |         | 280,000     |   |               |             | 1.8002.375 |  |   |       | 2.010 | 
|                                 
|                                 
|                                 
|                                 
|                                  | Forfeited and canceled |           |         | (270,000    | ) |               |             | 4.0007.500 |  |   |       | 6.610 | 
|                                  |                        |           |         |             |   |               |             |             |  |   |       |      
|Outstanding at September 30, 2001 |                        |           | 648,000 |             |   | $             | 1.8007.500 |             |  | $ | 3.150 |      
|                                  |                        |           |         |             |   |               |             |             |  |   |       |      

In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 123,
Accounting for Stock-Based Compensation. This
standard prescribes a fair value based method of accounting for
employee stock options or similar equity instruments and
requires certain pro forma disclosures. For purpose of the pro
forma disclosures required under Statement 123, the
estimated fair value of the options is amortized to expense over
the options vesting period. The estimated weighted average
fair value of options granted approximates $256, $609, and $204,
during the years ended September 30, 2001, 2000, and 1999,
respectively. In determining the estimated fair value of the
Companys stock options as of the date of grant, a
Black-Scholes option pricing model was used with the following
weighted-average assumptions: risk-free interest rates of 6.0%;
volatility factors of the expected market price of the
Companys common stock at 30%; and a weighted-average
expected life of the options of 7 years.

The Black-Scholes option valuation model was developed for use
in estimating the fair value of traded options, which have no
vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective
assumptions, including the expected stock price volatility.
Because the Companys employee stock options have
characteristics significantly different from those of traded
options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in
managements opinion, the existing models do not
necessarily provide a reliable single measure of the fair value
of its employee stock options.

Pro forma information regarding net income and earnings per
share is required by Statement 123, and has been determined
as if the Company had accounted for its employee stock options
under the fair value method of that Statement. For purposes of
pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options vesting period.
The Companys pro forma net earnings (loss) would be
($1,089),

F-17



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

$1,531, and $5,084, and pro forma earnings (loss) per common
share, basic and diluted, would be ($0.11), $0.11, and $0.47,
for the years ended September 30, 2001, 2000, and 1999,
respectively.

NOTE 10  PREFERRED STOCK

Effective April 2, 1998, the Company issued 260,000 shares
of 8% Series B Cumulative Preferred Stock (Preferred
Stock) at $1 par value per share to Omega Healthcare.
Each share of Series B Preferred converts to one share of
the Companys Common Stock immediately after Omega
Healthcare makes a distribution of the Series B Preferred
to its shareholders or otherwise transfers the shares to any
unaffiliated third party. Dividends on the Preferred Stock are
payable annually based on liquidation value of $10 per
share. Cumulative undeclared dividends at September 30,
2001 are $728.

NOTE 11  NET EARNINGS PER SHARE

Net earnings per share are computed based on the weighted
average number of common shares outstanding during the period.
Average common shares outstanding for the basic earnings per
share were 12,343,000, 12,297,000, and 12,261,000 and for
diluted earnings per share were 12,343,000, 12,345,000 and
12,262,000 for the periods ended September 30, 2001, 2000,
and 1999, respectively. The difference between average basic and
diluted common shares is due to the effect of dilutive employee
stock options. The assumed conversion of shares of preferred
stock is currently antidilutive.

NOTE 12  RELATED PARTY TRANSACTIONS

The Company, through its subsidiary Idun, leases nursing
homes throughout the United Kingdom under operating leases from
Principal-UK which expire at various dates through the year
2035. Iduns rent expense on leases with Principal-UK was
approximately $17.1 million for the fiscal year ended
September 30, 2001 and $17.7 million for the
eleven-month period that Idun is included in the year ended
September 30, 2000 results, respectively and is included in
cost of patient services. No lease expense for the consolidated
company was incurred during the year ended September 30,
1999.

