----

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**UNITED      STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-K/A**

**For      the Fiscal Year Ended December 31, 2004**

**Commission      File Number 000-27945**

**ASCENDANT      SOLUTIONS, INC.**

| **Delaware**                                                                  |   | **75-2900905**                                      |
|-------------------------------------------------------------------------------|--------|-----------------------------------------------------|
| (State                or other jurisdiction of incorporation or organization) |   | (I.R.S.                Employer Identification No.) |
|                                                                          |   |                                                |
| **16250                Dallas Parkway, Suite 102, Dallas, TX**                |   | **75248**                                           |
| (Address                of principal executive offices)                       |   | (Zip                Code)                           |

**972-250-0945**

**      None**

**      Common Stock, par value $0.0001**

**DOCUMENTS      INCORPORATED BY REFERENCE**

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**ASCENDANT      SOLUTIONS, INC.**

**FORM      10-K/A**

**For      the Fiscal Year Ended December 31, 2004**

**EXPLANATORY      NOTE**

**Table      of Contents**

|                   | **PART                II.**                                             |   | **Page** |
|------------------------|-------------------------------------------------------------------------|--------|----------|
|                   |                                                                    |   |     |
| Item                8. | Consolidated                Financial Statements and Supplementary Data |   | **3**    |
|                   |                                                                    |   |     |
|                   | **PART                IV.**                                             |   |     |
|                   |                                                                    |   |     |
| Item                15 | Exhibits                and Financial Statement Schedules               |   | **66**   |
|                   |                                                                    |   |     |
|                   | Signatures                                                              |   | **67**   |

**-2-**

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**ITEM      8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY      DATA**

|                                                                                                                                                                                                  | Page   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **ASCENDANT                SOLUTIONS, INC.**                                                                                                                                                          |   |
|                                                                                                                                                                                                  |   |
| Reports                of Independent Registered Public Accounting Firms                                                                                                                              | 4      |
|                                                                                                                                                                                                  |   |
| Consolidated                Balance Sheets as of December 31, 2004 and 2003                                                                                                                           | 7      |
|                                                                                                                                                                                                  |   |
| Consolidated                Statements of Operations for the Years Ended December 31, 2004, 2003                and                2002                                                               | 8      |
|                                                                                                                                                                                                  |   |
| Consolidated                Statements of Stockholders’ Equity for the Years Ended December 31, 2004,                2003 and 2002                                                              | 9      |
|                                                                                                                                                                                                  |   |
| Consolidated                Statements of Cash Flows for the Years Ended December 31, 2004, 2003                and                2002                                                               | 10     |
|                                                                                                                                                                                                  |   |
| Notes                to Consolidated Financial Statements                                                                                                                                             | 11     |
|                                                                                                                                                                                                  |   |
| **PARK                PHARMACY CORPORATION**                                                                                                                                                          |   |
|                                                                                                                                                                                                  |   |
| Report                of Independent Registered Public Accounting Firm                                                                                                                                | 35     |
|                                                                                                                                                                                                  |   |
| Consolidated                Balance Sheets as of March 24, 2004 and June 30, 2003                                                                                                                     | 36     |
|                                                                                                                                                                                                  |   |
| Consolidated                Statements of Operations for the period from July 1, 2003 to March                24,                2004 and for the years ended June 30, 2003 and 2002                  | 37     |
|                                                                                                                                                                                                  |   |
| Consolidated                Statements of Stockholders’ Deficit for the period from July 1, 2003 to                March 24, 2004 and for the years ended June 30, 2003 and                2002 | 38     |
|                                                                                                                                                                                                  |   |
| Consolidated                Statements of Cash Flows for the period from July 1, 2003 to March                24,                2004 and for the years ended June 30, 2003 and 2002                  | 39     |
|                                                                                                                                                                                                  |   |
| Notes                to Consolidated Financial Statements                                                                                                                                             | 41     |
|                                                                                                                                                                                                  |   |
| **THE                STAUBACH COMPANY-WEST, INC.**                                                                                                                                                    |   |
|                                                                                                                                                                                                  |   |
| Report                of Independent Registered Public Accounting Firm                                                                                                                                | 56     |
|                                                                                                                                                                                                  |   |
| Balance                Sheets as of December 31, 2003 and 2002                                                                                                                                        | 57     |
|                                                                                                                                                                                                  |   |
| Statements                of Operations for the years ended December 31, 2003 and                2002                                                                                                 | 58     |
|                                                                                                                                                                                                  |   |
| Statements                of Stockholders’ Deficit for the years ended December 31, 2003 and                2002                                                                                | 59     |
|                                                                                                                                                                                                  |   |
| Statements                of Cash Flows the years ended December 31, 2003 and 2002                                                                                                                    | 60     |
|                                                                                                                                                                                                  |   |
| Notes                to Financial Statements                                                                                                                                                          | 61     |

**-3-**

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**Report      of Independent Registered Public Accounting Firm**

* *

|   | */s/                HEIN & ASSOCIATES LLP** * |
|--------|--------------------------------------------------------|

**-4-**

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**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

|   | /s/                BDO Seidman, LLP |
|--------|-------------------------------------|

**-5-**

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**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM **

|   | /s/                Ernst & Young LLP. |
|--------|-------------------------------------------|

**-6-**

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| **ASCENDANT                SOLUTIONS, INC.**                            |   |
|-------------------------------------------------------------------------|--------|
| **CONSOLIDATED                BALANCE SHEETS**                          |   |
| **(000's                omitted, except per share amounts)**            |   |
|                                                                    |   |   |   |   |   |
|                                                                    |   | **December                31,** |   | **December                31,** |   |
|                                                                    |   | **2004** |   | **2003** |   |
|                                                                    |   |   |   |   |   |
| **ASSETS**                                                              |   |
| Current                assets:                                          |   |   |   |   |   |
| Cash                and cash equivalents                                |   | $ | 1,868 |   | $ | 2,006 |   |
| Trade                accounts receivable, net of allowance for doubtful |   |   |   |   |   |   |   |
| accounts                of $ 380 at December 31, 2004                   |   |   | 6,350 |   |   | - |   |
| Other                receivables                                        |   |   | 161 |   |   | 46 |   |
| Receivable                from affiliates                               |   |   | 71 |   |   | 52 |   |
| Inventories                                                             |   |   | 2,498 |   |   | - |   |
| Prepaid                expenses                                         |   |   | 503 |   |   | 125 |   |
| Total                current assets                                     |   |   | 11,451 |   |   | 2,229 |   |
| Property                and equipment, net                              |   |   | 716 |   |   | 17 |   |
| Deferred                acquisition costs                               |   |   | - |   |   | 310 |   |
| Goodwill                                                                |   |   | 7,299 |   |   | - |   |
| Other                intangible assets                                  |   |   | 758 |   |   | - |   |
| Investments                in limited partnerships, net                 |   |   | 411 |   |   | 285 |   |
| Other                assets                                             |   |   | 118 |   |   | - |   |
| Total                assets                                             |   | $ | 20,753 |   |   | 2,841 |   |
|                                                                    |   |   |   |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                 |
| Current                liabilities:                                     |   |   |   |   |   |   |   |
| Accounts                payable                                         |   | $ | 1,633 |   | $ | 60 |   |
| Accounts                payable to affiliates                           |   |   | - |   |   | 1 |   |
| Accrued                liabilities                                      |   |   | 3,161 |   |   | 48 |   |
| Notes                payable, current                                   |   |   | 461 |   |   | - |   |
| Total                current liabilities                                |   |   | 5,255 |   |   | 109 |   |
| Notes                payable, long-term                                 |   |   | 12,155 |   |   | - |   |
| Limited                partnership and minority interests               |   |   | 464 |   |   | 209 |   |
| Commitments                and contingencies                            |   |   |   |   |   |   |   |
|                                                                    |   |   |   |   |   |   |   |
| Stockholders'                equity:                                    |   |   |   |   |   |   |   |
| Preferred                stock, $0.0001 par value:                      |   |   |   |   |   |   |   |
| Authorized                shares--7,500,000                             |   |   |   |   |   |   |   |
| Issued                and outstanding--none                             |   |   | - |   |   | - |   |
| Common                stock, $0.0001 par value:                         |   |   |   |   |   |   |   |
| Authorized                shares--50,000,000                            |   |   |   |   |   |   |   |
| Issued                and outstanding shares--21,933,400 and            |   |   |   |   |   |   |   |
| 21,665,900                at December 31,2004 and 2003, respectively.   |   |   | 2 |   |   | 2 |   |
| Additional                paid-in capital                               |   |   | 59,961 |   |   | 59,822 |   |
| Deferred                compensation                                    |   |   | (78 | ) |   | (46 | ) |
| Accumulated                deficit                                      |   |   | (57,006 | ) |   | (57,255 | ) |
| Total                stockholders' equity                               |   |   | 2,879 |   |   | 2,523 |   |
| Total                liabilities and stockholders' equity               |   | $ | 20,753 |   | $ | 2,841 |   |

**-7-**

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| **ASCENDANT                SOLUTIONS, INC.**                                |   |
|-----------------------------------------------------------------------------|--------|
| **CONSOLIDATED                STATEMENTS OF OPERATIONS**                    |   |
| **(000's                omitted, except share & per share amounts)**    |   |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   |   |   |   |   |   |   |
|                                                                        |   | **Years                Ended December 31,** |   |
|                                                                        |   | **2004** |   | **2003** |   | **2002** |   |
|                                                                        |   |   |   |   |   |   |   |
| Revenue:                                                                    |   |   |   |   |   |   |   |   |   |   |
| Healthcare                                                                  |   | $ | 29,532 |   | $ | - |   | $ | - |   |
| Real                estate advisory services                                |   |   | 9,759 |   |   | 505 |   |   | - |   |
|                                                                        |   |   | 39,291 |   |   | 505 |   |   | - |   |
| Cost                of Sales:                                               |   |   |   |   |   |   |   |   |   |   |
| Healthcare                                                                  |   |   | 19,668 |   |   | - |   |   | - |   |
| Real                estate advisory services                                |   |   | 5,387 |   |   | - |   |   | - |   |
|                                                                        |   |   | 25,055 |   |   | - |   |   | - |   |
| Gross                profit                                                 |   |   | 14,236 |   |   | 505 |   |   | - |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |
| Operating                expenses:                                          |   |   |   |   |   |   |   |   |   |   |
| Selling,                general and administrative expenses                 |   |   | 13,054 |   |   | 1,540 |   |   | 998 |   |
| Non-cash                stock compensation                                  |   |   | 58 |   |   | - |   |   | - |   |
| Impairment                charges                                           |   |   | - |   |   | 112 |   |   | - |   |
| Depreciation                and amortization                                |   |   | 494 |   |   | 63 |   |   | 18 |   |
| Total                operating expenses                                     |   |   | 13,606 |   |   | 1,715 |   |   | 1,016 |   |
| Operating                income (loss)                                      |   |   | 630 |   |   | (1,210 | ) |   | (1,016 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |
| Investment                income                                            |   |   | 393 |   |   | 85 |   |   | 19 |   |
| Interest                income (expense), net                               |   |   | (520 | ) |   | 30 |   |   | 59 |   |
| Gain                (Loss) on sale of property and equipment                |   |   | (32 | ) |   | - |   |   | 1 |   |
| Income                (loss) before limited partnership and                 |   |   | 471 |   |   | (1,095 | ) |   | (937 | ) |
| minority                interest and income tax provision                   |   |   |   |   |   |   |   |   |   |   |
| Limited                partnership and minority interest                    |   |   | 56 |   |   | (277 | ) |   | (209 | ) |
| State                income tax provision                                   |   |   | 166 |   |   | - |   |   | - |   |
| Net                income (loss)                                            |   | $ | 249 |   | $ | (818 | ) | $ | (728 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |
| Basic                net income (loss) per share                            |   | $ | 0.01 |   | $ | (0.04 | ) | $ | (0.03 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |
| Diluted                net income (loss) per share                          |   | $ | 0.01 |   | $ | (0.04 | ) | $ | (0.03 | ) |
|                                                                        |   |   |   |   |   |   |   |   |   |   |
| Shares                used in computing basic net income (loss) per share   |   |   | 21,803,817 |   |   | 21,557,150 |   |   | 21,230,900 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |   |
| Shares                used in computing diluted net income (loss) per share |   |   | 22,389,267 |   |   | 21,557,150 |   |   | 21,230,900 |   |

