<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                  -------------

                                   FORM 10-KSB

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

For the fiscal year ended: December 31, 1998

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

For the transition period from _______   to _______

Commission file number: 0-8115

                                  PH GROUP INC. 
                 (Name of Small Business Issuer in Its Charter)

            OHIO                                           31-0737351
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

 2365 Scioto Harper Drive, Columbus, Ohio                   43204
(Address of Principal Executive Offices)                  (Zip Code)

                                (614)279-8877 
                 Issuer's Telephone Number, Including Area Code:

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

                       Common Shares, without par value 
                                (Title of Class)


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

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

         The issuer's revenues for its most recent fiscal year were $13,394,357.

         The aggregate market value of Common Shares held by non-affiliates of
the Registrant on March 5, 1999 was $2,228,030.

         The number of Common Shares outstanding on March 5, 1999 was 1,620,386.
<PAGE>   2
         The following document has been incorporated by reference into this
Form 10-KSB:

           Document                                        Part of Form 10-KSB

Registrant's Proxy Statement for its                             Part III
1999 Annual Meeting of Shareholders to
be held on April 27, 1999

Transitional Small Business Disclosure Format (check one)
         Yes                     No  X
            ---                     ---
<PAGE>   3
                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

         a.       Business Development.

PH Group Inc. is an Ohio corporation (the "Company" or the "Registrant") that
resulted from the merger of a number of small companies over the past 20 years,
the oldest of which was incorporated as Millersport Bank Company in 1906. The
Company sold its banking operations in 1981.

The PH Hydraulics division of the Company arose out of an acquisition in 1987 by
PH Hydraulics & Automation, Inc., a former subsidiary of the Company, of the
right to manufacture and market a line of industrial hydraulic presses which the
Company markets under the PH Hydraulics(TM) label.

The Trueblood division of the Company arose out of an acquisition in 1990 of the
right to manufacture and market a line of plastic injection molding machines
which the Company markets under the Trueblood(TM) label. The Trueblood
operations were conducted by subsidiaries of PH Hydraulics & Automation, Inc.

As of October 31, 1996, PH Hydraulics & Automation, Inc., the sole subsidiary of
the Company, was merged into the Company.

On April 30, 1997, the Company purchased the operating assets of St. Lawrence
Press, a division of St. Lawrence, Inc., for a price of approximately $1.3
million. The purchase agreement contains a contingent earnout component where
the purchase price is subject to future increases based on 5% of gross sales in
excess of an annual specified level ($2.5 million in the first two years and $3
million in the last two years) for eligible products in each of the four years
following the purchase date. The maximum earn out for any one year is $200,000
and the minimum is $50,000. A $124,775 liability has been included on the
financial statements (see Note 8) for the present value of the minimum annual
contingent earnout payments with a corresponding increase in the cost of the
purchase price.

The acquisition was funded with cash, the assumption of liabilities, notes
payable, and restricted common stock which is subject to a repurchase agreement.
St. Lawrence presses are generally larger hydraulic presses that range up to
5,000 tons.

         b.       Business of Issuer

Business and Principal Products

The Company operates principally in one business segment, the production of high
quality equipment used in the machine tool industry. Based upon its market
research, it is management's belief that the Company has the widest range of
standard and special design hydraulic presses manufactured in the United States.
Hydraulic presses are used in a number of metalforming applications, primarily
in the automotive, aircraft, appliance, and prototype industries. Typical
metalforming applications are assembly, forming, trimming, embossing, and
compression molding. The Company estimates that the market for hydraulic presses
is in excess of $150 million per year. The Company's hydraulic presses range
from 1 to 5,000 tons and are marketed under the names of PH Hydraulics and St.
Lawrence Press. The Company's injection molding product line is used by the
automotive, electrical, medical, and consumer products industries. The process
involves inserting a non-plastic part in a mold and injecting plastic around the
part. The Company estimates that the market for its injection molding machines
is in excess of $200 million. The injection molding machines have a tonnage
range from 30 to 450 tons and are marketed under the Trueblood label.

The Company sells its products primarily through independent sales
representatives. The product lines are separately managed internally by Company
sales personnel who also administer the Company sales and marketing activities.
<PAGE>   4
The following table shows the Company's sales by category within the machine
tool industry for the years 1998, 1997, and 1996.

<TABLE>
<CAPTION>
                                     1998                              1997                               1996
                                     ----                              ----                               ----

                           Dollars         Percent            Dollars         Percent            Dollars         Percent
                           -------         -------            -------         -------            -------         -------
<S>                      <C>                 <C>            <C>                 <C>            <C>                 <C>
Machine Tools            $13,036,460         97.5           $13,493,256         98.1           $8,882,898          97.6

Repair Parts                 262,062          2.0               214,992          1.6              153,605           1.7

Repair Service                95,835          0.7                43,757           .3               65,347           0.7

Total                    $13,394,357          100           $13,752,005          100           $9,101,850           100
</TABLE>

Sources and Availability of Raw Materials

As a matter of policy, the Company uses standard industrial components in the
manufacture of its products. This policy is perceived as a strong marketing
advantage. Since steel is the largest material component of the Company's
products, its availability impacts the Company's ability to meet promised
delivery dates. The Company does not, however, depend heavily on certified or
specialty steels. Hydraulic cylinders and manifolds are key purchase components
which vary in availability and lead times. All of the components used by the
Company in the manufacture of its products are available domestically from a
wide range of suppliers. The Company has experienced no difficulty in obtaining
components from suppliers and anticipates no future difficulty.

Backlog

Backlog at December 31, 1998 was approximately $5,254,000, all of which is
expected to be completed in 1999. Backlog at December 31, 1997 was approximately
$6,505,000 of which $5,894,000 shipped in 1998.

Competition

The Company's two hydraulic press lines face different competition based on the
size of the press. The Company believes that, because of its wide product range
and customer base, it is in a unique position to gain market share for both
product lines. The Company's smaller hydraulic presses, sold under the PH
Hydraulics name, ranging from 1 to 300 tons, have competition from four to six
small companies. These presses, especially less than 50 tons, are sold on the
basis of price and delivery time. The larger presses, sold under the St.
Lawrence Press name, have competition from significantly larger companies. The
competitive factors for sales of the larger hydraulic presses are technical and
engineering design and delivery. Price is seldom the deciding factor. Management
believes that, because of the unique combination of two well-regarded product
lines, it will gain market share. Both product lines have excellent reputations
for performance, quality and engineering design.

Effect of Environmental Regulation

Compliance with federal, state and local provisions regulating the discharge of
materials into the environment, or otherwise relating to the protection of the
environment, has not had a material effect upon the capital expenditures,
earnings or competitive position of the Company. The Company believes that the
nature of its operations has little, if any, environmental impact. The Company,
therefore, anticipates no material capital expenditures for environmental
control facilities for its current fiscal year or for the foreseeable future.
<PAGE>   5
Employees

As of December 31, 1998, the Company had 76 employees, all of whom were full
time.

Significant Customers

In 1998, one of the Company's customers accounted for 15% of sales and 24% of
the accounts receivable balance at December 31, 1998. No other customer
accounted for more than 10% of sales. In 1997, one of the Company's customers
accounted for 29% of sales and 33% of the accounts receivable balance at
December 31 1997.

Capital Expenditures and Research and Development

Capital expenditures totaled approximately $265,000 and $319,000 for 1998 and
1997, respectively. Capital expenditures consist of equipment to manufacture
parts as well as storage equipment, computers and office furniture and fixtures.

Research and development costs of approximately $38,000 were expensed during
1998. There were no research and development costs in 1997.

Year 2000 Matters

Issues related to the year 2000 systems issues are addressed in Part II, Item 7,
"Management's Discussion and Analysis or Plan of Operation" contained elsewhere
in this document.

ITEM 2.  DESCRIPTION OF PROPERTY.

The Company leases a manufacturing and office facility at 2365 Scioto Harper
Drive, Columbus, Ohio, containing approximately 22,000 square feet. The lease
term is April 1, 1989 through August 31, 1999. The rent payments escalate from
an annual amount of $54,750 to $88,080 at the end of the eighth year.

The Company owns land in Franklin County, Ohio recorded on the Company's books
at $20,570. In December 1998 the Company sold approximately 470 acres of
undeveloped land in Perry County, Ohio that had been recorded on the Company's
books at $149,600 to the U.S. Department of Agriculture for a consideration of 
approximately $480 per acre.

The Company leases manufacturing and office space at 12500 South Wayne Road,
Romulus, Michigan, containing approximately 20,000 square feet. The original
lease term is May 1, 1997 through April 30, 2002 at a monthly rental of $14,850.
A portion of the space was subleased for $2,400 per month through December 31,
1998. The Company has the right to cancel its lease in April 1999. The Wayne
County Airport Authority has issued an order of condemnation on the property due
to airport expansion. The Company is currently vacating the property.

The Company believes that all of the buildings owned or leased by it are well
maintained, in good operating condition, and are suitable for their present
uses, except as disclosed herein.

The Company has entered into a lease agreement for office and manufacturing
space at the CityGate development in Columbus, Ohio. The building is under
construction, with an estimated occupancy of September 1, 1999. Annual lease
payments are estimated to be approximately $280,000.