Future minimum lease expense accounted for under US GAAP under
operating leases from Principal-UK as of September 30, 2001
are as follows:

|           |  |   |         | 
|---------- |  | - | ------- | 
|          
|          
|          
|          
|2002       |  | $ | 17,226  | 
|          
|          
|          
|          
|2003       |  |   | 17,188  | 
|          
|          
|          
|          
|2004       |  |   | 17,149  | 
|          
|          
|          
|          
|2005       |  |   | 17,110  | 
|          
|          
|          
|          
|2006       |  |   | 16,354  | 
|          
|          
|          
|          
|Thereafter |  | $ | 268,842 | 

Pursuant to the provision of a Services Agreement between Omega
Healthcare and the Company that expired June 30, 2000,
indirect costs incurred by Omega Healthcare, including
compensation of shared executive officers and relations support
personnel, and costs incurred by Omega Healthcare for rent,
insurance, telephone, utilities, supplies, maintenance and
travel, were allocated to the Company based upon the
relationship of assets under the Companys management to
the combined total of those assets and Omega Healthcares
assets. Such allocations are based on estimates and formulas
that management believes to be reasonable. In July 2000, the
Company and Omega Healthcare negotiated a new arrangement for a
quarterly fee of $38 which excludes certain previously provided
services, most significantly, those of shared executives. This
quarterly fee was amended again in November 2000 to
$33 per quarter. Incurred expenses for the years ended
September 30, 2001, 2000 and 1999 were approximately $132,
$544, $768, respectively.

F-18



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Fees from services provided to Principal-UK for the years-ended
September 30, 2001, 2000 and 1999, are $4,246, $5,040, and
$4,918, respectively.

Fees from services provided to Principal-Australia for the
years ended September 30, 2001 and 2000 and the
period April 1, 1999 through September 30, 1999 are
$1,211, $1,013, and $405, respectively.

Interest expense relating to a bridge loan from Omega Healthcare
totaled $226 for the year ended September 30, 1999. This
loan was repaid in December 1998.

NOTE 13 - BUSINESS SEGMENT INFORMATION

The Company provides investment advisory and management
services, as well as equity and debt capital to the healthcare
industry, primarily in the United Kingdom and the Pacific Rim.
The Company emphasizes investments in firms, which provide
residential services to the elderly. The Company has established
subsidiary businesses, Omega (UK) Ltd. in London and Omega
(Australia) Pty Ltd., in Sydney, to manage, finance, and monitor
investments in the United Kingdom and Australia/ New Zealand,
respectively. Accordingly, the Company presently operates in
three geographic regions, the United States, United Kingdom and
Australia/ New Zealand.

The following is a summary of operations by geographic region
for the years ended September 30:

|                         |                       |       |   |         |         |      |   |         |         |  |   |        |        | 
|------------------------ | --------------------- | ----- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------ | ------ | 
|                         |                       | 2001  |   | 2000    |         | 1999
|                         |                       |       |   |         |         |     
|Revenue:                 |                       |       |   |         |         |      |   |         |         |  |   |       
|                        
|                        
|                        
|                        
|                         | United States         |       | $ | 5,042   |         |      | $ | 4,897   |         |  | $ | 5,369  |       
|                        
|                        
|                        
|                        
|                         | United Kingdom        |       |   | 144,900 |         |      |   | 139,696 |         |  |   | 4,918  |       
|                        
|                        
|                        
|                        
|                         | Australia/New Zealand |       |   | 1,222   |         |      |   | 1,016   |         |  |   | 4,466  |       
|                         |                       |       |   |         |         |      |   |         |         |  |   |       
|                         |                       | Total |   | $       | 151,164 |      |   | $       | 145,609 |  |   | $      | 14,753 | 
|                         |                       |       |   |         |         |      |   |         |         |  |   |       
|Operating (loss) income: |                       |       |   |         |         |      |   |         |         |  |   |       
|                        
|                        
|                        
|                        
|                         | United States         |       | $ | 3,782   |         |      | $ | 5,915   |         |  | $ | 5,357  |       
|                        
|                        
|                        
|                        
|                         | United Kingdom        |       |   | (1,646  | )       |      |   | (3,348  | )       |  |   | 2,828  |       
|                        
|                        
|                        
|                        
|                         | Australia/New Zealand |       |   | 881     |         |      |   | 409     |         |  |   | 1,385  |       
|                        
|                        
|                        
|                        
|                         | Corporate expenses    |       |   | (3,320  | )       |      |   | (1,548  | )       |  |   | (1,718 | )     
|                         |                       |       |   |         |         |      |   |         |         |  |   |       
|                         |                       | Total |   | $       | (303    | )    |   | $       | 1,428   |  |   | $      | 7,852  | 
|                         |                       |       |   |         |         |      |   |         |         |  |   |       