**-8-**

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| **ASCENDANT                SOLUTIONS, INC.**                            |   |
|-------------------------------------------------------------------------|--------|
| **CONSOLIDATED                STATEMENTS OF STOCKHOLDERS' EQUITY**      |   |
| **(000's                omitted, except share amounts)**                |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                    |   | **Series                A** |   |   |   |   |   |   |   |   |   |   |   | **Total** |   |
|                                                                    |   | **Convertible** |   | **Comon                Stock** |   | **Additional** |   |   |   |   |   | **Stockholders'** |   |
|                                                                    |   | **Preferred** |   | **Class                A** |   | **Paid-in** |   | **Deferred** |   | **Accumulated** |   | **Equity** |   |
|                                                                    |   | **Stock** |   | **Shares** |   | **Amount** |   | **Capital** |   | **Compensation** |   | **Deficit** |   | **(Deficit)** |   |
|                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance                at January 1, 2002                               |   |   | - |   |   | 21,230,900 |   | $ | 2 |   | $ | 59,718 |   | $ | - |   | $ | (55,709 | ) | $ | 4,011 |   |
| Issuance                of restricted stock to officers                 |   |   | - |   |   | - |   |   | - |   |   | 104 |   |   | (104 | ) |   | - |   |   | - |   |
| Amortization                of deferred compensation                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 23 |   |   | - |   |   | 23 |   |
| Net                loss                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (728 | ) |   | (728 | ) |
| Balance                at December 31, 2002                             |   |   | - |   |   | 21,230,900 |   |   | 2 |   |   | 59,822 |   |   | (81 | ) |   | (56,437 | ) |   | 3,306 |   |
| Issuance                of restricted stock to officers                 |   |   | - |   |   | 435,000 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Amortization                of deferred compensation                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 35 |   |   | - |   |   | 35 |   |
| Net                loss                                                 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | (818 | ) |   | (818 | ) |
| Balance                at December 31, 2003                             |   | $ | - |   |   | 21,665,900 |   |   | 2 |   |   | 59,822 |   |   | (46 | ) |   | (57,255 | ) |   | 2,523 |   |
| Exercise                of stock options                                |   |   |   |   |   | 200,000 |   |   | - |   |   | 49 |   |   | - |   |   | - |   |   | 49 |   |
| Non-cash                stock option compensation                       |   |   | - |   |   | - |   |   | - |   |   | 18 |   |   | - |   |   | - |   |   | 18 |   |
| Issuance                of restricted stock to officers & directors |   |   | - |   |   | 67,500 |   |   | - |   |   | 72 |   |   | (72 | ) |   | - |   |   | - |   |
| Amortization                of deferred compensation                    |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 40 |   |   | - |   |   | 40 |   |
| Net                income                                               |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 249 |   |   | 249 |   |
| Balance                at December 31, 2004                             |   | $ | - |   |   | 21,933,400 |   | $ | 2 |   | $ | 59,961 |   | $ | (78 | ) | $ | (57,006 | ) | $ | 2,879 |   |

**-9-**

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| **ASCENDANT                SOLUTIONS, INC.**                                                                                                    |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| **CONSOLIDATED                STATEMENTS OF CASH FLOWS**                                                                                        |   |
| **(000's                omitted)**                                                                                                              |   |
|                                                                                                                                            |   |   |   |   |   |   |   |
|                                                                                                                                            |   | **Years                Ended December 31,** |   |
|                                                                                                                                            |   | **2004** |   | **2003** |   | **2002** |   |
| **Operating                Activities**                                                                                                         |   |   |   |   |   |   |   |
| Net                income (loss)                                                                                                                |   | $                249 |   | $                (818) |   | $                (728) |   |
| Adjustments                to reconcile net income (loss) to net cash provided by (used in)                operating                activities: |   |   |   |   |   |   |   |
| Provision                for doubtful accounts                                                                                                  |   |   | 260 |   |   | - |   |   | - |   |
| Depreciation                and amortization                                                                                                    |   |   | 494 |   |   | 63 |   |   | 18 |   |
| Deferred                compensation amortization                                                                                               |   |   | 40 |   |   | 35 |   |   | 23 |   |
| Non-cash                stock option compensation                                                                                               |   |   | 18 |   |   | - |   |   | - |   |
| (Gain)                Loss on sale of property and equipment                                                                                    |   |   | 32 |   |   | - |   |   | (1 | ) |
| Impairment                charges                                                                                                               |   |   | - |   |   | 112 |   |   | - |   |
| Limited                partnership and minority interest                                                                                        |   |   | 56 |   |   | (277 | ) |   | (209 | ) |
| Changes                in operating assets and liabilities, net of effects from                acquisitions:                                    |   |   |   |   |   |   |
| Accounts                receivable                                                                                                              |   |   | 922 |   |   | (3 | ) |   | (69 | ) |
| Inventories                                                                                                                                     |   |   | (165 | ) |   | - |   |   | - |   |
| Prepaid                expenses and other assets                                                                                                |   |   | (103 | ) |   | 13 |   |   | (17 | ) |
| Accounts                payable                                                                                                                 |   |   | 16 |   |   | (21 | ) |   | (152 | ) |
| Accrued                liabilities                                                                                                              |   |   | 140 |   |   | 10 |   |   | (80 | ) |
| Net                cash provided by (used in) operating activities                                                                              |   |   | 1,959 |   |   | (886 | ) |   | (1,215 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Investing                Activities**                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Return                of capital distributions                                                                                                  |   |   | 29 |   |   | 46 |   |   | 69 |   |
| Proceeds                from sale of property and equipment                                                                                     |   |   | 42 |   |   | - |   |   | 8 |   |
| Deferred                acquisition costs                                                                                                       |   |   | 310 |   |   | (310 | ) |   | - |   |
| Net                cash acquired in acquisitions                                                                                                |   |   | 1,537 |   |   | - |   |   | - |   |
| Purchases                of property and equipment                                                                                              |   |   | (172 | ) |   | (32 | ) |   | (172 | ) |
| Distributions                to limited partners                                                                                                |   |   | (31 | ) |   | - |   |   | - |   |
| Investment                in limited partnerships                                                                                               |   |   | (155 | ) |   | (146 | ) |   | (400 | ) |
| Return                of investment in limited partnerships                                                                                     |   |   | - |   |   | 145 |   |   | - |   |
| Payment                of acquistion liabilities                                                                                                |   |   | (1,350 | ) |   | - |   |   | - |   |
| Purchase                cost of acquisitions, net of cash acquired                                                                              |   |   | (857 | ) |   | - |   |   | - |   |
| Net                cash used in investing activities                                                                                            |   |   | (647 | ) |   | (297 | ) |   | (495 | ) |
|                                                                                                                                            |   |   |   |   |   |   |   |   |   |   |
| **Financing                Activities**                                                                                                         |   |   |   |   |   |   |   |   |   |   |
| Proceeds                from exercise of common stock purchase options                                                                          |   |   | 49 |   |   | - |   |   | - |   |
| Proceeds                from sale of limited partnership interests                                                                              |   |   | 230 |   |   | 239 |   |   | 456 |   |
| Payments                on notes payable                                                                                                        |   |   | (1,729 | ) |   | - |   |   | - |   |
| Net                cash (used in) provided by financing activities                                                                              |   |   | (1,450 | ) |   | 239 |   |   | 456 |   |
| Net                decrease in cash and cash equivalents                                                                                        |   |   | (138 | ) |   | (944 | ) |   | (1,254 | ) |
| Cash                and cash equivalents at beginning of year                                                                                   |   |   | 2,006 |   |   | 2,950 |   |   | 4,204 |   |
| Cash                and cash equivalents at end of year                                                                                         |   | $ | 1,868 |   | $ | 2,006 |   | $ | 2,950 |   |
| **Supplemental                Cash Flow Information**                                                                                           |   |   |   |   |   |   |   |   |   |   |
| Cash                paid for state income taxes                                                                                                 |   | $ | - |   | $ | - |   | $ | - |   |
| Cash                paid for interest on notes payable                                                                                          |   | $ | 497 |   | $ | - |   | $ | - |   |

** **

**-10-**

----

| **1.** | **Organization                and Significant Accounting                Policies** |
|--------|------------------------------------------------------------------------------------|

**Description      of Business**

| **Business                Segment**          | **Subsidiaries**                                                                                                                                   | **Principal                Business Activity**                                                                                                                                                   |
|----------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Healthcare                                   | Dougherty’s                Holdings, Inc. and Subsidiaries                                                                                   | Healthcare                products and services provided through retail pharmacies and infusion                therapy centers, including specialty compounding pharmacy                services |
|                                         |                                                                                                                                               |                                                                                                                                                                                             |
| Real                estate advisory services | CRESA                Partners of Orange County, L.P., ASDS of Orange County, Inc.,CRESA                Capital Markets Group, L.P.                 | Tenant                representation, lease management services, capital markets advisory                services and strategic real estate advisory services                                    |
|                                         |                                                                                                                                               |                                                                                                                                                                                             |
| Corporate                & other         | Ascendant                Solutions, Inc.,ASE                Investments Corporation, Fairways                Frisco, L.P.,VTE,                L.P. | Corporate                administration, investments not included in other                segments                                                                                               |