ITEM 3.  LEGAL PROCEEDINGS.

The Company is not currently a party, nor is any of its property subject to,
any material pending legal proceedings, other than ordinary, routine litigation
incidental to the business, nor are any such proceedings known by the Company to
be contemplated by governmental authorities.
<PAGE>   6
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not applicable.


                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         a.       Market Information

The Company's Common Shares are traded over the counter. The price of the
Company's Common Shares is found on the Electronic Bulletin Board. The range of
high and low bids for the Company's Common Shares for each quarter during its
past two fiscal years is as follows:

<TABLE>
<CAPTION>
Year      Quarter             $ High(a)           $ Low (a)
<S>       <C>                    <C>                <C>
1998      4th                    2.63               0.50
          3rd                    3.88               1.50
          2nd                    4.25               3.00
          1st                    4.13               2.38
1997      4th                    4.00               2.50
          3rd                    3.20               1.60
          2nd                    3.00               1.20
          1st                    2.88               1.20
</TABLE>

(a) Adjusted for a 5-for-4 stock split distributed on January 2, 1998.

The above quotations reflect inter-dealer prices, without retail mark up, mark
down or commission and may not represent actual transactions.

On December 1, 1998, the Company sold options to purchase 5,000 common shares to
each of Alida L. Breen, a director of the Company, and Kenneth J. Warren, the
Secretary of the Company. Each option was sold at a price of $1.50 per share.
Each option is exercisable at a price of $.80 per share and has a term of ten
years. The Company sold the options in reliance upon the exemptions from
registration provided by Sections 4(2) and 4(6) under the Securities Act of 1933
based upon the limited number of purchasers and the status of each individual as
an officer or director of the Company.

         b.       Holders

As of December 31, 1998, there were approximately 829 record holders of the
Company's Common Shares.

         c.       Dividends

The Company did not pay cash dividends in 1998 or 1997. Bank lending agreements
contain restrictions against cash dividend payments unless certain financial
covenants are met. The Company's Common Shares were split 5-for-4 on January 2,
1998.


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

Forward Looking Statements

Certain statements contained in this Annual Report on Form 10-KSB, which are not
statements of historical fact constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
<PAGE>   7
(the "Act"). In addition, certain statements in future filings by the Company
with the Securities and Exchange Commission, in press releases, and in oral and
written statements made by or with the approval of the Company which are not
statements of historical fact constitute forward-looking statements within the
meaning of the Act. Examples of forward-looking statements include, but are not
limited to (a) projections of revenues, income or loss, earnings or loss per
share, the payment or non-payment of dividends, capital structure and other
financial items; (b) statements of plans and objectives of the Company or its
management or Board of Directors, including those relating to products or
services; (c) statements of future economic performance; and (d) statements of
assumption underlying such statements. Words such as "believes", "anticipates",
"expects", "targeted", and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such
statements.

Forward-looking statements involve risks and uncertainties, which may cause
actual results to differ materially from those in such statements. Factors that
could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to (a) the strength of the U.S. economy
in general; (b) the ability to improve processes and business practices to keep
pace with economic, competitive and technological environments, including
successfully addressing Year 2000 issues; (c) the ability to increase market
share and control expenses; (d) acquisitions and the ability to successfully
integrate their operations; (e) the ability to raise additional capital through
stock issuance and (f) the success of the Company at managing the risks involved
in the foregoing.

Such forward-looking statements speak only as of the date on which such
statements are made, and the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.

1998 Compared with 1997

Net Sales

Sales for the year of 1998 totaled $13.4 million, a 2.6% decrease over the same
period in 1997. Press sales for the year of 1998 increased by 47% to $10.1
million. Trueblood sales decreased 49% for the year to $2.9 million. Parts and
service revenues increased 39% to $358 thousand. The Company entered 1998 with a
$6.5 million backlog of orders, most of which shipped in 1998. 1998 ended with a
backlog of orders of $5.3 million that will ship in 1999.

New orders for presses decreased 7.0% in 1998. Orders for injection molding
machines declined 63%. 1997 orders of injection molding machines was positively
impacted by a $3.4 million order from one customer that was not duplicated in
1998. Parts and service orders increased by 84% during 1998, adding increased
business having greater profit margins.

Gross Margin

Gross Margin in 1998 has been adversely impacted by the shipment of highly
specialized presses, and the additional costs associated with metric machines.
Many of these machines were research and development related projects using new
technology unique to a given customer. Material cost of shipments in the period
was 52% of sales compared to 47% for the same period in 1997. Cost projections
on specialty machines that were used in pricing these projects were understated
when compared to the actual material, labor and engineering expenses incurred.

Labor as a percent of sales increased to 9.7% versus 8.8% in 1997. This increase
was primarily due to staffing requirements at the Romulus, Michigan facility
performed by Columbus personnel. The corresponding labor rate is lower when
provided by Columbus personnel as compared to Romulus, Michigan. The benefit of
that reduced rate was eroded by travel-related costs. In addition, the unique
nature of the special orders required more labor hours to complete.

Selling, General and Administrative

Selling, General and Administrative ("SG & A") expenses for the year 1998 have
increased $487,000 or 13.9% over the comparable 1997 amount primarily due to
salary, consulting fees, investment banking fees, travel and
<PAGE>   8
entertainment expenses, and rent of the vacated Romulus facility.

As a percent of sales, SG&A represents 29.9% in 1998 compared to 25.6% in 1997.
Salaries increased $86,000 more in 1998 compared to 1997 amounts. The Company
began to see a decline in salary expense as all work was transferred from the
Romulus facility to Columbus, thus eliminating duplicate positions and expenses
at the two facilities.

Consulting expenses in the amount of $45,000 were incurred to review the
Company's computer software system and its implementation. Investment banking
fees of $25,000 were incurred in an effort to obtain outside equity financing.
There were no comparable charges in 1997. Travel and entertainment expenses are
$25,000 higher than the comparable period of 1997 in part due to the staffing of
Romulus with personnel from Columbus to complete orders in progress.

Rent expense in the amount of $133,000 relating to the Romulus facility has been
reclassified from Manufacturing to Selling, General and Administrative expense
as the building was used primarily as a storage facility during the last half of
the year. The Company had a full 12 months of the St. Lawrence facility expenses
in 1998 as compared to eight months in 1997.

Research and Development expenses in 1998 of $39,000 were incurred with an
outside engineering firm in the design of new products and processes. In-house
engineering efforts on the same projects amounted to approximately $50,000 of
additional expense. There were no similar expenses in 1997.

Interest Expense

Interest expense for the Year 1998 is 50.7% greater than the same period in
1997. The new design and complex nature of many of the large manufacturing jobs
in 1998 required significant cash resources and added to the increased amount of
time that it takes to convert the order to cash. This has led to increased
borrowing against the credit line, resulting in greater interest expense.

Income Taxes

For the year 1998 a net income tax benefit of $297,000 has been recognized,
compared with a $331,300 expense in the previous year. This is due to the net
loss incurred in 1998.

1997 Compared With 1996

In 1997 the Company increased revenues and profits for the third year in a row.
Revenues increased to $13.8 million, an increase of 51.1% over 1996's $9.1
million. The major reason for the Company's growth was sales of its Trueblood
machines which increased to $6.7 million or a 72% increase over 1996's $3.9
million. One of the significant reasons for the Trueblood increase was a large
$3.0 million order, most of which was shipped during the year. St. Lawrence,
acquired in April 1997, had $1.9 million of 1997's shipments. Revenue for the
Company's other product line, PH Hydraulics, remained basically even with 1996's
at $5.1 million.

St. Lawrence Press, a name well known in the large press industry, acquired in
April 1997, was funded with cash, the assumption of liabilities, notes payable
and restricted common stock that is subject to a repurchase agreement. The
addition of the St. Lawrence product line, specializing in presses up to 5,000
tons used in embossing, hydro-forming and die spotting, secures PH Group as the
only press manufacturer in the country manufacturing presses from 1 ton to 5,000
tons. The Company's revenue increase was aided in 1997 by St. Lawrence sales.

New order bookings for the year were $17.3 million. Normally, new orders booked
after October are not shipped until the following year. New order bookings
increased by 86% over 1996 new orders of $9.3 million. St. Lawrence booked $3.6
million for the eight months it was owned by PH Group. Trueblood had new order
bookings for the year of $7.1 million and PH Hydraulics had new orders of $6.4
million. Parts orders comprised the remaining bookings.
<PAGE>   9
Accompanying the record sales was also record net income. Net income increased
by 64.4%. Net income for 1997 was $605 thousand as opposed to $368 thousand in
1996. Net income as a percent of sales increased to 4.4% from 4.0% in 1996.

The St. Lawrence acquisition impacted the traditional financial analysis of the
Company due to increased engineering content and longer period of time from
order to delivery. St. Lawrence presses are large, complex, highly engineered
presses. The average St. Lawrence press sells for approximately $300 thousand as
opposed to $34 thousand for an average PH Hydraulic press. St. Lawrence presses
have greater engineering complexity than either the PH Hydraulic presses or the
Trueblood machines. In addition to the increased engineering costs, St. Lawrence
presses create financial pressures due to the amount of time between receipt of
the purchase order and shipment. A St. Lawrence press can easily take over 26
weeks between receipt of order and shipment. As a result of the long cycle time
between order and shipment, the Company expects interest costs to increase as
bank borrowings may be necessary to fund inventory and labor for longer periods
than the Company's other two product lines.