The following is a summary of assets by geographic region at
September 30, 2001 and 2000:

|              |                       |               |   |        |        |  |   |        |        | 
|------------- | --------------------- | ------------- | - | ------ | ------ |  | - | ------ | ------ | 
|              |                       |              
|              |                       | September 30,
|              |                       |              
|              |                       | 2001          |   | 2000  
|              |                       |               |   |       
|Total assets: |                       |               |   |        |        |  |   |       
|             
|             
|             
|             
|              | United States         |               | $ | 51,714 |        |  | $ | 56,708 |       
|             
|             
|             
|             
|              | United Kingdom        |               |   | 33,996 |        |  |   | 35,046 |       
|             
|             
|             
|             
|              | Australia/New Zealand |               |   | 458    |        |  |   | 746    |       
|              |                       |               |   |        |        |  |   |       
|              |                       | Total         |   | $      | 86,168 |  |   | $      | 92,500 | 
|              |                       |               |   |        |        |  |   |       

Total assets attributable to the United States include
approximately $47.0 million represented by cash, loans and
investments denominated in currencies other than the U.S. dollar.

F-19



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 14  SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION

Following are details of changes in operating assets,
liabilities and other non-cash transactions for the years ended
September 30, 2001, 2000 and 1999:

Increase (decrease) in cash from changes in operating
assets and liabilities:

|                                                              |  |      |        |      |  |      |         |   |  |   |        |  
|------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------- | - |  | - | ------ | -
|                                                              |  | 2001 |        | 2000 |  | 1999
|                                                              |  |      |        |      |  |     
|Operating assets                                              |  | $    | (1,903 | )    |  | $    | 2,281   |   |  | $ | (3,310 | )
|                                                             
|                                                             
|                                                             
|                                                             
|Other liabilities                                             |  |      | 2,076  |      |  |      | (11,611 | ) |  |   | 1,936  |  
|                                                             
|                                                             
|                                                             
|                                                             
|Accrued taxes                                                 |  |      | (123   | )    |  |      | (2,938  | ) |  |   | 1,447  |  
|                                                              |  |      |        |      |  |      |         |   |  |   |        |  
|                                                              |  | $    | 50     |      |  | $    | (12,268 | ) |  | $ | 73     |  
|                                                              |  |      |        |      |  |      |         |   |  |   |        |  
|Noncash investing and financing transactions:                 |  |      |        |      |  |      |         |   |  |   |        |  
|                                                             
|                                                             
|                                                             
|                                                             
|Income taxes paid during the period, net of
	refunds received |  | $    | 645    |      |  | $    | 2,925   |   |  | $ | 923    |  
|                                                             
|                                                             
|                                                             
|                                                             
|Interest expense paid during the period                       |  |      | 492    |      |  |      | 959     |   |  |   | 1,627  |  
|                                                             
|                                                             
|                                                             
|                                                             
|Principal-Australia cash balance at April 1,
	1999            |  |      |       |      |  |      |        |   |  |   | 151    |  

In addition, a portion of the purchase consideration for
Iduns purchase of the operating subsidiaries of Tamaris,
plc October 31, 1999, was non-cash (see Note 4).

NOTE 15  CONTINGENCY

On September 26, 2001 Mr. James Flaherty, former
President of the Company, ceased to be an employee of the
Company. The Company is presently in discussions with
Mr. Flaherty to determine the amount, if any, of
compensation due to him.

F-20



---



##### 



OMEGA WORLDWIDE, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

NOTE 16  QUARTERLY DATA (UNAUDITED)

The following is an unaudited summary of quarterly results of
operations for the years ended September 30, 2001, 2000 and
1999.