**-11-**

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| **Date**                     | **Entity**                                                                                      | **Business                Segment**          | **Transaction                Description**                                                                             | **%****Ownership** |
|------------------------------|-------------------------------------------------------------------------------------------------|----------------------------------------------|------------------------------------------------------------------------------------------------------------------------|--------------------|
| April                2002    | Ampco                Partners, Ltd                                                              | Corporate                & other         | Investment                in a non-sparking, non-magnetic safety tool manufacturing                company             | 10%                |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| August                2002   | VTE,                L.P.                                                                        | Corporate                & other         | Investment                to acquire early stage online electronic ticket exchange                company              | 23%                |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| October                2002  | CRESA                Capital Markets Group, L.P.,ASE                Investments Corporation     | Real                estate advisory services | Investment                to form real estate capital markets and strategic advisory services                companies | 80%                |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| November                2003 | Fairways                03 New Jersey, L.P.                                                     | Corporate                & other         | Investment                in a single tenant office building                                                           | 20%                |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| March                2004    | Dougherty’s                Holdings, Inc. and Subsidiaries                                | Healthcare                                   | Acquisition                of specialty pharmacies and therapy infusion centers                                        | 100%               |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| April                2004    | Fairways                36864, L.P.                                                             | Corporate                & other         | Investment                in commercial real estate properties                                                         | 20%                |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| May                2004      | CRESA                Partners of Orange County, L.P.,ASDS                of Orange County, Inc. | Real                estate advisory services | Acquisition                of tenant representation and other real estate advisory services                company     | 99%                |
|                         |                                                                                            |                                         |                                                                                                                   |               |
| December                2004 | Fairways                Frisco, L.P.                                                            | Corporate                & other         | Investment                in a mixed-use real estate development                                                       | 50%                |

**Significant      Accounting Policies **

***Basis      of Presentation***
* *

**-12-**

----

***Use      of Estimates***
* *

***Cash      and Cash Equivalents***
* *

***Concentration      of Credit Risk***

***Property      and Equipment***
* *

***Inventories***

***Long-Lived      Assets***
* *

***Investments      in Limited Partnerships***
* *

***Revenue      Recognition***
* *

**-13-**

----

***Income      Taxes***
* *

***Net      Income (Loss) Per Share***
* *

***Impairment      of goodwill and other intangible assets***

***Recent      Accounting Pronouncements***

*Consolidation      of Variable Interest Entities*
*Consolidated      Financial Statements*

**-14-**

----

***Stock      Based Compensation***
* *

|                                                                                                                                                                                   |   | **2004**     |    | **2003**     |   | **2002**     |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|---------|--------------|--------|--------------|--------|
| Net                  income (loss) attributable to common stockholders as                  reported                                                                                    |   | $249,000     |    | $(818,000)   |   | $(728,000)   |   |
|                                                                                                                                                                                   |   |    |    |    |   |    |   |
| Total                  stock-based employee compensation included in reported net income                  (loss),                  net of related tax effects                          |   |         | 58,900  |         |   | 34,800       |   |   | 23,200 |   |
| Total                  stock-based employee compensation expense determined under fair                  value                  based method for all awards, net of related tax effects |   |         | (88,000 | )            |   | (34,604      | )      |   | (25,952 | ) |
|                                                                                                                                                                                   |   |         |    |         |   |         |   |   |   |   |
| Pro                  forma net income (loss)                                                                                                                                           |   | $            | 219,900 |         | $      | (817,804     | )      | $ | (730,752 | ) |
|                                                                                                                                                                                   |   |         |    |         |   |         |   |   |   |   |
| Net                  income (loss) per share:                                                                                                                                          |   |         |    |         |   |         |   |   |   |   |
| Basic                  - as reported                                                                                                                                                   |   | $            | 0.01    |         | $      | (0.04        | )      | $ | (0.03 | ) |
| Basic                  - pro forma                                                                                                                                                     |   | $            | 0.01    |         | $      | (0.04        | )      | $ | (0.03 | ) |
| Diluted                  – as reported                                                                                                                                           |   | $            | 0.01    |         | $      | (0.04        | )      | $ | (0.03 | ) |
| Diluted                  – pro forma                                                                                                                                             |   | $            | 0.01    |         | $      | (0.04        | )      | $ | (0.03 | ) |

***Fair      Value of Financial Instruments  ***

***Reclassifications***

**-15-**

----

| **2.** | **Acquisitions                and Significant Equity                Investments** |
|--------|-----------------------------------------------------------------------------------|

**Ampco      Partners, Ltd.**

|                               |   |  **2004** |    |  **2003** |   |  **2002** |   |
|------------------------------------|--------|----------------|---------|----------------|--------|----------------|--------|
| Investment                Income   |   | $              | 82,000  |           | $      | 66,000         |   | $ | 19,000 |   |
| Return                of capital   |   |           | 29,000  |           |   | 46,000         |   |   | 69,000 |   |
| Total                distributions |   | $              | 111,000 |           | $      | 112,000        |   | $ | 88,000 |   |

**VTE,      L.P.**

**CRESA      Capital Markets Group, L.P.**

**-16-**

----

**Fairways      Equities LLC**

**Dougherty’s      Holdings, Inc.**

**-17-**

----

**CRESA      Partners of Orange County, L.P.**

**-18-**

----

**Fairways      Frisco Partnerships **

| **Frisco                Square Partnerships**  | **Effective                Indirect****Interest Owned**  | **Property                Description**                                        |
|-----------------------------------------------------|---------------------------------------------------------------|-------------------------------------------------------------------------------------|
| Frisco                Square B1-6 F1-11, Ltd.  | 50%                Partner *(1)*                         | Approximately                171,000 Sq Ft residential/retail space            |
| Frisco                Square B1-7 F1-10, Ltd.  | 50%                Partner *(1)*                         | Approximately                65,000 Sq Ft commercial/residential/retail space  |
| Frisco                Square Properties, Ltd.  | 50%                Partner *(1)*                         | Approximately                2.3 acres of land                                 |
| Frisco                Square, Ltd.             | Option                to become 50% Partner *(2)*        | Approximately                52 acres of land                                  |

| *(1)* | *Represents                a 49.5% limited partner interest in such partnership held by Fairways                Frisco L.P., an entity of which Ascendant is a limited partner, and                a 0.5%                indirect general partner interest held by Fairways Frisco as the                owner of                100% of the membership interests of one of such partnership's general                partners.* |
|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *(2)* | *Represents                the right to acquire a 50% partnership interest, sharing ratio and                interest in Frisco Square,                Ltd.* |
|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

** **

**-19-**

----

**-20-**

----

|                                                                                                                           |   | **Actual                  at March 21, 2005** |      | **Subscription                  Amounts** |   |
|--------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------|-----------|-------------------------------------------|--------|
|                                                                                                                           |   | **Actual**                                    |      | **Limited**                               |   | **Total** |   | **Limited** |   |
|                                                                                                                           |   | **Cash**                                      |      | **Partnership**                           |   | **Investment** |   | **Partnership** |   |
|                                                                                                                           |   | **Investment**                                |      | **%                  Owned**              |   | **Subscription** |   | **%                  Owned** |   |
|                                                                                                                           |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| Ascendant                  Solutions, Inc.                                                                                     |   | $                                             | 750,000   |                                      |   | 16.4% |   | $ | 1,000,000 |   |   | 16.3% |   |
| Fairways                  Equities, LLC 1                                                                                      |   |                                          | 1,136,000 |                                      |   | 24.8% |   |   | 1,325,000 |   |   | 21.5% |   |
| CLB                  Partners 2                                                                                                |   |                                          | 250,000   |                                      |   | 5.5% |   |   | 500,000 |   |   | 8.1% |   |
| Other                  non-affiliated accredited                                                                               |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| investors                                                                                                                      |   |                                          | 2,448,000 |                                      |   | 53.4% |   |   | 3,325,000 |   |   | 54.1% |   |
|                                                                                                                           |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| Total                  capital contributions                                                                                   |   | $                                             | 4,584,000 |                                      |   | 100.0% |   | $ | 6,150,000 |   |   | 100.0% |   |
|                                                                                                                           |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| *1**- Fairways Equities, LLC is the general partner of Fairways Frisco                  and the                  members of*   |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| *Fairways                  Equities, LLC, individually or through their affiliates, are limited                  partners*     |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| *2**- CLB Partners is a shareholder of the Company and one of its partners                  and                  co-founders,* |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |
| *Mr.                  Will Cureton is a member of the Company's Board of                  Directors.*                          |   |                                          |      |                                      |   |   |   |   |   |   |   |   |   |

| **3.** | **Unaudited                Pro forma Information** |
|--------|----------------------------------------------------|

**-21-**

----

|                                                  |   |                              |       |                                  |   | **(Unaudited)**                        |   |
|-------------------------------------------------------|--------|-----------------------------------|------------|---------------------------------------|--------|----------------------------------------|--------|
|                                                  |   | **(Audited)**                     |       | **(Unaudited)**                       |   | **Pro                  Forma Results** |   |
|                                                  |   | **Year                  Ended**   |       | **Pro                  Forma Effect** |   | **Year                  Ended**        |   |
|                                                  |   | **December                  31,** |       | **of                  Acquisitions**  |   | **December                  31**       |   |
|                                                  |   |                              |       |                                  |   |                                   |   |
|                                                  |   | **2004**                          |       |
| Revenue                                               |   | $                                 | 39,291,000 |                                  | $      | 12,413,000                             |   | $ | 51,704,000 |   |
| Net                  income (loss)                    |   | $                                 | 249,000    |                                  | $      | 392,000                                |   | $ | 641,000 |   |
| Net                  income (loss) per share, basic   |   | $                                 | 0.01       |                                  |   |                                   |   | $ | 0.03 |   |
| Net                  income (loss) per share, diluted |   | $                                 | 0.01       |                                  |   |                                   |   | $ | 0.03 |   |
|                                                  |   |                              |       |                                  |   |                                   |   |   |   |   |
|                                                  |   |  **2003**                    |
| Revenue                                               |   | $                                 | 505,000    |                                  | $      | 51,870,000                             |   | $ | 52,375,000 |   |
| Net                  income (loss)                    |   | $                                 | (818,000   | )                                     | $      | 2,494,000                              |   | $ | 1,676,000 |   |
| Net                  income (loss) per share, basic   |   | $                                 | (0.04      | )                                     |   |                                   |   | $ | 0.08 |   |
| Net                  income (loss) per share, diluted |   | $                                 | (0.04      | )                                     |   |                                   |   | $ | 0.08 |   |

| **4.** | **Trade                Accounts Receivable** |
|--------|----------------------------------------------|

|                                           |   |           |      | **Real                  Estate** |   |      |   |
|------------------------------------------------|--------|----------------|-----------|----------------------------------|--------|-----------|--------|
|                                           |   | **Healthcare** |      | **Advisory**                     |   | **Total** |   |
|                                           |   |           |      |                             |   |      |   |
| Trade                  accounts receivable     |   | $              | 4,319,000 |                             | $      | 2,411,000 |   | $ | 6,730,000 |   |
| Less                  - allowance for doubtful |   |           |      |                             |   |      |   |   |   |   |
| accounts                                       |   |           | (380,000  | )                                |   | -         |   |   | (380,000 | ) |
|                                           |   | $              | 3,939,000 |                             | $      | 2,411,000 |   | $ | 6,350,000 |   |