Cost of goods sold in 1997 was 66.7% of sales, which compares favorably to 76%
in 1996. The major reason for the drop in cost of goods sold was a reduction of
material costs for the year, improved factory floor efficiencies and continued
investment in computer hardware and software. Material costs as a percent of
sales was reduced to 47.8% of sales in 1997 as opposed to 49.1% in 1996. The
reduction in material costs for the year was a result of three factors. The
first factor was that the Company received a large order of $3.0 million for
duplicate Trueblood machines. The large order allowed the Company to receive
greater than normal discounts for material. The second factor is that the
Company continues to reap benefits from its MRP plan that it initiated in late
1995. MRP is designed to speed delivery of our products by refining production
processes. The third reason for the drop in material costs is that a large
percent of St. Lawrence shipments were rebuilt presses. A rebuilt press has
significantly less material costs as a percent of sales than a new press.
Material costs as a percent of sales has decreased for three consecutive years.

Labor, as a percent of sales, increased to 10.2% from 9.8%. Direct labor and
burden costs are 28% higher at the Company's St. Lawrence plant in Romulus,
Michigan. Consequently, the $1.9 million in shipments for 1997 for St. Lawrence
averaged $46 per labor hour as opposed to $36 per labor hour at its Columbus,
Ohio facility. The large difference in labor rates has led the Company to
initiate the close of its St. Lawrence facility by 1999 and move operations to
Central Ohio.

The Company, to accommodate its projected growth plus the consolidation of St.
Lawrence to Central Ohio, is planning on moving to a new facility. The new
facility will be 40,000 square feet and be equipped with crane capacity to
improve both production capacity and gross profit margins. Management believes
that a new facility plus consolidation of operations will substantially improve
profitability.

Selling, General and Administrative costs rose substantially in 1997. SG&A costs
were $3.5 million or 25.6% of sales for 1997 as opposed to $1.7 million or 18.7%
of sales in 1996. The majority of the increases were related to the St. Lawrence
acquisition. Salaries, taxes and benefits increased by 48.3% for the year with
the St. Lawrence staff comprising slightly less than 50% of the increases.
During the year the Company added significantly to the quality of its
engineering department by recruiting higher quality engineers. The increase in
the engineering staff plus increased salary costs with the St. Lawrence
acquisition increased the salary, taxes and benefits to 11.7% of sales in 1997.

The Company financed part of its St. Lawrence acquisition by $600,000 in bank
financing. The St. Lawrence acquisition plus increased business borrowings
increased interest expense. The Company aggressively solicits customer deposits
to provide working capital rather than the use of its line of credit. The
Company finished the year with $1.7 million in customer deposits.
<PAGE>   10
The St. Lawrence acquisition contributed to the significant increase in
professional expense costs for the year. Professional expenses, which included
legal, accounting and SEC reporting requirements, increased 44 percent in 1996
to $248 thousand. In 1997 the Company expensed $280 thousand in advertising and
promotion expenses, a 168% increase over 1996. The Company's 1998 budget calls
for an increase in advertising and promotion expenses to $330 thousand. The
Company believes that it is necessary to spend 2% of projected sales in business
promotion costs.

Liquidity and Capital Resources

The Company's primary cash requirements are for operating expenses and capital
expenditures. These cash requirements have historically been met through a
combination of cash flow from operations, and bank lines of credit.

Cash used in operations in 1998 totaled $2,800,000, resulting mainly from net
loss of $491,000, increases in accounts receivable of $1,136,000 and decreases
in customer deposits of $797,000. The increase in accounts receivable was due to
longer collection periods on specialty orders and an increase in sales in
December 1998. The decrease in customer deposits related to fewer orders in
process at December 31, 1998 compared to the prior year.

Financing activities provided $2,816,000 of net positive cash flow. The cash
flow was primarily due to additional borrowings on the line of credit of
$2,600,000.

At December 31, 1998, the Company had additional borrowings available under the 
line of credit of approximately $440,000.

The Company is currently in violation of the debt covenants for the line of
credit and the term loan. On March 30, 1999, the Company obtained a waiver from
the bank with respect to such events of noncompliance. In addition, the line of
credit agreement was amended as follows: 1) borrowing availability was reduced
to $3,000,000 2) interest is payable monthly at bank prime plus 1% or LIBOR plus
325 basis points and 3) the Company must seek to obtain equity or subordinated
debt acceptable to the bank and sufficient to provide adequate liquidity to the
Company. 4) Immediately upon injection of equity into the Company, the Company
shall be required to reduce the term loan balance by at least $250,000. 5) the
debt covenants were revised such that the Company is currently in compliance
with the new covenants.

Management believes that these sources, along with internally generated funds
from operations and additional bank financing, will be sufficient to fund
anticipated operating expenses and capital requirements.

Income Taxes

The balance sheet at December 31, 1998 and 1997 includes a deferred tax asset of
$473,800 and $200,600, respectively, net of a valuation allowance of $54,000 in
1998 and 1997. The valuation allowance relates primarily to the capital loss
carry forward and deferred costs. The deferred tax asset is net of a valuation
allowance since it is more likely than not that a portion of the deferred tax
asset may be realized in the future.

The deferred tax asset at December 31, 1998 primarily includes the tax benefits
associated with net operating and capital tax losses of approximately $254,000
and $55,400, respectively. The remaining deferred tax assets relate to temporary
differences between the book and tax basis of accrued liabilities $106,800,
goodwill of $90,100, inventory of $67,300, partially offset by property and
equipment of $58,100.

Inflation

Inflation generally affects the Company by increasing the cost of labor,
equipment and raw materials. We believe that, because rates of inflation have
been moderate during the periods presented, inflation has not had a significant
impact on our results of operations.

Year 2000 Readiness

The Year 2000 ("Y2K") issue refers to a condition in computer software where a
two-digit field rather than a four-digit field is used to distinguish a calendar
year. Unless corrected, date-sensitive software may recognize a date using "00"
as the year 1900 rather than the year 2000. This could result in system failures
or miscalculations
<PAGE>   11
causing disruptions to various activities and operations. Such uncorrected
condition could significantly interfere with the conduct of the Company's
business, could result in disruption of its operations and could subject it to
potentially significant legal liabilities.

The Company has conducted an assessment of the Y2K issue and the potential
effect it will have on the Company and its business. The Company has prepared a
plan for dealing with the Y2K issue. The Company has taken initiatives in three
general areas: information technology and communication systems, non-information
technologies systems, and third party issues.

Information Technology and Communication Systems

In 1998 the Company has upgraded the computer network used throughout the
organization. This has included a new client server, new desktop computers, and
upgrades and enhancements to those machines not replaced. Upgraded, Y2K
compliant versions of most software packages have been obtained. These include
the Visual Manufacturing, the company's application system, Novelle network
software, Microsoft Office, Auto CAD, and Parametric Technology Corp.'s Pro E.
In addition, the outside payroll provider and mailing system have been upgraded
to be in compliance.

Current areas of noncompliance include the Company's fixed asset system
software, and the banking communication system software. An upgraded
telecommunications system is currently being negotiated. Other ancillary office
equipment may not be in compliance. The Company expects to have the above
systems in compliance by the end of the second quarter, 1999.

Non-Information Technologies Systems

The Company has internal non-information technology systems comprised primarily
of building security systems that need to be assessed for compliance. The
Company expects to have the assessment completed by April 1999 and remediation
is expected to be completed by June 1999.

Third Parties

The Company has third party relationships with key raw materials suppliers and
outside processors. The Company is engaged in an ongoing effort with these and
key suppliers of outsource services including, but not limited to stock
transfer, debt servicing, payroll, banking, and benefit programs. The Company is
engaged in ongoing evaluations of these third parties' Y2K readiness; while
simultaneously advising them of the Company's readiness.

Because the Company's Y2K compliance is dependent upon key third parties also
being Y2K compliant on a timely basis, there can be no guarantee that the
Company's efforts will prevent a material adverse impact on its results of
operations, financial conditions and cash flows. The possible consequences to
the Company of not being fully Y2K compliant include temporary plant closings,
delays in the delivery of finished products, delays in the receipt of key
ingredients and supplies, invoice and collection errors, and financing issues,
including payroll. These consequences could have a material adverse impact on
the Company's results of operations, financial condition and cash flows if the
Company is unable to conduct its business in the ordinary course.

The Company currently estimates that the aggregate cost of its Y2K efforts
should not exceed $50,000, of which $45,000 has already been expended for
hardware and software upgrades. The Company believes that such costs will not
have a material impact on its results of operations, financial condition or cash
flows. Due to the nature of the Company's efforts, actual costs may vary from
these estimates and there are no guarantees regarding the timing or efficiency
of completion.

Contingency Plans

The Company intends to deal with contingency planning during the second fiscal
quarter of 1999, after results of the assessment and remediation in progress
have been ascertained. The Company cannot currently estimate the cost, if
<PAGE>   12
any, associated with contingency planning efforts that may be necessary to
complete the Y2K efforts.