|                                        |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |       |  
|--------------------------------------- | ------------------------------------------------- | -------------------------------- | ------ | -------- |  | ------- | ------ | ------------ | - | - | ------ | ----- | - | - | ------ | ----- | -
|                                        |                                                   | December 31                      |        | March 31 |  | June 30 |        | September 30
|                                        |                                                   |                                  |        |          |  |         |        |             
|                                        |                                                   |                                 
|                                        |                                                   | (In thousands, except per share)
|2001                                    |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |      
|                                       
|                                       
|                                       
|                                       
|Revenues                                |                                                   | $                                | 37,290 |          |  | $       | 36,912 |              |   | $ | 37,835 |       |   | $ | 39,127 |      
|                                       
|                                       
|                                       
|                                       
|Net earnings (loss)                     |                                                   |                                  | 963    |          |  |         | 468    |              |   |   | (1,543 | )     |   |   | (991   | )    
|                                       
|                                       
|                                       
|                                       
|Net earnings (loss) available to common |                                                   |                                  | 911    |          |  |         | 416    |              |   |   | (1,595 | )     |   |   | (1,043 | )    
|                                       
|                                       
|                                       
|                                       
|Per Share Amounts:                      |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |      
|                                       
|                                       
|                                       
|                                       
|                                        | Net earnings (loss) available to common,
	basic   |                                  |        | 0.07     |  |         |        | 0.04         |   |   |        | (0.13 | ) |   |        | (0.09 | )
|                                       
|                                       
|                                       
|                                       
|                                        | Net earnings (loss) available to common,
	diluted |                                  |        | 0.07     |  |         |        | 0.04         |   |   |        | (0.13 | ) |   |        | (0.09 | )
|2000                                    |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |      
|                                       
|                                       
|                                       
|                                       
|Revenues                                |                                                   | $                                | 27,424 |          |  | $       | 40,053 |              |   | $ | 39,615 |       |   | $ | 38,517 |      
|                                       
|                                       
|                                       
|                                       
|Net earnings (loss)                     |                                                   |                                  | 897    |          |  |         | (315   | )            |   |   | 60     |       |   |   | 804    |      
|                                       
|                                       
|                                       
|                                       
|Net earnings (loss) available to common |                                                   |                                  | 845    |          |  |         | (367   | )            |   |   | 8      |       |   |   | 752    |      
|                                       
|                                       
|                                       
|                                       
|Per Share Amounts:                      |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |      
|                                       
|                                       
|                                       
|                                       
|                                        | Net earnings (loss) available to common, basic    |                                  |        | 0.07     |  |         |        | (0.03        | ) |   |        |      |   |   |        | 0.06  |  
|                                       
|                                       
|                                       
|                                       
|                                        | Net earnings (loss) available to common, diluted  |                                  |        | 0.07     |  |         |        | (0.03        | ) |   |        |      |   |   |        | 0.06  |  
|1999                                    |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |      
|                                       
|                                       
|                                       
|                                       
|Revenues                                |                                                   | $                                | 3,858  |          |  | $       | 5,269  |              |   | $ | 2,740  |       |   | $ | 2,886  |      
|                                       
|                                       
|                                       
|                                       
|Net earnings                            |                                                   |                                  | 1,291  |          |  |         | 1,214  |              |   |   | 2,112  |       |   |   | 1,503  |      
|                                       
|                                       
|                                       
|                                       
|Net earnings available to common        |                                                   |                                  | 1,239  |          |  |         | 1,162  |              |   |   | 2,060  |       |   |   | 1,451  |      
|                                       
|                                       
|                                       
|                                       
|Per Share Amounts:                      |                                                   |                                  |        |          |  |         |        |              |   |   |        |       |   |   |        |      
|                                       
|                                       
|                                       
|                                       
|                                        | Net earnings available to common, basic           |                                  |        | 0.10     |  |         |        | 0.10         |   |   |        | 0.16  |   |   |        | 0.12  |  
|                                       
|                                       
|                                       
|                                       
|                                        | Net earnings available to common, diluted         |                                  |        | 0.10     |  |         |        | 0.10         |   |   |        | 0.16  |   |   |        | 0.12  |  