**-22-**

----

| **5.** | **Inventories** |
|--------|-----------------|

|                                       |   | **December                  31** |      | **December                  31** |   |
|--------------------------------------------|--------|----------------------------------|-----------|----------------------------------|--------|
|                                       |   |                             | **2004**  |                             |   | **2003** |   |
| Inventory-retail                  pharmacy |   | $                                | 1,498,000 |                             | $      | - |   |
| Inventory-infusion/homecare                |   |                             | 480,000   |                             |   | - |   |
| Inventory-general                  retail  |   |                             | 578,000   |                             |   | - |   |
| Less:                  Inventory reserves  |   |                             | (58,000   | )                                |   | - |   |
|                                       |   | $                                | 2,498,000 |                             | $      | - |   |

| **6.** | **Prepaid                Expenses** |
|--------|-------------------------------------|

|                                                  | **December                  31,** |    | **December                  31,** |   |
|-------------------------------------------------------|-----------------------------------|---------|-----------------------------------|--------|
|                                                  | **2004**                          |    | **2003**                          |   |
|                                                  |                              |    |                              |   |
| Prepaid                  insurance                    | $                                 | 279,000 |                              | $      | 125,000 |   |
| Deferred                  tenant representation costs |                              | 200,000 |                              |   | - |   |
| Other                  prepaid expenses               |                              | 24,000  |                              |   | - |   |
|                                                  | $                                 | 503,000 |                              | $      | 125,000 |   |

| **7.** | **Property                and Equipment, Net** |
|--------|------------------------------------------------|

|                                                 |   | **Estimated**                       |                             | **December                    31,** |   | **December                    31,** |   |
|------------------------------------------------------|--------|-------------------------------------|----------------------------------|-------------------------------------|--------|-------------------------------------|--------|
|                                                 |   | **Useful                    Lives** |                             | **2004**                            |   | **2003**                            |   |
|                                                 |   |                                |                             |                                |   |                                |   |
| Computer                    equipment and software   |   |                                | 3                    to 5 years  |                                | $      | 317,000                             |   | $ | 22,000 |   |
| Furniture,                    fixtures and equipment |   |                                | 5                    to 7 years  |                                |   | 336,000                             |   |   | 9,000 |   |
| Leasehold                    improvements            |   |                                | Life                    of Lease |                                |   | 321,000                             |   |   | - |   |
|                                                 |   |                                |                             |                                |   | 974,000                             |   |   | 31,000 |   |
| Less                    - accumulated depreciation   |   |                                |                             |                                |   | (258,000                            | )      |   | (14,000 | ) |
|                                                 |   |                                |                             |                                | $      | 716,000                             |   | $ | 17,000 |   |

**-23-**

----

| **8.** | **Goodwill                and Other Intangible                Assets** |
|--------|------------------------------------------------------------------------|

|                                             |   | **December                  31,** |      | **December                  31,** |   |
|--------------------------------------------------|--------|-----------------------------------|-----------|-----------------------------------|--------|
|                                             |   | **2004**                          |      | **2003**                          |   |
|                                             |   |                              |      |                              |   |
| Goodwill                                         |   | $                                 | 7,299,000 |                              | $      | - |   |
| Other                  intangible assets:        |   |                              |      |                              |   |   |   |
| Patient                  Prescriptions           |   |                              | 544,000   |                              |   | - |   |
| Non-compete                  Agreements          |   |                              | 450,000   |                              |   | - |   |
| Less                  - accumulated amortization |   |                              | (236,000  | )                                 |   | - |   |
|                                             |   | $                                 | 758,000   |                              | $      | - |   |

|                                                                 |   | **Park                  Assets** |       | **CPOC** |   |
|----------------------------------------------------------------------|--------|----------------------------------|------------|----------|--------|
|                                                                 |   |                             |       |     |   |
| Net                  cash acquired                                   |   | $                                | 1,396,000  |     | $      | 141,000 |   |
| Trade                  accounts receivable                           |   |                             | 5,044,000  |     |   | 2,604,000 |   |
| Inventory                                                            |   |                             | 2,281,000  |     |   | - |   |
| Furniture,                  fixtures and equipment                   |   |                             | 547,000    |     |   | 312,000 |   |
| Other                  assets                                        |   |                             | 166,000    |     |   | 297,000 |   |
| Patient                  prescriptions                               |   |                             | 544,000    |     |   | - |   |
| Goodwill                                                             |   |                             | -          |     |   | 7,299,000 |   |
| Non-compete                  agreements                              |   |                             | -          |     |   | 450,000 |   |
| Accounts                  payable and accrued liabilites             |   |                             | (2,983,000 | )        |   | (2,910,000 | ) |
| Line                  of credit payable under secured $800,000       |   |                             |       |     |   |   |   |
| bank                  credit facility                                |   |                             | -          |     |   | (500,000 | ) |
| Note                  payable to related party                       |   |                             | -          |     |   | (500,000 | ) |
| Notes                  payable under equipment financing obligations |   |                             | (23,000    | )        |   | (93,000 | ) |
| Allocated                  purchase price                            |   | $                                | 6,972,000  |     | $      | 7,100,000 |   |
|                                                                 |   |                             |       |     |   |   |   |

| **9.** | **Investment                in Limited Partnerships** |
|--------|-------------------------------------------------------|

|                                          |   |   |   | **Ownership** |   | **December                    31,** |   | **December                    31,** |    |
|-----------------------------------------------|--------|--------|--------|---------------|--------|-------------------------------------|--------|-------------------------------------|---------|
|                                          |   |        |   |  %       |   | **2004**                            |   | **2003**                            |    |
|                                          |   |   |   |          |   |                                |   |                                |    |
| Ampco                    Partners, Ltd.       |   |   |   |          |   | 10%                                 |   | $                                   | 256,000 |   | $ | 284,000 |   |
| Fairways                    Equities LLC      |   |   |   |          |   | 20%                                 |   |                                | 1,000   |   |   | 1,000 |   |
| Frisco                    Square Partnerships |   |   |   |          |   | 50%                                 |   |                                | 154,000 |   |   | - |   |
|                                          |   |   |   |          |   |                                |   | $                                   | 411,000 |   | $ | 285,000 |   |

**-24-**

----

| **10.** | **Accrued                Liabilities** |
|---------|----------------------------------------|

|                                                         |   | **December                  31,** |      | **December                  31,** |   |
|--------------------------------------------------------------|--------|-----------------------------------|-----------|-----------------------------------|--------|
|                                                         |   | **2004**                          |      | **2003**                          |   |
|                                                         |   |                              |      |                              |   |
| Accrued                  real estate commissions & fees  |   | $                                 | 2,060,000 |                              | $      | - |   |
| Accrued                  payroll and related                 |   |                              | 540,000   |                              |   | - |   |
| Accrued                  expenses                            |   |                              | 220,000   |                              |   | 33,000 |   |
| Accrued                  rent                                |   |                              | 116,000   |                              |   | - |   |
| Accrued                  property, franchise and sales taxes |   |                              | 44,000    |                              |   | 15,000 |   |
| Accrued                  state income taxes payable          |   |                              | 181,000   |                              |   | - |   |
|                                                         |   | $                                 | 3,161,000 |                              | $      | 48,000 |   |

**-25-**

----

| **11.** | **Notes                Payable** |
|---------|----------------------------------|

| Bank                of Texas Credit Facility, secured by substantially all healthcare                assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Term                note A in the principal amount of $1,000,000, interest at 6% per                annum                payable monthly, principal due in full in March 2007.                                                                                                                                                                                                                                                                                                                                                                                                    |   | $ | 688,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| Term                note B in the principal amount of $4,000,000, interest at 6% per                annum,                principal and interest payable in monthly installments of $44,408                over 35                months with a balloon payment of principal of $3,084,000 due in March                2007.                                                                                                                                                                                                                                                      |   |   | 3,783,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| Term                note C in the principal amount of $529,539, interest at 6% per annum,                principal and interest payable in monthly installments of $5,579                over 35                months with a balloon payment of principal of $408,000 due in March                2007.                                                                                                                                                                                                                                                                          |   |   | 501,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| AmerisourceBergen                Drug Corporation, unsecured note payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |   |   |   |   |
| Unsecured                note in the principal amount of $750,000, interest at 6% per annum,                principal and interest payable in monthly installments of $6,329                over 59                months with a balloon payment of principal of $576,000 due in March                2009.                                                                                                                                                                                                                                                                       |   |   | 726,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| Note                payable to Kevin Hayes, prior shareholder of CRESA Partners of Orange                County, Inc. (predessor to CRESA Partners of Orange County, LP, f/k/a                The                Staubach Company - West, Inc.)                                                                                                                                                                                                                                                                                                                                   |   |   |   |   |
| Acquisition                note in the principal amount of $6,900,000 due May 1, 2007, interest                at                Northern Trust Bank prime rate plus 0.5% (5.75% at December 31, 2004)                payable monthly, principal payable quarterly from the Company's equity                interest in the operating cash flow, as defined, of CRESA Partners                of                Orange County, LP., secured by a subordinated security interest in                substantially all assets of CRESA Partners of Orange County,                LP. |   |   | 6,900,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| Capital                lease obligations, secured by office equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |   | 18,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 12,616,000 |   |
| Less                current portion                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   |   | (461,000 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $ | 12,155,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   |   |   |
| The                aggregate maturities of notes payable for the 12 months ended December                31                are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $ | 461,000 |   |
| 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 479,000 |   |
| 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 11,176,000 |   |
| 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 40,000 |   |
| 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   |   | 460,000 |   |
| Thereafter                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | $ | 12,616,000 |   |