Regarding "Forward-Looking" Statements

The foregoing outlook contains forward-looking statements that are based on
current expectations and are subject to a number of risks and uncertainties.
Actual results could differ materially from current expectations due to a number
of factors, including general economics; competitive factors and pricing
pressures; shifts in market demand; the performance and needs of industries
served by the Company's business; actual future costs of operating expenses such
as material, wages and benefits; actual cost of continuing investments in
technology; the availability of capital to finance possible growth; the ability
of management to implement Company strategy of acquisitions and process
improvements; and the risks described from time to time in the Company's SEC
reports.

New Accounting Pronouncements

In March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, "Accounting for the Costs of Computer Software
Developed or obtained for Internal Use." This statement defines whether or not
certain costs related to the development or acquisition of internal use software
should be expensed or capitalized and is effective for fiscal years beginning
after December 15, 1998. The Company does not believe the new statement will
have a material impact on its results of operations, financial position and cash
flows.

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities," to establish accounting and reporting requirements for
derivative instruments. This standard requires recognition of all derivative
instruments in the statement of financial position as either assets or
liabilities, measured at fair value, and is effective for fiscal years beginning
after June 15, 1999. This statement additionally requires changes in the fair
value of derivatives to be recorded each period in current earnings or
comprehensive income depending on the intended use of the derivatives. The
Company is currently assessing the impact of this statement on its results of
operations and financial position.

ITEM 7.  FINANCIAL STATEMENTS

The financial statements of the Company, and related notes, together with the
report of Deloitte & Touche LLP dated March 30, 1999, are set forth at pages F-1
through F-16 attached hereto.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

At a meeting held on July 10, 1998, the Board of Directors of the Company agreed
to dismiss, effective July 21, 1998, the accounting firm of Greene & Wallace,
Inc., which had served as independent public accountants for the Company prior
to and until July 21, 1998. At the same meeting, the Company agreed to retain
the accounting firm of Deloitte & Touche LLP to serve as independent public
accountants for the Company effective July 21, 1998. The decision to change
accountants was recommended by the Audit Committee of the Board of Directors,
and approved by the Board.

The reports of Greene & Wallace, Inc. on the financial statements for the fiscal
years ended December 31, 1996, and December 31, 1997 contained no adverse
opinion or disclaimer of opinion and neither of such reports was qualified or
modified as to uncertainty, audit scope or accounting principles.

There were no disagreements between the Company and Greene & Wallace, Inc. on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, during the fiscal years ended
December 31, 1996, and December 31, 1997, or in the interim period of January
1,1998 through July 21, 1998, which disagreements, if not resolved to the
satisfaction of Greene & Wallace, Inc., would have caused it to make a reference
to the subject matter of the disagreements in connection with its report.
<PAGE>   13
                                    PART III

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

Information regarding the Registrant's directors and executive officers is set
forth at "ELECTION OF DIRECTORS", and the information required by Item 405 of
Regulation S-B is set forth at "SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE", in the Registrant's definitive Proxy Statement for its 1999 Annual
Meeting of Shareholders to be held on April 27, 1999, filed with the Securities
and Exchange Commission (the "1999 Proxy Statement"), which information is
incorporated herein by reference.

ITEM 10. EXECUTIVE COMPENSATION.

The information required by this item is set forth at "COMPENSATION OF
MANAGEMENT" in the 1999 Proxy Statement, which information is incorporated
herein by reference.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information required by this item is set forth at "SECURITY OWNERSHIP OF
PRINCIPAL SHAREHOLDERS, DIRECTORS, NOMINEES AND EXECUTIVE OFFICERS" in the 1999
Proxy Statement, which information is incorporated herein by reference.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information required by this item is set forth at "CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS" in the 1999 Proxy Statement, which information is
incorporated herein by reference.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

         (a) LIST OF EXHIBITS.

          2. PLAN OF PURCHASE, SALE, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
 SUCCESSION.

         2.1. Asset Purchase Agreement, dated as of April 30, 1997, between PH
Group Inc. and St. Lawrence Press Company, Inc. (incorporated by reference to
Exhibit 2 of the Company's Quarterly Report on Form 10 - QSB for the quarterly
period ended March 31, 1997; Commission File No. 0-8115).

         3.  ARTICLES OF INCORPORATION AND CODE OF REGULATIONS

         3.1. Certificate of Amendment by Shareholders to the Article of
Incorporation of PH Group Inc. as filed with the Ohio Secretary of State on
April 30, 1998 (amending Article IV of Amended Articles of Incorporation).

         3.2. Action Taken Without Meeting by the Board of Directors of PH Group
Inc. on April 30, 1998 (adopting Amended and Restated Articles of
Incorporation).

         3.3. Certified Resolutions regarding adoption of amendment to Sections
2 and 5 of Article I of Amended Code of Regulations of PH Group Inc. by
Shareholders on April 30, 1998.

         10. MATERIAL CONTRACTS (*indicates management contract or compensatory
plan or arrangement).
<PAGE>   14
         10.1. Bank Lending Agreement, (Second Amended and Restated Revolving
Credit/Term Loan Agreement dated June 29, 1998 between Star Bank, N.A. and PH
Group Inc.).

         10.2. Form of Option Agreement between the Company and Employees,
related to options granted under PH Group Inc. 1997 Stock Incentive Plan.

         10.3. Form of Option Agreement between the Company and Consultants,
related to options granted under PH Group Inc. 1997 Stock Incentive Plan.

         10.4. Form of Option Agreement between the Company and Directors',
related to options granted under PH Group Inc. 1997 Stock Incentive Plan.

         10.5. Employment Agreement between the Company and Charles T. Sherman
dated January 23, 1997 (incorporated by reference to Exhibit 10.5 to the
Company's Annual Report on Form 10-KSB for the period ended December 31, 1997;
Commission File No. 0-8115).*

         10.6. Split Dollar Agreement between the Company and Charles T. Sherman
dated September 11, 1997 (incorporated by reference to Exhibit 10.6 to the
Company's Annual Report on Form 10-KSB for the period ended December 31, 1997;
Commission File No. 0-8115).*

         10.7. PH Group Inc. 1997 Stock Incentive Plan (incorporated by
reference to Exhibit 10.7 to the Company's Annual Report on Form 10-KSB for the
period ended December 31, 1997; Commission File No. 0-8115).*

         10.8. PH Group Inc. Employee Stock Purchase Plan (incorporated by
reference to Exhibit 10.8 to the Company's Annual Report on Form 10-KSB for the
period ended December 31, 1997; Commission File No. 0-8115).*

         10.9.  PH Group Inc. agreement with major Sales Representative.

         23. CONSENT OF INDEPENDENT AUDITORS.

         23.1. Consent of Deloitte & Touche LLP

         23.2. Consent of Greene & Wallace, Inc.

         24. POWERS OF ATTORNEY.

         24.1. Powers of Attorney.

         24.2. Certified resolution of the Company's Board of Directors
authorizing officers and directors signing on behalf of the Company to sign
pursuant to a power of attorney.

         27. FINANCIAL DATA SCHEDULE

         27. Financial Data Schedule (submitted electronically for SEC
information only).

         (b) REPORTS ON FORM 8-K.

         There were no Forms 8-K filed by the Company during the fourth quarter
of fiscal year 1998.
<PAGE>   15
                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

Dated: March  30, 1999                   PH GROUP INC.
                                         (the "Registrant")


                                         By:  /s/ CHARLES T. SHERMAN
                                              ----------------------------------
                                                  Charles T. Sherman, President

         In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the 30th day of March, 1999.

   SIGNATURE                                             TITLE

/s/ CHARLES T. SHERMAN                            Director, President,
-----------------------------                     Chief Executive Officer
    Charles T. Sherman                            (principal executive officer)



/s/ KENNETH P. FURLONG                            Treasurer (principal financial
----------------------------                      officer)
    Kenneth P. Furlong

MICHAEL W. GARDNER*                               Director, Vice President
----------------------------                      Special Press Group
      Michael W. Gardner

BOB BINSKY*                                       Director
----------------------------
      Bob Binsky

ALIDA BREEN*                                      Director
----------------------------
      Alida Breen

M. RICHARD SULSER*                                Director
----------------------------
      M. Richard Sulser

TERRY L. SANBORN*                                 Director
----------------------------
      Terry L. Sanborn

* Charles T. Sherman, by signing his name hereto, does sign this document on
behalf of the person indicated above pursuant to a Power of Attorney duly
executed by such person.

             *By:  /s/ CHARLES T. SHERMAN
              ------------------------------------
             Charles T. Sherman, Attorney-in-fact
<PAGE>   16
INDEPENDENT AUDITORS' REPORT


To the Shareholders of
  PH Group Inc.

We have audited the accompanying balance sheet of PH Group Inc. as of December
31, l998 and the related statements of operations, shareholders' equity and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit. The financial statements of PH
Group Inc. for the year ended December 31, 1997 were audited by other auditors
whose report, dated February 6, 1998, expressed an unqualified opinion on those
statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of PH Group Inc. as of December
31, 1998, and the results of its operations and cash flows for the year then
ended in conformity with generally accepted accounting principles.