F-21



---



##### 





INDEX TO EXHIBITS




|              |  |                                                                                                                                                                                                                                                              
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 3.1   |  | Articles of Amendment and Restatement  Incorporated
	by reference to Exhibit 3.1 to Form S-1 Registration
	Statement.                                                                                                                                       
|             
|Exhibit 3.2   |  | Amended and Restated Bylaws Incorporated by reference to
	Exhibit 3.2 to Form S-1 Registration Statement.                                                                                                                                                    
|             
|Exhibit 3.3   |  | Articles Supplementary for Series B Preferred
	Stock  Incorporated by reference to Exhibit 3.3
	to Form S-1 Registration Statement,                                                                                                                         
|             
|Exhibit 3.4   |  | Articles Supplementary for Series A Preferred
	Stock  Incorporated by reference to Exhibit 3.4
	to Form S-1 Registration Statement.                                                                                                                         
|             
|Exhibit 3.5   |  | Amendment No. 1 to Amended and Restated Bylaws dated as of
	March 25, 2000  Incorporated by reference to
	Exhibit 3.2 to the Companys report on Form 10-Q
	for the quarterly period dated March 31, 2000.                                                  
|             
|Exhibit 10.1  |  | Omega Worldwide, Inc. 1997 Stock Option and Restricted Stock
	Plan  Incorporated by reference to Exhibit 10.1
	to Form S-1 Registration Statement.                                                                                                          
|             
|Exhibit 10.2  |  | Form of Rights Agreement, dated as of April 1, 1998,
	between the Company and First Chicago Trust Company of New
	York  Incorporated by reference to Exhibit 10.6
	to Form S-1 Registration Statement.                                                      
|             
|Exhibit 10.3  |  | Amended and Restated Advisory Agreement dated as of
	July 21, 1995 between the Company (as successor by
	assignment from Omega Healthcare) and Principal 
	Incorporated by reference to Exhibit 10.5 to Form S-1
	Registration Statement.                   
|             
|Exhibit 10.4  |  | Indemnification Agreements between the Company and its Directors
	and Executive Officers  Incorporated by reference to
	Exhibit 10.7 to Form S-1 Registration Statement.                                                                                    
|             
|Exhibit 10.5  |  | Advisory Agreement between Omega Healthcare (Australia) Pty
	Limited and Principal Healthcare Finance Trust 
	Incorporated by reference to Exhibit 10.6 to Form 10-K
	for the fiscal year ended September 30, 1998.                                         
|             
|Exhibit 10.6  |  | Form of Loan Agreement dated as of November 20, 1998 among
	the Company, Fleet Bank, N.A., as Agent, and other financial
	institutions named therein  Incorporated by reference
	to Exhibit 10.7 to Form 10-K for the fiscal year ended
	September 30, 1998.
|             
|Exhibit 10.7  |  | Amendment to Loan agreement dated as of November 20, 1998
	among the Company, Fleet Bank, N.A. as agent 
	Incorporated by reference to Exhibit 10.12 to
	Form 10-K for the fiscal year ended September 30, 1999.                                            
|             
|Exhibit 10.8  |  | Amendment #2 to Loan Agreement dated as of January 10,
	2000, among the Company, Fleet Bank, N.A. as agent and a bank
	and Harris Trust and Savings Bank  Incorporated by
	reference to Exhibit 10.5 to Form 10-Q for the quarter
	ended March 31, 2000.    
|             
|Exhibit 10.9  |  | Amendment #3 to Loan Agreement dated as of March 17,2000,
	among the Company, Fleet Bank, N.A. as agent and a bank and
	Harris Trust and Savings Bank  Incorporated by
	reference to Exhibit 10.6 to Form 10-Q for the quarter
	ended March 31, 2000.       
|             
|Exhibit 10.10 |  | Amendment #4 to Loan Agreement dated June 29, 2000, among
	the Company, Fleet Bank, N.A. as agent and a bank and Harris
	Trust and Savings Bank  Incorporated by reference to
	Exhibit 10.7 to Form 10-Q for the quarter ended
	June 30, 2000.              