**-26-**

----

| **12.** | **Income                Taxes**** ** |
|---------|-------------------------------------------|

|                                                                      |   |  2004 |     | 2003   |   | 2002     |   |
|---------------------------------------------------------------------------|--------|------------|----------|--------|--------|----------|--------|
|                                                                      |   |       |     |   |   |     |   |   |   |   |
| Provision                  (benefit) computed at federal statutory rate   |   | $          | 141,000  |   | $      | (278,000 | )      | $ | (247,000 | ) |
| State                  income taxes, net of federal tax effect            |   |       | 178,000  |   |   | (24,000  | )      |   | (32,000 | ) |
| Other                  permanent differences                              |   |       | 104,000  |   |   | -        |   |   | - |   |
| Expiration                  of state net operating loss carryover         |   |       | 267,000  |   |   | 60,000   |   |   | - |   |
| Benefit                  of federal NOL utilization                       |   |       | (300,000 | )      |   | -        |   |   | - |   |
| Benefit                  of state NOL utilization                         |   |       | (26,000  | )      |   | -        |   |   | - |   |
| Other                  changes in deferred tax assets valuation allowance |   |       | (198,000 | )      |   | 191,000  |   |   | 389,000 |   |
| Other                                                                     |   |       | -        |   |   | 51,000   |   |   | (110,000 | ) |
|                                                                      |   |       |     |   |   |     |   |   |   |   |
| Current                  provision                                        |   | $          | 166,000  |   | $      | -        |   | $ | - |   |

|                                                  |   |  2004   |        | 2003   |   | 2002        |   |
|-------------------------------------------------------|--------|--------------|-------------|--------|--------|-------------|--------|
|                                                  |   |    |        |   |   |        |   |
| Deferred                    tax assets (liabilities): |   |         |        |   |   |        |   |   |   |   |
| Net                    operating loss carryforward    |   | $            | 17,812,000  |   | $      | 18,370,000  |   | $ | 18,157,000 |   |
| Allowance                    for doubtful accounts    |   |         | 141,000     |   |   | -           |   |   | - |   |
| Property                    and equipment             |   |         | (85,000     | )      |   | 12,000      |   |   | - |   |
| Prepaid                    insurance                  |   |         | -           |   |   | (6,000      | )      |   | 1,000 |   |
| Deferred                    compensation              |   |         | (29,000     | )      |   | (17,000     | )      |   | - |   |
| Other                                                 |   |         | (2,000      | )      |   | -           |   |   | - |   |
|                                                  |   |         |        |   |   |        |   |   |   |   |
| Total                    deferred tax assets          |   |         | 17,837,000  |   |   | 18,359,000  |   |   | 18,158,000 |   |
| Less                    valuation allowance           |   |         | (17,837,000 | )      |   | (18,359,000 | )      |   | (18,158,000 | ) |
|                                                  |   |         |        |   |   |        |   |   |   |   |
| Net                    deferred tax assets            |   | $            | -           |   | $      | -           |   | $ | - |   |

**-27-**

----

| **13.** | **Stockholders’                Equity** |
|---------|-----------------------------------------------|

*Preferred      Stock*

| Series                A convertible preferred stock, $.0001 par value      |   |   | 1,111,111                shares |   |
|----------------------------------------------------------------------------|--------|--------|---------------------------------|--------|
|                                                                       |   |   |                            |   |
| Series                B redeemable preferred stock, $.0001 par value       |   |   | 1,111,111                shares |   |
|                                                                       |   |   |                            |   |
| Series                C non-voting preferred stock, $.0001 par value       |   |   | 3,200,000                shares |   |
|                                                                       |   |   |                            |   |
| “Blank                check” preferred stock, $.0001 par value |   |   | 2,077,778                shares |   |
|                                                                       |   |   |                            |   |
| Total                                                                      |   |   | 7,500,000                shares |   |

*Common      Stock*

**-28-**

----

| **14.** | **Stock                Option Plan** |
|---------|--------------------------------------|

|                                            |   |                       |      | Weighted                          |   |
|-------------------------------------------------|--------|----------------------------|-----------|-----------------------------------|--------|
|                                            |   | Number                  of |      | Average                  Exercise |   |
|                                            |   | Options                    |      | Price                             |   |
|                                            |   |                       |      |                              |   |
| Outstanding,                  January 1, 2002   |   |                       | 765,000   |                              | $      | 2.52 |   |
| Granted                  in 2002                |   |                       | 1,385,000 |                              |   | 0.24 |   |
| Exercised                  in 2002              |   |                       | -         |                              |   | - |   |
| Canceled                  in 2002               |   |                       | (810,000  | )                                 |   | 2.37 |   |
| Outstanding,                  December 31, 2002 |   |                       | 1,340,000 |                              | $      | 0.26 |   |
| Granted                  in 2003                |   |                       | -         |                              |   | - |   |
| Exercised                  in 2003              |   |                       | -         |                              |   | - |   |
| Canceled                  in 2003               |   |                       | -         |                              |   | - |   |
| Outstanding,                  December 31, 2003 |   |                       | 1,340,000 |                              | $      | 0.26 |   |
| Granted                  in 2004                |   |                       | -         |                              |   | - |   |
| Exercised                  in 2004              |   |                       | (200,000  | )                                 |   | 0.24 |   |
| Canceled                  in 2004               |   |                       | -         |                              |   | - |   |
| Outstanding,                  December 31, 2004 |   |                       | 1,140,000 |                              | $      | 0.26 |   |

|                              |   | **Options                Outstanding** |      | **Options                Exercisable**        |   |
|-----------------------------------|--------|----------------------------------------|-----------|-----------------------------------------------|--------|
|                              |   |                                   |      | **Weighted                Average Remaining** |   |   |   | **Weighted                Average** |   |
| **Exercise                Price** |   | **# Outstanding**                 |      | **Contractual                Life (Yrs.)**    |   | **#                Exercisable** |   | **Exercise                Price** |   |
| $1.00                             |   |                                   | 30,000    |                                          |   | 4.20 |   |   | 30,000 |   | $ | 1.00 |   |
| $0.24                             |   |                                   | 1,110,000 |                                          |   | 7.20 |   |   | 1,088,000 |   | $ | 0.24 |   |
|                              |   |                                   | 1,140,000 |                                          |   |   |   |   | 1,118,000 |   | $ | 0.32 |   |

**-29-**

----

| **15.** | **Employee                Benefit Plan** |
|---------|------------------------------------------|

| **16.** | **Computations                of Basic and Diluted Net Loss Per Common                Share** |
|---------|-----------------------------------------------------------------------------------------------|

|                                                           |   | **Years                  Ended December 31,** |       |     |
|----------------------------------------------------------------|--------|-----------------------------------------------|------------|----------|
|                                                           |   | **2004**                                      |       | **2003** |   |   |                  **2002** |  |   |
|                                                           |   |                                          |       |     |   |   |   |   |   |
| Net                  income (loss)                             |   | $                                             | 249,000    |     | $ | (818,000 | ) |   | $ | (728,000 | ) |
|                                                           |   |                                          |       |     |   |   |   |   |   |   |   |
| Weighted                  average number                       |   |                                          |       |     |   |   |   |   |   |   |   |
| of                  shares outstanding                    |   |                                          |       |     |   |   |   |   |   |   |   |
| used                  in computing basic                  |   |                                          |       |     |   |   |   |   |   |   |   |
| net                  income (loss) per share              |   |                                          | 21,803,817 |     |   | 21,557,150 |   |   |   | 21,230,900 |   |
| Effect                  of dilutive stock options and warrants |   |                                          | 585,450    |     |   | - |   |   |   | - |   |
| Weighted                  average number                       |   |                                          |       |     |   |   |   |   |   |   |   |
| of                  shares outstanding                    |   |                                          |       |     |   |   |   |   |   |   |   |
| used                  in computing diluted                |   |                                          |       |     |   |   |   |   |   |   |   |
| net                  income (loss) per share              |   |                                          | 22,389,267 |     |   | 21,557,150 |   |   |   | 21,230,900 |   |
| Basic                  net income (loss) per share             |   | $                                             | 0.01       |     | $ | (0.04 | ) |   | $ | (0.03 | ) |
| Diluted                  net income (loss) per share           |   | $                                             | 0.01       |     | $ | (0.04 | ) |   | $ | (0.03 | ) |

**17.**
**Commitments      and Contingencies**
** **

**-30-**

----

***Operating      Leases***

| **Years                    ending December 31,** |   |   |      |
|--------------------------------------------------|--------|--------|-----------|
| 2005                                             |   | $      | 1,457,000 |   |
| 2006                                             |   |   | 1,325,000 |   |
| 2007                                             |   |   | 1,129,000 |   |
| 2008                                             |   |   | 979,000   |   |
| 2009                                             |   |   | 620,000   |   |
| Thereafter                                       |   |   | 519,000   |   |
|                                             |   | $      | 6,029,000 |   |

***Legal      Proceedings***

**-31-**

----

| **18.** | **Related                Party Transactions** |
|---------|-----------------------------------------------|

**-32-**

----

| **19.** | **Unaudited                Quarterly Financial Data for 2004 and                2003:** |
|---------|-----------------------------------------------------------------------------------------|

|                                              |   | **March                  31** |   | **June                  30** |   | **Sept.                  30** |   | **Dec.                  31****(1)** |   | **Year                  Ended 2004** |   |
|---------------------------------------------------|--------|-------------------------------|--------|------------------------------|--------|-------------------------------|--------|-------------------------------------|--------|--------------------------------------|--------|
|                                              |   |                          |   |                         |   |                          |   |                                |   |                                 |   |
| **2004**                                          |   |                          |   |                         |   |                          |   |                                |   |                                 |   |
| Revenue                                           |   | $                             | 1,452  |                         | $      | 12,285                        |   | $                                   | 12,084 |                                 | $      | 13,470 |   | $ | 39,291 |   |
| Gross                  profit                     |   |                          | 738    |                         |   | 4,536                         |   |                                | 4,243  |                                 |   | 4,719 |   |   | 14,236 |   |
| Net                  income (loss)                |   |                          | (106   | )                            |   | 214                           |   |                                | 3      |                                 |   | 138 |   |   | 249 |   |
| Net                  income per share, basic      |   |                          | -      |                         |   | 0.01                          |   |                                | -      |                                 |   | 0.01 |   |   | 0.01 |   |
| Net                  income per share, diluted    |   |                          | -      |                         |   | 0.01                          |   |                                | -      |                                 |   | 0.01 |   |   | 0.01 |   |
| Weighted                  average shares, basic   |   |                          | 21,666 |                         |   | 21,733                        |   |                                | 21,883 |                                 |   | 21,933 |   |   | 21,804 |   |
| Weighted                  average shares, diluted |   |                          | 21,666 |                         |   | 21,925                        |   |                                | 22,419 |                                 |   | 22,600 |   |   | 22,389 |   |
|                                              |   |                          |   |                         |   |                          |   |                                |   |                                 |   |   |   |   |   |   |
| **2003****(2)**                                   |   |                          |   |                         |   |                          |   |                                |   |                                 |   |   |   |   |   |   |
| Revenue                                           |   | $                             | 40     |                         | $      | 40                            |   | $                                   | -      |                                 | $      | 425 |   | $ | 505 |   |
| Gross                  profit                     |   |                          | 40     |                         |   | 40                            |   |                                | -      |                                 |   | 425 |   |   | 505 |   |
| Net                  loss                         |   |                          | (217   | )                            |   | (282                          | )      |                                | (260   | )                                    |   | (59 | ) |   | (818 | ) |
| Net                  loss per share, basic        |   |                          | (0.01  | )                            |   | (0.01                         | )      |                                | (0.01  | )                                    |   | - |   |   | (0.04 | ) |
| Net                  loss per share, diluted      |   |                          | (0.01  | )                            |   | (0.01                         | )      |                                | (0.01  | )                                    |   | - |   |   | (0.04 | ) |
| Weighted                  average shares          |   |                          | 21,231 |                         |   | 21,666                        |   |                                | 21,666 |                                 |   | 21,666 |   |   | 21,557 |   |

| **20.** | **Subsequent                Events** |
|---------|--------------------------------------|

| **21.** | **Segment                Information** |
|---------|----------------------------------------|