/s/ Deloitte & Touche LLP
Columbus, Ohio
March 30, 1999
<PAGE>   17
PH GROUP INC.

<TABLE>
<CAPTION>
BALANCE SHEETS, DECEMBER 31, 1998 AND 1997
-------------------------------------------------------------------------------------

ASSETS                                                            1998          1997

CURRENT ASSETS:
<S>                                                            <C>          <C>
  Cash                                                         $    5,862   $    7,789
  Accounts receivable (less allowance for doubtful accounts:
    1998 - $30,000; 1997 - $0)                                  3,974,134    2,837,774
  Federal and state income tax receivables                        157,646
  Inventories                                                   2,942,799    2,829,172
  Deferred income taxes                                           186,300      150,500
  Other current assets                                             85,260      188,496
                                                                ---------    ---------

            Total current assets                                7,352,001    6,013,731
                                                                ---------    ---------


PROPERTY AND EQUIPMENT:
  Office equipment                                                756,890      621,933
  Manufacturing equipment                                       1,090,015    1,053,198
  Leasehold improvements                                          281,821      265,564
  Vehicles                                                        140,271      166,180
                                                                ---------    ---------
  Total property and equipment                                  2,268,997    2,106,875
  Less accumulated depreciation and amortization                1,329,574    1,112,086
                                                                ---------    ---------

            Property and equipment, net                           939,423      994,789
                                                                ---------    ---------

OTHER NONCURRENT ASSETS:
  Land held for investment                                         20,570      169,720
  Goodwill, net                                                   698,030      785,899
  Deferred income taxes, net                                      287,500       50,100
  Other noncurrent assets, net                                    285,261      280,338
                                                                ---------    ---------

           Total other noncurrent assets                        1,291,361    1,286,057
                                                                ---------    ---------


TOTAL ASSETS                                                   $9,582,785   $8,294,577
                                                               ==========   ==========
</TABLE>


                                                                     (Continued)

See notes to financial statements.


                                      -2-
<PAGE>   18
PH GROUP INC.

<TABLE>
<CAPTION>
BALANCE SHEETS, DECEMBER 31, 1998 AND 1997 (Continued)
-------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY                                      1998            1997
CURRENT LIABILITIES:
<S>                                                                   <C>            <C>
  Accounts payable                                                    $ 2,285,591    $ 1,950,925
  Current portion of debt                                               3,281,539      1,226,882
  Income taxes payable                                                                   422,626
  Accrued expenses                                                        460,257        610,409
  Customer deposits                                                       924,949      1,722,235
                                                                        ---------      ---------

            Total current liabilities                                   6,952,336      5,933,077
                                                                        ---------      ---------

NONCURRENT LIABILITIES:
  Long-term debt (less current portion)                                   951,068        252,061
  Deferred compensation                                                    12,083         12,916
                                                                        ---------      ---------

           Total noncurrent liabilities                                   963,151        264,977
                                                                        ---------      ---------

           Total liabilities                                            7,915,487      6,198,054
                                                                        ---------      ---------

COMMON STOCK SUBJECT TO REPURCHASE, 125,000
  shares issued, outstanding shares (93,750 - 1998; 125,000 - 1997)
  at redemption value                                                     262,500        312,500
                                                                        ---------      ---------

SHAREHOLDERS' EQUITY:
  Common stock, with no par value, authorized 10,000,000
    shares, issued and outstanding shares at stated value:
     (1998 - 1,519,846; 1997 - 1,418,731)                                  12,157         11,350
  Additional paid-in capital                                            1,403,321      1,292,051
  Retained earnings (accumulated deficit)                                 (10,680)       480,622
                                                                        ---------      ---------

           Total shareholders' equity                                   1,404,798      1,784,023
                                                                        ---------      ---------


TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                            $ 9,582,785    $ 8,294,577
                                                                      ===========    ===========
</TABLE>



See notes to financial statements.



                                      -3-
<PAGE>   19
PH GROUP INC.

STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                      1998            1997


<S>                                             <C>             <C>
NET SALES                                       $ 13,394,357    $ 13,752,009

COST OF SALES                                     10,042,780       9,167,483
                                                ------------    ------------

GROSS MARGIN                                       3,351,577       4,584,526

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES       4,006,233       3,518,850
                                                ------------    ------------

INCOME (LOSS) FROM OPERATIONS                       (654,656)      1,065,676
                                                ------------    ------------

OTHER INCOME (EXPENSES):
  Interest expense                                  (285,623)       (189,570)
  Other, net                                         151,977          60,040
                                                ------------    ------------

           Total other income (expenses), net       (133,646)        129,530
                                                ------------    ------------

INCOME (LOSS) BEFORE INCOME TAXES                   (788,302)        936,146

PROVISION (BENEFIT) FOR INCOME TAXES                (297,000)        331,300
                                                ------------    ------------


NET INCOME (LOSS)                               $   (491,302)   $    604,846
                                                ============    ============

PER SHARE DATA:
  Basic earnings (loss) per share               $      (0.33)   $       0.43

  Diluted earnings (loss) per share             $      (0.31)   $       0.37

  Weighted average shares outstanding:

    Basic                                          1,490,475       1,397,343
    Diluted                                        1,577,546       1,622,087
</TABLE>



See notes to financial statements.



                                      -4-
<PAGE>   20
PH GROUP INC.

STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                              RETAINED
                                         OUTSTANDING            ADDITIONAL     EARNINGS        TOTAL
                                         COMMON STOCK            PAID-IN     (ACCUMULATED   SHAREHOLDERS'
                                   SHARES           AMOUNT       CAPITAL       DEFICIT)       EQUITY
<S>                               <C>          <C>            <C>           <C>            <C>
BALANCES AT JANUARY 1, 1997       1,359,731    $    10,878    $ 1,239,023   $  (124,224)   $ 1,125,677

  Issuance of common stock           59,000            472         53,028                       53,500
  Net income                                                                    604,846        604,846
                                  ---------         ------      ---------       -------      ---------

BALANCES AT DECEMBER 31, 1997     1,418,731         11,350      1,292,051       480,622      1,784,023


  Issuance of common stock          101,115            807        111,270                      112,077


  Net loss                                                                     (491,302)      (491,302)
                                  ---------         ------      ---------       -------      ---------


BALANCES AT DECEMBER 31, 1998     1,519,846    $    12,157    $ 1,403,321    $  (10,680)    $1,404,798
                                  =========    ===========    ===========    ==========     ==========
</TABLE>

See notes to financial statements.

                                      -5-
<PAGE>   21
PH GROUP INC.

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                             1998           1997

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                   <C>             <C>
  Net (loss) income                                                                   $   (491,302)   $    604,846
  Adjustments to reconcile net income (loss) to net cash provided by
    (used in) operating activities:
    Depreciation and amortization                                                          393,380         339,985
    Deferred income tax benefit                                                           (255,500)       (160,600)
    Gain on sale of property and equipment                                                 (52,696)         (7,875)
  Changes in assets and liabilities affecting cash flows from operating activities:
    Accounts receivable                                                                 (1,136,360)       (708,402)
    Inventories                                                                           (113,627)     (1,924,683)
    Other current assets                                                                   103,236           3,136
    Other noncurrent assets                                                                (34,949)        (46,040)
    Accounts payable                                                                       334,666         963,160
    Income taxes                                                                          (598,172)        399,126
    Accrued expenses                                                                      (150,152)         (9,188)
    Customer deposits                                                                     (797,286)      1,029,237
    Deferred compensation                                                                     (833)          6,550
                                                                                        ----------         -------

            Net cash (used in) provided by operating activities                         (2,799,595)        489,252
                                                                                        ----------         -------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Proceeds from sale of equipment                                                          246,514         145,079
  Acquisition costs                                                                                       (211,143)
  Capital expenditures for property and equipment                                         (264,587)       (319,090)
                                                                                        ----------         -------

           Net cash used in investing activities                                           (18,073)       (385,154)
                                                                                        ----------         -------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on debt obligations                                                (8,919,365)    (11,979,558)
  Proceeds from debt obligations                                                        11,673,029      11,725,300
  Proceeds from issuance of common stock                                                   112,077          41,500
  Payment for common stock subject to repurchase                                           (50,000)
                                                                                        ----------         -------

           Net cash provided by (used in) financing activities                           2,815,741        (212,758)
                                                                                        ----------         -------

NET DECREASE IN CASH                                                                        (1,927)       (108,660)

CASH, beginning of year                                                                      7,789         116,449
                                                                                        ----------         -------

CASH, end of year                                                                     $      5,862    $      7,789
                                                                                      ============    ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for income taxes                                                          $    557,642    $     92,774
                                                                                      ============    ============

  Cash paid for interest expense                                                      $    285,623    $    189,570
                                                                                      ============    ============
</TABLE>



See notes to financial statements.



                                      -6-
<PAGE>   22
PH GROUP INC.

NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      BUSINESS DESCRIPTION - PH Group Inc., an Ohio corporation, is the product
      of the merger of several companies, the oldest of which was incorporated
      in 1906. The primary operations of the Company are the manufacture and
      marketing of a line of hydraulic presses and injection molding equipment
      under the names PH Hydraulics, St. Lawrence Press and Trueblood. The
      principal market area of these product lines is North America.