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##### 





|              |  |                                                                                                                                                                                                                                                                                                                                      
|------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit 10.11 |  | Transaction documents dated June 19, 1998 
	Incorporated by reference to Exhibit 10.1 to the
	Companys report on Form 8-K filed on July 2,
	1998:                                                                                                                                                                                  
|             
|              |  | (a) Mortgage of Deposit between the Company and ABN AMRO
	Facilities Australia Limited (ABN Facilities)                                                                                                                                                                                                                            
|             
|              |  | (b) Bill Facility Agreement between Principal Pty and ABN
	AMRO Australia Limited (ABN Australia)                                                                                                                                                                                                                                  
|             
|              |  | (c) Deed of Guarantee and Indemnity between the Company and
	ABN Facilities                                                                                                                                                                                                                                                          
|             
|              |  | (d) Redemption and Subscription Agreement among Premier
	Care Australia (Holdings) Pty Limited, FAI Insurances Limited
	(FAI), PHF No. 1 Pty Limited (PHF
	No. 1), Tanoa Pty Limited (Tanoa), and
	Premier Care Australia Pty Limited (now known as Principal
	Healthcare Finance Pty Limited (Principal Pty)                
|             
|              |  | (e) Relationship Agreement among the Company, PHF
	No. 1 Pty Limited, PHF No. 2 Pty Limited, Tanoa,
	Mindra Pty Limited, Beheer-en Beleggingsmaatschappij Dilava BV,
	Beheer-en Beleggingsmaatschappij Rocla BV, Moran Health Care
	(Australia) Pty Limited (Moran
	Australia) and Moran Health Care Group Pty Limited
	(Moran)
|             
|              |  | (f) Deed of Mortgage and Annexure B to Mortgage between
	Principal Pty and ABN Facilities                                                                                                                                                                                                                                            
|             
|              |  | (g) Capital Contribution Agreement among Moran Australia,
	Moran and Principal Pty                                                                                                                                                                                                                                                   
|             
|              |  | (h) NSW Lease between Principal Pty, as lessor, and Moran
	Australia, as lessee                                                                                                                                                                                                                                                      
|             
|              |  | (i) Lease Guarantee between Moran and Principal Pty                                                                                                                                                                                                                                                                                  
|             
|              |  | (j) Indemnity Deed                                                                                                                                                                                                                                                                                                                   
|             
|              |  | (k) Procurement Agreement among Moran Australia, FAI,
	Moran, Douglas John Moran, Greta Richmond Moran, Peter Godfrey
	Moran and Shane Moran                                                                                                                                                                                         
|             
|              |  | (l) Mortgage of Shares between Moran and Principal Pty                                                                                                                                                                                                                                                                               
|             
|Exhibit 10.12 |  | Transaction documents dated April 16, 1999 with the
	following exhibits. Incorporated by reference to
	Exhibit 10.10 to the Companys report on Form 8-K
	filed on April 16, 1999.                                                                                                                                                   
|             
|              |  | (a) Form of Transaction Documents                                                                                                                                                                                                                                                                                                    
|             
|              |  | (b) Subscription Deed, Principal Healthcare Finance Unit
	Trust No. 1                                                                                                                                                                                                                                                                
|             
|              |  | (c) Subscription Deed, Principal Healthcare Finance Unit
	Trust No. 2                                                                                                                                                                                                                                                                
|             
|              |  | (d) Deed of Loan, PHF No. 1 Pty Limited, AMP Life
	Limited, Omega Healthcare Worldwide, Inc.                                                                                                                                                                                                                                         
|             
|              |  | (e) Principal Healthcare Finance Unit Trust No. 1,
	Term of 2004 Options                                                                                                                                                                                                                                                             
|             
|              |  | (f) Principal Healthcare Finance Unit Trust No. 2,
	Term of 2004 Options                                                                                                                                                                                                                                                             
|             
|              |  | (g) Advisory Agreement                                                                                                                                                                                                                                                                                                               
|             
|Exhibit 10.13 |  | Share Acquisition Agreement between Tamaris plc and the
	Company  Incorporated by reference to
	Exhibit 10.1 to the Companys report on Form 8-K
	filed on November 1, 1999.                                                                                                                                                        
|             
|Exhibit 10.14 |  | Asset Administration deed between Principal Healthcare Finance
	Pty Limited and Omega (Australia) Pty Limited dated as of
	November 1, 1999  Incorporated by reference to
	Exhibit 10.13 to Form 10-K for the fiscal year ended
	September 30, 1999.                                                                                

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##### 





|              |  |                                                                                                                         
|------------- |  | ------------------------------------------------------------------------------------------------------------------------
|Exhibit 11    |  | Computation of Per Share Earnings  Filed herewith                                                                      
|             
|Exhibit 12    |  | Statement re: Computation of Ratio of Earnings to Combined Fixed
	Charges and Preferred Stock Dividends  Filed herewith
|             
|Exhibit 21    |  | Subsidiaries of Registrant  Filed herewith                                                                             
|             
|Exhibit 99(a) |  | Financial Statements of Principal Healthcare Finance
	Limited  Filed herewith:                                         
|              |  |                                                                                                                         
|              |  |  Report of Auditors                                                                                                    
|              |  |  Consolidated Statement of operations for the years
	ended August 31, 2001, 2000 and 1999                              
|              |  |  Consolidated Balance Sheets as of August 31,
	2001 and 2000                                                           
|              |  |  Consolidated Statements of Shareholders Equity
	for the years ended August 31, 2001, 2000, and 1999                  
|              |  |  Consolidated Statements of Cash Flows for the years
	ended August 31, 2001, 2000 and 1999                             
|              |  |  Notes to Consolidated Financial Statements                                                                            

17