**-33-**

----

|                                             |   | **Years                  Ended December 31**        |                                                 |
|--------------------------------------------------|--------|-----------------------------------------------------|------------------------------------------------------|
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | **Healthcare**                                      |                                                 | **Real                  Estate Advisory Services** |   | **Corporate                  and Other** |   | **Consolidated** |   |
|                                             |   | **2004**                                            |                                                 | **2003** |   | **2004** |   | **2003** |   | **2004** |   | **2003** |   | **2004** |   | **2003** |   |
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                                           |                                                 |    |   |    |   |    |   |    |   |    |   |    |   |    |   |
| Revenue                                          |   | $                                                   | 29,532                                               |   | $ | - |   | $ | 9,759 |   | $ | 505 |   | $ | - |   | $ | - |   | $ | 39,291 |   | $ | 505 |   |
| Cost                  of sales                   |   |                                                | 19,667                                               |   |   | - |   |   | 5,388 |   |   | - |   |   | - |   |   | - |   |   | 25,055 |   |   | - |   |
| Gross                  profit                    |   |                                                | 9,865                                                |   |   | - |   |   | 4,371 |   |   | 505 |   |   | - |   |   | - |   |   | 14,236 |   |   | 505 |   |
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EBITDA                                           |   |                                                | 270                                                  |   |   | - |   |   | 2,063 |   |   | 2 |   |   | (904 | ) |   | (787 | ) |   | 1,429 |   |   | (785 | ) |
| Less:                                            |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  Expense                |   |                                                | 297                                                  |   |   | - |   |   | 247 |   |   | 3 |   |   | (24 | ) |   | (33 | ) |   | 520 |   |   | (30 | ) |
| Taxes                                            |   |                                                | -                                                    |   |   | - |   |   | 166 |   |   | - |   |   | - |   |   | - |   |   | 166 |   |   | - |   |
| Depreciation                  & Amortization |   |                                                | 272                                                  |   |   | - |   |   | 215 |   |   | 2 |   |   | 7 |   |   | 61 |   |   | 494 |   |   | 63 |   |
| Net                  Income                      |   | $                                                   | (299                                                 | ) | $ | - |   | $ | 1,435 |   | $ | (3 | ) | $ | (887 | ) | $ | (815 | ) | $ | 249 |   | $ | (818 | ) |
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                             |   | **December                  31, **   |                                                 |   |   |
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   |  **Healthcare**                                |  Real                  Estate Advisory Services |  **Corporate                  and Other** |  **Consolidated** |
|                                             |   |                                                | **2004**                                             |   |   | **2003** |   |   | **2004** |   |   | **2003** |   |   | **2004** |   |   | **2003** |   |   | **2004** |   |   | **2003** |   |
|                                             |   |                                                |                                                 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  assets                    |   | $                                                   | 8,811                                                |   | $ | - |   | $ | 10,971 |   | $ | 75 |   | $ | 971 |   | $ | 2,766 |   | $ | 20,753 |   | $ | 2,841 |   |

**-34-**

----

**REPORT      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

|   | */s/                HEIN & ASSOCIATES LLP** * |
|--------|--------------------------------------------------------|

**-35-**

----

**PARK      PHARMACY CORPORATION**

**CONSOLIDATED      BALANCE SHEETS**

| **ASSETS**                                                                                                                                                                                                                                 |   | MARCH                24, 2004 |        | JUNE                30, 2003 |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------|-------------|------------------------------|--------|
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |
| **CURRENT                ASSETS:**                                                                                                                                                                                                         |   |                          |        |                         |   |
| Cash                and cash equivalents                                                                                                                                                                                                   |   | $                             | 1,413,961   |                         | $      | 1,045,691 |   |
| Trade                accounts receivable, net of allowance for doubtful accounts of $2,743,000                and $2,622,000 , respectively                                                                                                |   |                          | 5,044,374   |                         |   | 5,098,838 |   |
| Inventories                                                                                                                                                                                                                                |   |                          | 2,356,223   |                         |   | 2,119,342 |   |
| Prepaid                expenses and other                                                                                                                                                                                                  |   |                          | 149,070     |                         |   | 409,035 |   |
| Total                current assets                                                                                                                                                                                                        |   |                          | 8,963,628   |                         |   | 8,672,906 |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **PROPERTY                AND EQUIPMENT**,                net                                                                                                                                                                              |   |                          | 895,451     |                         |   | 1,031,210 |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **OTHER                ASSETS**                                                                                                                                                                                                            |   |                          | 145,758     |                         |   | 153,171 |   |
| Total                assets                                                                                                                                                                                                                |   | $                             | 10,004,837  |                         | $      | 9,857,287 |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS’ DEFICIT**                                                                                                                                                                             |   |                          |        |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **LIABILITIES                NOT SUBJECT TO COMPROMISE:**                                                                                                                                                                                  |   |                          |        |                         |   |   |   |
| Current                liabilities:                                                                                                                                                                                                        |   |                          |        |                         |   |   |   |
| Accounts                payable                                                                                                                                                                                                            |   | $                             | 5,134,825   |                         | $      | 4,671,795 |   |
| Accrued                liabilities                                                                                                                                                                                                         |   |                          | 846,525     |                         |   | 934,006 |   |
| Income                taxes payable                                                                                                                                                                                                        |   |                          | -           |                         |   | 16,239 |   |
| Current                portion of long-term obligations                                                                                                                                                                                    |   |                          | 23,374      |                         |   | 14,042 |   |
| Total                current liabilities                                                                                                                                                                                                   |   |                          | 6,004,724   |                         |   | 5,636,082 |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **LIABILITIES                SUBJECT TO COMPROMISE**                                                                                                                                                                                       |   |                          | 7,142,100   |                         |   | 7,602,647 |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **LONG-TERM                OBLIGATIONS**,                net of current portion                                                                                                                                                            |   |                          | -           |                         |   | 26,507 |   |
| Total                liabilities                                                                                                                                                                                                           |   |                          | 13,146,824  |                         |   | 13,265,236 |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **COMMITMENTS** **AND                CONTINGENCIES**(Notes                3 and 9)                                                                                                                                                    |   |                          |        |                         |   |   |   |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| **STOCKHOLDERS’                DEFICIT:**                                                                                                                                                                                            |   |                          |        |                         |   |   |   |
| Preferred                stock; $.001 par value; 250,000,000 shares authorized; 2,613,498                shares                issued and outstanding (liquidation preference of $10 per share,                aggregating to $26,134,980) |   |                          | 2,614       |                         |   | 2,614 |   |
| Common                stock; $.0001 par value; 750,000,000 shares authorized; 10,105,381                shares                issued and outstanding                                                                                       |   |                          | 1,011       |                         |   | 1,011 |   |
| Additional                paid-in capital                                                                                                                                                                                                  |   |                          | 7,889,126   |                         |   | 7,889,126 |   |
| Accumulated                deficit                                                                                                                                                                                                         |   |                          | (11,034,738 | )                            |   | (11,288,003 | ) |
| Deferred                compensation                                                                                                                                                                                                       |   |                          |        |                         |   | (12,697 | ) |
| Total                stockholders’ deficit                                                                                                                                                                                           |   |                          | (3,141,987  | )                            |   | (3,407,949 | ) |
|                                                                                                                                                                                                                                       |   |                          |        |                         |   |   |   |
| Total                liabilities and stockholders’ deficit                                                                                                                                                                           |   | $                             | 10,004,837  |                         | $      | 9,857,287 |   |