      LOSS FROM OPERATIONS - The Company incurred a net loss of approximately
      $491,000 in 1998 and is in violation of certain debt covenants for which
      the Company obtained a waiver (See Note 2). Should losses continue to
      occur, the Company will continue to have difficulty satisfying liabilities
      as they come due and, accordingly, may not be able to continue as a going
      concern. Management has changed its focus from revenue growth to
      operational efficiencies and has implemented various cost savings plans to
      reduce operational losses. Additionally, the Company seeks to improve its
      margins in the manufacturing process and acquire additional equity and
      amend its bank credit facilities. Accordingly, management believes that
      the Company will be able to return to profitable operations, realize its
      assets and satisfy its liabilities in the normal course of business.

      INVENTORIES - Inventories are stated at the lower of cost (on a first-in,
      first-out basis) or market. Inventories are comprised of the following:

<TABLE>
<CAPTION>
                                            December 31,
                                        1998         1997
<S>                                  <C>          <C>
Raw materials                        $  420,661   $  439,528
Finished and work-in-process goods    2,522,138    2,389,644
                                      ---------    ---------

Total                                $2,942,799   $2,829,172
                                     ==========   ==========
</TABLE>

      PROPERTY AND EQUIPMENT - Property and equipment are stated at cost.
      Depreciation and amortization are computed using the straight-line method
      for financial reporting purposes and accelerated methods for income tax
      purposes over the estimated useful lives of the related assets ranging
      from 3 to 20 years.

      Depreciation expense was approximately $275,000 and $249,000 in 1998
      and 1997, respectively.

      SIGNIFICANT CUSTOMERS AND INDUSTRY CONCENTRATION - A significant portion
      of the Company's business activity is with customers directly or
      indirectly related to the automotive industry. One of the Company's
      customers accounted for approximately 15% and 29% of the sales in 1998 and
      1997 and 24% and 33% of the accounts receivable balance at December 31,
      1998 and 1997. The Company's exposure to credit risk is impacted by the
      economic climate affecting its industry. The Company manages this risk by
      performing on-going credit evaluations of its customers and maintains
      reserves for potential uncollectable accounts.


                                      -7-
<PAGE>   23
      LAND HELD FOR INVESTMENT - Land held for investment is valued at the lower
      of cost or market. Expenditures that add to the recoverable value of the
      property are capitalized as land development costs.

      GOODWILL - Goodwill is being amortized using the straight-line method over
      periods ranging from six to fifteen years for financial statement
      purposes. The amortization expense for 1998 and 1997 was approximately
      $78,000 and $61,000, respectively. Goodwill on the balance sheet is shown
      net of accumulated amortization at December 31, 1998 and 1997 of
      approximately $214,000 and $136,000, respectively.

      IMPAIRMENT OF ASSETS - At each balance sheet date, a determination is made
      by management to ascertain whether property and equipment, goodwill held
      for investment, land and non-compete and consulting agreements have been
      impaired based on several criteria, including, but not limited to, revenue
      trends, undiscounted operating cash flows and other operating factors. For
      the years presented, there has been no impairment of assets.

      OTHER NONCURRENT ASSETS - Included in other noncurrent assets are
      noncompetition and consulting agreements of approximately $147,000 at
      December 31, 1998 and 1997. These agreements are being amortized using the
      straight-line method over the lives of the agreements which range from 32
      to 116 months. The amortization expense for 1998 and 1997 was
      approximately $37,000 and $25,000, respectively. Accumulated amortization
      at December 31, 1998 and 1997 was approximately $62,000 and $25,000,
      respectively.

      REVENUE RECOGNITION - Revenue from equipment sales and the related costs
      of sales are recognized when products are completed, and accepted for
      shipment by the customer, and all costs are incurred or subject to
      reasonable estimate. Advance payments from customers prior to completion
      are reported as customer deposits.

      PRODUCT WARRANTY - The Company generally provides a warranty against
      defects in its products for periods ranging from one to two years. A
      liability for estimated warranty costs is recognized on current sales. The
      Company has determined the estimate based on the historical relationship
      of actual warranty costs to sales revenue.

      ADVERTISING - The Company expenses advertising costs as incurred.
      Advertising costs relate primarily to product brochures, industry
      magazines and trade shows. Advertising expenses were approximately
      $242,000 and $274,000 in 1998 and 1997, respectively.

      RESEARCH AND DEVELOPMENT -The Company expenses research and development
      costs as incurred. Research and development expenses were approximately
      $39,000 and $0 in 1998 and 1997, respectively.

      PER SHARE INFORMATION - Basic earnings per share amounts (EPS) are
      computed based on the weighted average number of common shares actually
      outstanding. Diluted EPS includes the effect of EPS of dilutive stock
      options of 72,759 and 140,840 and restricted stock subject to put options
      of 14,312 and 83,904 at December 31, 1998 and 1997, respectively.
      Computation of the dilutive effect of stock option conversion is computed
      using the treasury stock method. All share and per share information for
      1998 and 1997 reflects the retroactive impact of a five for four stock
      split which occurred January 2, 1998. No adjustments to net income (loss)
      were required for purposes of computing diluted per share amounts.

      ESTIMATES - The preparation of financial statements in conformity with
      generally accepted accounting principles requires management to make
      estimates and assumptions that affect the reported amounts of


                                      -8-
<PAGE>   24
      assets and liabilities and disclosure of contingent assets and liabilities
      at the date of the financial statements and the reported amounts of
      revenues and expenses during the reporting period. Actual results could
      differ from those estimates.

      BUSINESS SEGMENTS - In 1998, the Company adopted Statement of Financial
      Accounting Standards No. 131, "Disclosures about Segments of a Business
      Enterprise and Related Information". The Company is managed in one
      operating segment, the manufacturer of equipment for the machine tool
      industry. Within their one operating segment, the Company has identified
      two product groups; Hydraulic Presses and Injection Molding Machines. The
      following is supplemental information on net sales by product group:

<TABLE>
<CAPTION>
                              HYDRAULIC         INJECTION      REPAIR PARTS
                               PRESSES           MOLDING       AND SERVICE         TOTAL
<S>                          <C>              <C>              <C>              <C>
     1998                    $ 10,151,921      $ 2,884,539      $ 357,897       $ 13,394,357
     1997                    $ 6,897,463       $ 6,596,793      $ 257,749       $ 13,752,005
</TABLE>

      NEW ACCOUNTING PRONOUNCEMENTS - In March 1998, the American Institute of
      Certified Public Accountants issued Statement of Position 98-1,
      "Accounting for the Costs of Computer Software Developed or obtained for
      Internal Use." This statement defines whether or not certain costs related
      to the development or acquisition of internal use software should be
      expensed or capitalized and is effective for fiscal years beginning after
      December 15, 1998. The Company does not believe the new statement will
      have a material impact on its results of operations and financial
      position.

      In June 1998, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standards No. 133, "Accounting for Derivative
      Instruments and Hedging Activities," to establish accounting and reporting
      requirements for derivative instruments. This standard requires
      recognition of all derivative instruments in the statement of financial
      position as either assets or liabilities, measured at fair value, and is
      effective for fiscal years beginning after June 15, 1999. This statement
      additionally requires changes in the fair value of derivatives to be
      recorded each period in current earnings or comprehensive income depending
      on the intended use of the derivatives. The Company is currently assessing
      the impact of this statement on its results of operations, financial
      position and cash flows.

      RECLASSIFICATIONS - Reclassifications have been made to prior years'
      amounts to conform with the current year's classifications.


                                      -9-
<PAGE>   25
2.    DEBT AND OTHER OBLIGATIONS

      Debt consists of the following:

<TABLE>
<CAPTION>
                                                                                   DECEMBER 31,
                                                                               1998             1997

<S>                                                                        <C>                 <C>
Bank line of credit agreement                                               $ 3,056,716        $ 457,049
Term loan payable to bank at interest rate of 8.07%, secured,
  monthly payments of $14,286 through June 30, 2005.                          1,114,286
  The term loan is cross collateralized with the line of credit
Promissory note payable to bank at an interest rate of
  prime plus 1%, secured, paid in 1998                                                           600,000
Term loan payable to a bank at an interest rate of prime
  plus 1%, secured, paid in 1998                                                                 291,667
Other installment notes at interest rates ranging from 5%
  to 10.25%, secured by certain vehicles and manufacturing
  equipment, requiring monthly principal and interest
  payments with various maturities through August 2000                           37,841           87,287
Capital lease obligation at 13%, secured by computer
  equipment requiring monthly principal and interest
  payments through January 2000                                                  23,764           42,940
                                                                              ---------        ---------
           Total                                                              4,232,607        1,478,943
Less current portion                                                          3,281,539        1,226,882
                                                                              ---------        ---------

Long-term portion                                                             $ 951,068        $ 252,061
                                                                              =========        =========
</TABLE>

      BANK LINE OF CREDIT - At December 31, 1998, the Company has a line of
      credit agreement with a bank to borrow up to $3,500,000, subject to
      certain borrowing base restrictions. The line is secured as noted below.
      Interest is payable monthly at bank prime plus .5%. The agreement expires
      on September 30, 1999. Outstanding balances due were $3,056,716 and
      $457,049 at December 31, 1998 and 1997. At December 31, 1998 the Company
      was in violation of certain debt covenants regarding the following;
      tangible net worth, debt to tangible net worth ratio, defined cash flow
      coverage ratio and annual capital expenditures. On March 30, 1999 the
      Company obtained a waiver from the bank with respect to such events of
      noncompliance. Additional borrowings available under the line of credit at
      December 31, 1998 were $443,284.