***See      accompanying notes to these consolidated financial      statements.***

**-36-**

----

**PARK      PHARMACY CORPORATION**

**CONSOLIDATED      STATEMENTS OF OPERATIONS**

|                                                                                                                                  |   | PERIOD                FROMJULY                1, 2003 TO |       | YEAR                ENDEDJUNE                30, |   | YEAR                ENDEDJUNE                30, |   |
|---------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|------------|--------------------------------------------------|--------|--------------------------------------------------|--------|
|                                                                                                                                  |   | MARCH                24, 2004                            |       | 2003                                             |   | 2002                                             |   |
| **REVENUES**                                                                                                                          |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| Product                sales and other, net                                                                                           |   | $                                                        | 29,485,743 |                                             | $      | 39,368,169                                       |   | $ | 43,786,161 |   |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **OPERATING                EXPENSES**                                                                                                 |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| Cost                of goods sold                                                                                                     |   |                                                     | 19,052,182 |                                             |   | 25,363,480                                       |   |   | 28,462,781 |   |
| Salaries,                wages and related taxes                                                                                      |   |                                                     | 5,349,983  |                                             |   | 7,363,813                                        |   |   | 8,941,119 |   |
| Selling,                general and administrative expenses                                                                           |   |                                                     | 3,975,587  |                                             |   | 5,719,993                                        |   |   | 8,886,174 |   |
| Depreciation                and amortization                                                                                          |   |                                                     | 140,786    |                                             |   | 195,036                                          |   |   | 237,891 |   |
| Impairment                of goodwill                                                                                                 |   |                                                     | -          |                                             |   | 1,031,994                                        |   |   | 124,415 |   |
| Total                operating expenses                                                                                               |   |                                                     | 28,518,538 |                                             |   | 39,674,316                                       |   |   | 46,652,380 |   |
| Income                (loss) from operations                                                                                          |   |                                                     | 967,205    |                                             |   | (306,147                                         | )      |   | (2,866,219 | ) |
| **OTHER                INCOME (EXPENSE)**                                                                                             |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| Other                income, net                                                                                                      |   |                                                     | 125,441    |                                             |   | 121,726                                          |   |   | 126,474 |   |
| Interest                expense, net                                                                                                  |   |                                                     | (323,814   | )                                                |   | (708,733                                         | )      |   | (426,354 | ) |
| Financing                expenses                                                                                                     |   |                                                     | -          |                                             |   | (25,000                                          | )      |   | (141,677 | ) |
| Total                other income (expense)                                                                                           |   |                                                     | (198,373   | )                                                |   | (612,007                                         | )      |   | (441,557 | ) |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **INCOME                (LOSS) FROM CONTINUING OPERATIONS BEFORE REORGANIZATION ITEM AND                INCOME                TAXES** |   |                                                     | 768,832    |                                             |   | (918,154                                         | )      |   | (3,307,776 | ) |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **REORGANIZATION                ITEM - PROFESSIONAL FEES**                                                                            |   |                                                     | (515,567   | )                                                |   | (49,000                                          | )      |   | - |   |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **INCOME                (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME                TAXES**                                        |   |                                                     | 253,265    |                                             |   | (967,154                                         | )      |   | (3,307,776 | ) |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **INCOME                TAX BENEFIT**                                                                                                 |   |                                                     | -          |                                             |   | -                                                |   |   | 94,644 |   |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **INCOME                (LOSS) FROM CONTINUING OPERATIONS**                                                                           |   |                                                     | 253,265    |                                             |   | (967,154                                         | )      |   | (3,213,132 | ) |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **DISCONTINUED                OPERATIONS (NET OF TAXES)**                                                                             |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| Loss                from discontinued operations                                                                                      |   |                                                     | -          |                                             |   | (759,160                                         | )      |   | (6,946,470 | ) |
| Loss                on disposals                                                                                                      |   |                                                     | -          |                                             |   | (5,744                                           | )      |   | 214,574 |   |
| Loss                from discontinued operations, net                                                                                 |   |                                                     | -          |                                             |   | (764,904                                         | )      |   | (6,731,896 | ) |
| **NET                INCOME (LOSS)**                                                                                                  |   | $                                                        | 253,265    |                                             | $      | (1,732,058                                       | )      | $ | (9,945,028 | ) |
|                                                                                                                                  |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| **NET                INCOME (LOSS) PER COMMON SHARE**                -                basic and diluted:                              |   |                                                     |       |                                             |   |                                             |   |   |   |   |
| Continuing                operations                                                                                                  |   | $                                                        | 0.01       |                                             | $      | (0.03                                            | )      | $ | (0.09 | ) |
| Discontinued                operations                                                                                                |   | $                                                        | -          |                                             | $      | (0.02                                            | )      | $ | (0.19 | ) |
| Net                income (loss)                                                                                                      |   | $                                                        | 0.01       |                                             | $      | (0.05                                            | )      | $ | (0.28 | ) |
| Weighted                Average Common Shares - Basic:                                                                                |   |                                                     | 36,035,430 |                                             |   | 36,035,430                                       |   |   | 36,035,430 |   |
| Weighted                Average Common Shares - Diluted:                                                                              |   |                                                     | 36,035,430 |                                             |   | 36,035,430                                       |   |   | 36,035,430 |   |

***See      accompanying notes to these consolidated financial      statements.***

**-37-**

----

**PARK      PHARMACY CORPORATION**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ DEFICIT**

|                                                                                                               |   | Preferred                Stock |      | Common                Stock |   | Additional                Paid-in |   | Retained                Earnings (Accumulated |       | Deferred        |   | Total                Stockholders’ Equity |   |
|--------------------------------------------------------------------------------------------------------------------|--------|--------------------------------|-----------|-----------------------------|--------|-----------------------------------|--------|-----------------------------------------------|------------|-----------------|--------|-------------------------------------------------|--------|
|                                                                                                               |   | Shares                         |      | Amount                      |   | Shares                            |   | Amount                                        |       | Capital         |   | Deficit)                                        |   | Compensation |   | (Deficit) |   |
|                                                                                                               |   |                           |      |                        |   |                              |   |                                          |       |            |   |                                            |   |   |   |   |   |
| **BALANCES**,                June 30, 2001                                                                         |   |  3,024,581                |      | $3,025                      |   |  5,719,551                   |   | $572                                          |       | $7,942,054      |   | $389,083                                        |   | $(141,286) |   | $8,193,448 |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Conversions                of preferred stock                                                                      |   |  (411,083)                |      |  (411)                 |   |  4,110,830                   |   |  411                                     |       |  -         |   |  -                                         |   |  - |   |  - |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Issuance                of common stock in connection with business acquired                                       |   |  -                        |      |  -                     |   |  260,000                     |   |  26                                      |       |  (26)      |   |  -                                         |   |  - |   |  - |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Deferred                compensation in connection with restricted stock awards, net of                forfeitures |   |  -                        |      |  -                     |   |  15,000                      |   |  2                                       |       |  7,198     |   |  -                                         |   |  (7,200) |   |  - |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Amortization                of deferred compensation, net of forfeitures                                           |   |  -                        |      |  -                     |   |  -                           |   |  -                                       |       |  (60,100)  |   |  -                                         |   |  131,558 |   |  71,458 |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Net                loss                                                                                            |   |  -                        |      |  -                     |   |  -                           |   |  -                                       |       |  -         |   |  (9,945,028)                               |   |  - |   |  (9,945,028) |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| **BALANCES**,                June 30, 2002                                                                         |   |  2,613,498                |      |  2,614                 |   |  10,105,381                  |   |  1,011                                   |       |  7,889,126 |   |  (9,555,945)                               |   |  (16,928) |   |  (1,680,122) |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Amortization                of deferred compensation, net of forfeitures                                           |   |  -                        |      |  -                     |   |  -                           |   |  -                                       |       |  -         |   |  -                                         |   |  4,231 |   |  4,231 |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Net                loss                                                                                            |   |  -                        |      |  -                     |   |  -                           |   |  -                                       |       |  -         |   |  (1,732,058)                               |   |  - |   |  (1,732,058) |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| **BALANCES**,                June 30, 2003                                                                         |   |  2,613,498                |      |  2,614                 |   |  10,105,381                  |   |  1,011                                   |       |  7,889,126 |   |  (11,288,003)                              |   |  (12,697) |   |  (3,407,949) |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Amortization                of deferred compensation, net of forfeitures                                           |   |  -                        |      |  -                     |   |  -                           |   |  -                                       |       |  -         |   |  -                                         |   |  12,697 |   |  12,697 |   |
|                                                                                                               |   |                      |      |                   |   |                         |   |                                     |       |       |   |                                       |   |    |   |    |   |
| Net                income                                                                                          |   |                           | -         |                        |   | -                                 |   |                                          | -          |            |   | -                                               |   |   | - |   |   | 253,265 |   |   | - |   |   | 253,265 |   |
|                                                                                                               |   |                           |      |                        |   |                              |   |                                          |       |            |   |                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **BALANCES**,                March 24, 2004                                                                        |   |                           | 2,613,498 |                        | $      | 2,614                             |   |                                          | 10,105,381 |            | $      | 1,011                                           |   | $ | 7,889,126 |   | $ | (11,034,738 | ) | $ | - |   | $ | (3,141,987 | ) |

***See      accompanying notes to these consolidated financial      statements.***

**-38-**

----

**PARK      PHARMACY CORPORATION**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                       |   | PERIOD                  FROM     |      |                                                    |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------|-----------|--------------------------------------------------------------|--------|
|                                                                                                                       |   | JULY                  1, 2003 TO |      |  YEARS                  ENDED JUNE                  30, |   |
|                                                                                                                       |   | MARCH                  24, 2004  |      |  2003                                                   |   | 2002 |   |
|                                                                                                                       |   |                             |      |                                                    |   |   |   |
| **CASH                  FLOWS FROM OPERATING ACTIVITIES:**                                                                 |   |                             |      |                                                    |   |   |   |
| Net                  income (loss)                                                                                         |   | $                                | 253,265   |                                                         | $      | (1,732,058 | ) | $ | (9,945,028 | ) |
| Adjustments                  to reconcile net income (loss) to net cash provided by operating                  activities: |   |                             |      |                                                         |   |   |   |   |   |   |
| Depreciation                  and amortization                                                                             |   |                             | 140,785   |                                                         |   | 216,222 |   |   | 473,555 |   |
| Amortization                  and write off of debt issuance costs                                                         |   |                             | -         |                                                         |   | - |   |   | 141,677 |   |
| Amortization                  of deferred compensation                                                                     |   |                             | 12,697    |                                                         |   | 4,231 |   |   | 71,458 |   |
| Impairment                  of property and equipment                                                                      |   |                             | 5,883     |                                                         |   | - |   |   | 84,160 |   |
| Write-down                  of capitalized software costs                                                                  |   |                             | -         |                                                         |   | - |   |   | 2,595,740 |   |
| Impairment                  and write-off of goodwill                                                                      |   |                             | -         |                                                         |   | 2,035,784 |   |   | 2,600,488 |   |
| Gain                  on sale of business                                                                                  |   |                             | (126,000  | )                                                            |   | - |   |   | - |   |
| (Gain)                  loss on disposal of discontinued operations                                                        |   |                             | -         |                                                         |   | 5,744 |   |   | (214,574 | ) |
| Deferred                  income taxes                                                                                     |   |                             | -         |                                                         |   | - |   |   | 331,756 |   |
| Other                                                                                                                      |   |                             | -         |                                                         |   | 4,473 |   |   | - |   |
| Changes                  in operating assets and liabilities, net of effect of businesses                  acquired:       |   |                             |      |                                                         |   |   |   |   |   |   |
| Trade                  accounts receivable                                                                                 |   |                             | 54,464    |                                                         |   | 976,300 |   |   | 2,741,529 |   |
| Refundable                  income taxes                                                                                   |   |                             | -         |                                                         |   | 296,547 |   |   | (296,547 | ) |
| Inventories                                                                                                                |   |                             | (236,881  | )                                                            |   | 231,433 |   |   | 1,385,793 |   |
| Prepaid                  expenses and other                                                                                |   |                             | 259,965   |                                                         |   | (30,287 | ) |   | (187,995 | ) |
| Other                  assets                                                                                              |   |                             | 7,413     |                                                         |   | (116,384 | ) |   | (10,874 | ) |
| Trade                  accounts payable                                                                                    |   |                             | 463,030   |                                                         |   | (1,189,576 | ) |   | 1,699,230 |   |
| Accrued                  liabilities                                                                                       |   |                             | (120,901  | )                                                            |   | (486,178 | ) |   | 227,483 |   |
| Income                  taxes payable                                                                                      |   |                             | -         |                                                         |   | (98,800 | ) |   | (400,408 | ) |
| Net                  cash provided by operating activities                                                                 |   |                             | 713,720   |                                                         |   | 117,451 |   |   | 1,297,443 |   |
| **CASH                  FLOWS FROM INVESTING ACTIVITIES:**                                                                 |   |                             |      |                                                         |   |   |   |   |   |   |
| Purchases                  of property and equipment                                                                       |   |                             | (23,910   | )                                                            |   | (58,883 | ) |   | (324,635 | ) |
| Proceeds                  from sale of property and equipment                                                              |   |                             | 13,000    |                                                         |   | 210,000 |   |   | - |   |
| Increase                  in software costs                                                                                |   |                             | -         |                                                         |   | - |   |   | (136,216 | ) |
| Proceeds                  from sale of businesses                                                                          |   |                             | -         |                                                         |   | 334,864 |   |   | 845,000 |   |
| Net                  cash provided by (used in) investing activities                                                       |   |                             | (10,910   | )                                                            |   | 485,981 |   |   | 384,149 |   |
| **CASH                  FLOWS FROM FINANCING ACTIVITIES:**                                                                 |   |                             |      |                                                         |   |   |   |   |   |   |
| Proceeds                  from notes payable and long-term debt                                                            |   |                             | -         |                                                         |   | 1,637,131 |   |   | 19,039,874 |   |
| Repayments                  of notes payable and long-term debt                                                            |   |                             | (334,540  | )                                                            |   | (1,361,448 | ) |   | (21,854,451 | ) |
| Repayments                  of other long-term obligations                                                                 |   |                             | -         |                                                         |   | (18,202 | ) |   | (24,453 | ) |
| Repayment                  of capital lease obligation                                                                     |   |                             | -         |                                                         |   | (269,707 | ) |   | - |   |
| Net                  cash provided by (used in) financing activities                                                       |   |                             | (334,540  | )                                                            |   | (12,226 | ) |   | (2,839,030 | ) |
| **CHANGE                  IN CASH AND CASH EQUIVALENTS**                                                                   |   |                             | 368,270   |                                                         |   | 591,206 |   |   | (1,157,438 | ) |
| **CASH                  AND CASH EQUIVALENTS**,                  beginning of period                                       |   |                             | 1,045,691 |                                                         |   | 454,485 |   |   | 1,611,923 |   |
| **CASH                  AND CASH EQUIVALENTS**,                  end of period                                             |   | $                                | 1,413,961 |                                                         | $      | 1,045,691 |   | $ | 454,485 |   |