      In addition, the line of credit agreement was amended as follows: 1)
      borrowing availability was reduced to $3,000,000 2) interest is payable
      monthly at bank prime plus 1% or LIBOR plus 325 basis points and 3) the
      Company must seek to obtain equity or subordinated debt acceptable to the
      bank and sufficient to provide adequate liquidity to the Company. 4)
      Immediately upon injection of equity into the Company, the Company shall
      be required to reduce the term loan balance by at least $250,000. 5) the
      debt covenants were revised such that the Company is currently in
      compliance with the new covenants.


                                      -10-
<PAGE>   26
      Maturities of debt at December 31, 1998 are as follows:
<TABLE>
<S>                              <C>
      1999                       $3,281,539
      2000                          179,640
      2001                          171,429
      2002                          171,429
      2003                          171,429
   Thereafter                       257,141
                                 ----------

Total                            $4,232,607
                                 ==========
</TABLE>

      Debt is secured by substantially all assets of the Company and the
      assignment of the proceeds of a $500,000 life insurance policy.

3.       INCOME TAXES

      Components of the provision for income taxes are as follows:

<TABLE>
<CAPTION>
                                          1998          1997
Current:
<S>                                    <C>          <C>
  Federal                              $  11,100    $ 419,800
  State and local                        (52,600)      72,100
                                       ---------    ---------
                                         (41,500)     491,900

Deferred:
  Federal                               (250,100)    (160,600)
  State and local                         (5,400)
                                       ---------    ---------
                                        (255,500)    (160,600)
                                       ---------    ---------

Provision (benefit) for income taxes   $(297,000)   $ 331,300
                                       =========    =========
</TABLE>

      A reconciliation of the income tax provision (benefit) based on the
      federal statutory income tax rate of 34% to the Company's income tax
      provision (benefit) is as follows:

<TABLE>
<CAPTION>
                                                                 1998          1997

<S>                                                            <C>          <C>
Provision (benefit) at federal statutory rate                  $(268,000)   $ 318,300
State and local tax expense (benefit), net of federal effect     (35,400)      72,100
Change in valuation allowance                                                 (39,800)
Other items, net                                                   6,400      (19,300)
                                                               ---------    ---------

Provision (benefit) for income taxes                           $(297,000)   $ 331,300
                                                               =========    =========
</TABLE>



                                      -11-
<PAGE>   27
      Deferred tax assets (liabilities) consist of the following:

<TABLE>
<CAPTION>
                                            December 31,
                                        1998           1997
Current assets:
<S>                                  <C>          <C>
  Accrued expenses                   $ 106,800    $  79,400
  Inventory                             67,300      104,900
  Bad debt allowance                    12,200
                                     ---------    ---------
           Total current assets        186,300      184,300
                                     ---------    ---------

Non-current asset (liability):
  Property, plant and equipment        (58,100)     (39,600)
  Net operating loss carryforwards     254,100
  Goodwill                              90,100       29,000
  Deferred costs                                     76,300
  Capital loss carryforwards            55,400
  Other, net                                          4,600
                                     ---------    ---------
           Total non-current asset     341,500       70,300
                                     ---------    ---------

Total deferred tax asset               527,800      254,600
Less valuation allowance               (54,000)     (54,000)
                                     ---------    ---------

Total deferred tax asset - net       $ 473,800    $ 200,600
                                     =========    =========
</TABLE>

      At December 31, 1998, the Company has approximately $747,000 of net
      operating losses carryforwards for Federal income tax purposes expiring in
      2013 and approximately $54,000 in capital loss carryforwards expiring in
      2003.

4.    OPERATING LEASES

      During 1989, the Company entered into an agreement to lease office and
      manufacturing space in Columbus, Ohio. The lease period is 125 months and
      will expire on August 31, 1999.

      During May 1997, the Company entered into an agreement to lease office and
      manufacturing space in Romulus, Michigan. The lease requires monthly
      payments of $14,850, plus a proportionate share of the operating expenses.
      The agreement was to expire in April 2002, with an option for early
      termination in April 1999. The Wayne County Airport Authority has issued
      an order of condemnation on the property due to airport expansion. The
      Company is currently vacating the property. A portion of this space was
      subleased for $2,400 per month, plus a proportionate share of the
      operating expenses, under a month to month operating lease agreement.


                                      -12-
<PAGE>   28
      The Company has entered into a lease of office and manufacturing space at
      the CityGate development in Columbus, Ohio. The building is currently
      under construction, however, a preliminary annual lease payment of
      approximately $279,000 has been negotiated based on estimated construction
      costs. The Company plans to occupy the new building in September 1999.
      Minimum future rental payments for the above noncancelable operating
      leases having remaining terms in excess of one year as of December 31,
      1998 are as follows:

<TABLE>
<S>                        <C>
1999                       $   93,045
2000                          279,135
2001                          279,135
2002                          279,135
2003                          279,135
Thereafter                  2,977,440
</TABLE>

      Rental expense under all operating leases was approximately $255,000 in
      1998 and $182,000 in 1997.

5.    STOCK OPTIONS

      The Company has a fixed director's stock option plan. Under this plan the
      Company can grant up to 6,250 options per newly elected director after May
      1996. The maximum term of the options is ten years and they become fully
      vested at the end of two years. Directors who held their position before
      May 1996 could receive up to 25,000 options which were fully vested upon
      receipt, and expire in the year 2005. The exercise price of each option is
      equal to the market price of the Company's stock on the date of the grant.
      All stock option information in these financial statements has been
      adjusted to reflect the impact of a five for four stock split in January
      1998.

      The Company's 1997 Stock Incentive Plan allows the Board of Directors to
      grant stock options to employees, directors and consultants. The total
      number of aggregate shares which may be granted under the Plan shall not
      exceed 187,500. Options to acquire company stock for employees and
      consultants shall not be granted with exercise prices less than the fair
      market value of a share on the date of the grant. The number of shares
      granted to employees and consultants is at the discretion of the board.
      Shares are granted to non-employee directors upon appointment to the board
      and at each annual meeting based upon the increase in total income before
      taxes over the prior calendar year. Options granted to non-employee
      directors are made at exercise prices equal to the fair market value of
      the stock at the date of the annual meeting corresponding to the
      performance year. During 1998, 66,150 options were granted at $3.11 under
      the Plan. No options will be granted to non-employee directors at the 1999
      annual meeting of shareholders.

      The Company accounts for its stock option plans in accordance with APB
      Opinion No. 25, under which no compensation cost has been recognized. Had
      compensation cost for all stock option plans been determined consistent
      with the SFAS No. 123, "Accounting for Stock Based Compensation," the
      Company's pro forma 1998 net income (loss) and earnings (loss) per common
      share would have been $(554,269) and $(.37) per basic and $(.35) diluted
      share, respectively. For 1997, pro forma net income and earnings per
      common share would have been $545,276 and $.39 per basic share or $.34 per
      diluted share. The pro forma amounts are not representative of the effects
      on reported net earnings or earnings per common share for future years.

      The fair value of each option granted is estimated on the grant date using
      the Black-Scholes Formula. The following weighted average assumptions were
      made in estimating the fair value for options granted in 1998


                                      -13-
<PAGE>   29
      and 1997, respectively: risk-free interest rates of 5.09% and 6.25%; and
      volatility factors of 119% and 184%. The expected life of the options was
      assumed at 10 years and the expected dividend yields were assumed to be
      zero for both 1998 and 1997.

      The following table summarized stock option activity:

<TABLE>
<CAPTION>
                                                                  1998                                      1997
                                                                  ----                                      ----

                                                                           Weighted                                   Weighted
                                                          Number           Average              Number                Average
                                                            of             Exercise               of                  Exercise
                                                         Options            Price               Options                Price

<S>                                                      <C>               <C>                <C>                    <C>
Outstanding at beginning of year                          233,750           $ 1.02             252,500                $ 0.86
Granted                                                    72,400             3.11              33,500                  1.68
Exercised                                                 (71,700)            0.86             (52,250)                 0.81
Forfeited or expired                                      (29,150)            2.62
                                                          -------             ----             -------                ------
Outstanding at end of year                                205,300           $ 1.57             233,750                $ 1.02
                                                          =======           ======             =======                ======

Exercisable at end of year                                162,550           $ 1.16             179,750                $ 1.01
                                                          =======           ======             =======                ======

Weighted average fair value of options
  granted during the year                                                   $ 2.84                                    $ 2.29
                                                                            ======                                    ======

Options Available for Grant                              131,750                              187,500
                                                         =======                              =======
</TABLE>

The following table summarizes information about stock options outstanding and
exercisable as of December 31, 1998:

<TABLE>
<CAPTION>
                                                    Options Outstanding                                 Options Exercisable
                                                    -------------------                                 -------------------
                                                                    Weighted         Weighted                           Weighted
                                                Number              Average           Average        Number              Average
                                                  of                Exercise        Contractual        of               Exercise
      Range of Exercise Prices                  Options              Price         Life (Years)      Options              Price


<S>                                              <C>                <C>                <C>           <C>                 <C>
$.80                                             91,250             $ 0.80             4.1           96,250              $ 0.80
$1.20 to $2.20                                   66,050               1.51             4.1           55,000                1.37
$3.06 to $3.25                                   48,000               3.11             9.3           11,300                3.15
                                                 ------               ----                           ------                ----

                                                205,300             $ 1.57                          162,550              $ 1.16
                                                =======             ======                          =======              ======
</TABLE>

      Options to purchase 125,000, 93,750, 98,650 and 57,900 shares at $1.60 -
      3.25 for each quarter in 1998 were outstanding but not included in the
      computation of diluted EPS because the options' exercise price was greater
      than the average market price of common shares.


                                      -14-
<PAGE>   30
      On January 26, 1999 options for 3,125 shares at $1.75 per share were
      granted automatically to a director appointed to fill a board vacancy. On
      February 9, 1999 options for 45,000 shares were granted to employees and
      executives of the Company at $1.38 per share.

6.    TRANSACTIONS WITH RELATED PARTIES

      In 1998 fees of $26,400 were paid to a director for services provided to
      the Company. In 1997 fees of $85,000 were incurred to an entity owned by
      certain shareholders in regards to activities involving the St. Lawrence
      Press asset acquisition (see Note 8). At December 31, 1997 a liability of
      $32,000 is due to this entity and included in accounts payable. At
      December 31,1998 this liability was paid in full.

      In December 1996 the Company agreed to lend $59,000 to an entity owned by
      certain shareholders. At December 31, 1998 the outstanding balance was
      $47,200, with $5,900 in other current assets and $41,300 in other
      non-current assets. At December 31, 1997 the outstanding balance was
      $53,100 with $5,900 in other current assets and $47,200 in other
      non-current assets. Interest is computed on the outstanding principal
      amount at a rate of bank prime plus 1.25%. Principal repayment is $5,900
      for 1999 with remaining balance is due in 2000.

7.    PROFIT-SHARING PLAN

      The Company sponsors a profit-sharing plan covering employees completing
      at least six months of service, working at least 1,000 annual hours, and
      having attained the age of 21. Contributions to the plan are made at the
      discretion of the Board of Directors. Employees have an option to make
      voluntary contributions to the Plan under the provisions of Internal
      Revenue Code Section 401(k). Profit-sharing expense was approximately
      $20,000 in 1998, and $51,900 in 1997.

8.    BUSINESS COMBINATION

      On April 30, 1997, the Company acquired certain net assets of the St.
      Lawrence Press Company in a business combination accounted for as a
      purchase. The acquired business is engaged in the production, development
      and sales of various multi-ton hydraulic presses. The results of
      operations of the acquired business are included in the financial
      statements from the date of acquisition. The $1,257,430 purchase price,
      including acquisition costs, exceeded the value of the net tangible assets
      acquired by $910,418. The excess amount was allocated as follows: Goodwill
      $763,836; Consulting Agreements $109,942; and Noncompetition Agreements
      $36,640. These intangible assets are being amortized over fifteen years
      for the Goodwill and the specific lives of the Noncompetition and
      Consulting Agreements which range from 32 to 116 months.

      The purchase agreement contains a contingent earnout component where the
      purchase price is subject to future increases. The increases are based on
      5% of gross sales in excess of an annual specified level ($2.5 million in
      the first two years and $3 million in the last two years) for eligible
      products in each of the four years following the purchase date. The
      maximum earn out for any one year is $200,000 and the minimum is $50,000.
      A $124,775 liability has been included on the financial statements (see
      Note 3) for the present value of the minimum annual contingent earnout
      payments with a corresponding increase in the cost of the purchase price.

      The acquisition was funded with cash, the assumption of liabilities, notes
      payable, and restricted common stock which is subject to a repurchase
      agreement, (see Note 10).


                                      -15-
<PAGE>   31
9.    COMMON SHARES SUBJECT TO REPURCHASE

      In conjunction with the St. Lawrence Press asset acquisition discussed in
      Note 8, the Company issued 125,000 shares of common stock, which are
      subject to a repurchase agreement. The issued shares are subject to
      restrictions on their transfer and voting rights. The Company has
      guaranteed the value of these shares by providing the holders four
      separate put rights which can require the Company to redeem these shares
      as follows: 31,250 shares on April 30, 1998 at $1.60 per share; 31,250
      shares on April 30, 1999 at $2.40 per share; 31,250 shares on April 30,
      2000 at $2.80 per share; and 31,250 shares on April 30, 2001 at $3.20 per
      share. Each separate put option is not exercisable until the dates shown
      above and expires one year from this vesting date. The holders are
      required to attempt to sell the shares in the market at a price equal to
      or greater than the minimum share price for 90 days prior to requiring the
      Company to redeem them.

      On the date issued, there was no significant difference between the
      estimated fair value of the common shares subject to repurchase and the
      future mandatory redemption amounts.

      No put options were exercised on the first installment at April 30, 1998.
      However, the holders were able to sell the first installment of 31,250
      shares on the market at April 30, 1998.

10.   CONTINGENCIES

      At December 31, 1998, the Company is a party to various legal matters
      which have arisen in the ordinary course of business. Such matters did not
      have a material adverse effect on the current year's results of operations
      and, in the opinion of management, their ultimate disposition will not
      have a material adverse effect on the Company's future financial position
      or results of operations.

                                     ******



                                      -16-
<PAGE>   32
                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                                                         Page in
                                                                                                     Sequentially
                                                                                                       Numbered
Exhibit No.        Description                                                                            Copy

<S>               <C>                                                                                <C>
2.1.              Asset Purchase Agreement, dated as of April 30, 1997, between PH Group
                  Inc. and St. Lawrence Press Company, Inc. (incorporated by reference
                  to Exhibit 2 of the Company's Quarterly Report on Form 10 - QSB for the
                  quarterly period ended March 31, 1997;  Commission File No. 0-8115).                     *

3.1.              Certificate of Amendment by Shareholders to the Article of
                  Incorporation of PH Group Inc. as filed with the Ohio
                  Secretary of State on April 30, 1998 (amending Article IV of
                  Amended Articles of Incorporation).

3.2.              Action Taken Without Meeting by the Board of Directors of PH Group Inc.
                  on April 30, 1998 (adopting Amended and Restated Articles of Incorporation).

3.3.              Certified Resolutions regarding adoption of amendment to
                  Sections 2 and 5 of Article I of Amended Code of Regulations
                  of PH Group Inc. by Shareholders on April 30, 1998.

10.1.             Bank Lending Agreement, (Second Amended and Restated Revolving
                  Credit/Term Loan Agreement dated June 29, 1998 between Star Bank,
                  N.A. and PH Group Inc.).

10.2.             Form of Option Agreement between the Company and Employees, related
                  to options granted under PH Group Inc. 1997 Stock Incentive Plan.

10.3.             Form of Option Agreement between the Company and Consultants, related
                  to options granted under PH Group Inc. 1997 Stock Incentive Plan.

10.4.             Form of Option Agreement between the Company and Directors', related
                  to options granted under PH Group Inc. 1997 Stock Incentive Plan.

10.5.             Employment Agreement between the Company and Charles T.
                  Sherman dated January 23, 1997 (incorporated by reference to
                  Exhibit 10.5 to the Company's Annual Report on Form 10-KSB for
                  the period ended December 31, 1997; Commission File No.
                  0-8115).*                                                                                *

10.6.             Split Dollar Agreement between the Company and Charles T.
                  Sherman dated September 11, 1997 (incorporated by reference to
                  Exhibit 10.6 to the Company's Annual Report on Form 10-KSB for
                  the period ended December 31, 1997; Commission File No.
                  0-8115).*                                                                                *

10.7.             PH Group Inc. 1997 Stock Incentive Plan (incorporated by reference to
                  Exhibit 10.7 to the Company's Annual Report on Form 10-KSB for the
                  period ended December 31, 1997; Commission File No. 0-8115).*                            *
</TABLE>
<PAGE>   33
<TABLE>
<S>               <C>                                                                                      <C>


10.8.             PH Group Inc. Employee Stock Purchase Plan (incorporated by reference to
                  Exhibit 10.8 to the Company's Annual Report on Form 10-KSB for the
                  period ended December 31, 1997; Commission File No. 0-8115).*                             *

10.9.             PH Group Inc. agreement with major Sales Representative.

23.1.             Consent of Deloitte & Touche LLP

23.2.             Consent of Greene & Wallace, Inc.

24.1.             Powers of Attorney.

24.2.              Certified resolution of the Company's Board of Directors
                   authorizing officers and directors signing on behalf of the
                   Company to sign pursuant to a power of attorney.

27.                Financial Data Schedule (submitted electronically for SEC
                   information only).
</TABLE>

---
*Incorporated by reference