**-39-**

----

|  **SUPPLEMENTAL                  CASH FLOW INFORMATION:**                                              |   |   |    |   |   |     |   |   |    |   |
|-------------------------------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|----------|--------|--------|---------|--------|
| Cash                  paid (received) for:                                                                  |   |   |    |   |   |     |   |   |    |   |
| Interest                                                                                                    |   | $      | 323,814 |   | $      | 409,626  |   | $      | 410,200 |   |
| Income                  taxes                                                                               |   | $      | -       |   | $      | (296,547 | )      | $      | 289,200 |   |
| Reorganization                  item - professional fees                                                    |   | $      | 541,427 |   | $      | 110,500  |   | $      | -       |   |
| **NON-CASH                  INVESTING AND FINANCING TRANSACTIONS:**                                         |   |   |    |   |   |     |   |   |    |   |
| Capital                  lease obligations incurred in connection with equipment                  purchases |   | $      | -       |   | $      | -        |   | $      | 330,868 |   |
| Write-off                  of fully depreciated property and equipment                                      |   | $      | -       |   | $      | -        |   | $      | 226,026 |   |
| Deferred                  compensation in connection with restricted stock awards                           |   | $      | -       |   | $      | -        |   | $      | 7,200   |   |
| Deferred                  compensation in connection with stock options                                     |   | $      | -       |   | $      | -        |   | $      | (60,100 | )      |

***See      accompanying notes to these consolidated financial      statements.***

**-40-**

----

| **1.** | **NATURE                OF OPERATIONS AND BASIS OF                PRESENTATION** |
|--------|----------------------------------------------------------------------------------|

| **2.** | **SUMMARY                OF SIGNIFICANT ACCOUNTING                POLICIES** |
|--------|------------------------------------------------------------------------------|

**(a)      - Principles of Consolidation and Basis of Presentation **

**(b)      - Accounting for Reorganization**

**-41-**

----

**(c)      - Use of Estimates**

**(d)      - Financial Instruments**

**(e)      - Cash and Cash Equivalents**

**(f)      - Revenue Recognition**

**(g)      - Accounts Receivable**

**-42-**

----

**(h)      - Inventories**

**(i)      - Property and Equipment**

**(j)      - Software Costs**

*Accounting      for the Costs of Computer Software Developed or Obtained for Internal      Use*

**(k)      - Goodwill**

*Goodwill      and Other Intangible Assets*

**-43-**

----

|                                           |   | Period                From July                1, 2003 to |    |                                |   |
|------------------------------------------------|--------|-----------------------------------------------------------|---------|-------------------------------------|--------|
|                                           |   | March                24,                                  |    | Years                Ended June 30, |   |
|                                           |   | 2004                                                      |    | 2003                                |   | 2002 |   |
|                                           |   |                                                      |    |                                |   |   |   |
| Net                income (loss):              |   |                                                      |    |                                |   |   |   |   |   |   |
| As                reported - net income (loss) |   | $                                                         | 253,265 |                                | $      | (1,732,058 | ) | $ | (9,945,028 | ) |
| Add                back: Goodwill amortization |   |                                                      | -       |                                |   | - |   |   | 232,560 |   |
| As                adjusted - net income (loss) |   | $                                                         | 253,265 |                                |   | (1,732,058 | ) |   | (9,712,468 | ) |
| Earnings                per share:             |   |                                                      |    |                                |   |   |   |   |   |   |
| As                reported - basic and diluted |   | $                                                         | 0.01    |                                | $      | (0.05 | ) | $ | (0.28 | ) |
| Add                back: Goodwill amortization |   |                                                      | -       |                                |   | - |   |   | 0.01 |   |
| As                adjusted - basic and diluted |   | $                                                         | 0.01    |                                | $      | (0.05 | ) | $ | (0.27 | ) |

**(l)      - Advertising Costs**

**(m)      - Income Taxes **

**(n)      - Per Share Data**

**(o)      - Stock-Based Compensation**

*Accounting      for Stock-Based Compensation*
*Accounting      for Stock Issued to Employees*

**-44-**

----

| **3.** | **LIQUIDITY** |
|--------|---------------|

| **4.** | **BUSINESS                COMBINATIONS** |
|--------|------------------------------------------|

| **5.** | **DISPOSITIONS                AND DISCONTINUED                OPERATIONS** |
|--------|----------------------------------------------------------------------------|

**Year      Ended June 30, 2002**

*Compass*

** **

*Pharmacy      Components*

**-45-**

----

*Rx-Pro      Software*

**Year      Ended June 30, 2003**

*Rx-Pro      Prescription Management*

*MJN      Enterprises, Inc.*

*Total      Pharmacy Supply, Inc.*

**-46-**

----

|                                                                                                                                          |   | Years                Ended June 30, |      |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-----------|
|                                                                                                                                          |   | 2003                                |      | 2002 |   |
| Revenues:                                                                                                                                     |   |                                |      |   |   |
| Pharmacy                components                                                                                                            |   | $                                   | -         |   | $ | 3,346,003 |   |
| Rx-Pro                                                                                                                                        |   |                                | 102,528   |   |   | 122,789 |   |
| Total                Health Care                                                                                                              |   |                                | 1,402,259 |   |   | 6,678,938 |   |
| Total                Pharmacy Supply                                                                                                          |   |                                | 2,613,788 |   |   | 3,235,221 |   |
| Total                revenues                                                                                                                 |   | $                                   | 4,118,575 |   | $ | 13,382,951 |   |
| Income                (loss) from discontinued operations:                                                                                    |   |                                |      |   |   |   |   |
| Pharmacy                components, net of income tax expense of $26,000 in 2002 and benefit                of                $26,000 in 2001 |   | $                                   | -         |   | $ | (614,068 | ) |
| Rx-Pro,                no tax effect                                                                                                          |   |                                | 185,718   |   |   | (3,158,511 | ) |
| Total                Health Care, no tax effect                                                                                               |   |                                | (32,244   | ) |   | (3,030,245 | ) |
| Total                Pharmacy Supply, no tax effect                                                                                           |   |                                | (912,634  | ) |   | (143,646 | ) |
|                                                                                                                                          |   |                                | (759,160  | ) |   | (6,946,470 | )) |
| Gain                (loss) on disposals:                                                                                                      |   |                                |      |   |   |   |   |
| Gain                on disposal of pharmacy components, no tax effect                                                                         |   |                                | -         |   |   | 214,574 |   |
| Loss                on disposal of Rx-Pro                                                                                                     |   |                                | (23,957   | ) |   | - |   |
| Loss                on disposal of Total Health Care                                                                                          |   |                                | (25,554   | ) |   | - |   |
| Gain                on disposal of Total Pharmacy Supply                                                                                      |   |                                | 43,767    |   |   | - |   |
|                                                                                                                                          |   |                                | (5,744    | ) |   | 214,574 |   |
| Income                (loss) from discontinued operations, net                                                                                |   | $                                   | (764,904  | ) | $ | (6,731,896 | ) |

| **6.** | **BALANCE                SHEET INFORMATION** |
|--------|----------------------------------------------|

**Property      and Equipment**

|                                                          |   | March                24, |       | June                30, |   |
|---------------------------------------------------------------|--------|--------------------------|------------|-------------------------|--------|
|                                                          |   | 2004                     |       | 2003                    |   |
|                                                          |   |                     |       |                    |   |
| Furniture,                fixture and equipment               |   | $                        | 812,370    |                    | $      | 907,753 |   |
| Computer                equipment                             |   |                     | 350,424    |                    |   | 383,742 |   |
| Leasehold                improvements                         |   |                     | 792,614    |                    |   | 792,615 |   |
| Vehicles                                                      |   |                     | 41,093     |                    |   | 161,473 |   |
|                                                          |   |                     | 1,996,501  |                    |   | 2,245,583 |   |
| Less                accumulated depreciation and amortization |   |                     | (1,101,050 | )                       |   | (1,214,373 | ) |
|                                                          |   | $                        | 895,451    |                    | $      | 1,031,210 |   |

**-47-**

----

**Accrued      Liabilities**

|                                         |   | March                24, |    | June                30, |   |
|----------------------------------------------|--------|--------------------------|---------|-------------------------|--------|
|                                         |   | 2004                     |    | 2003                    |   |
|                                         |   |                     |    |                    |   |
| Payroll                and employee benefits |   | $                        | 542,491 |                    | $      | 603,283 |   |
| Insurance                cost                |   |                     | -       |                    |   | 119,892 |   |
| Deferred                income               |   |                     | -       |                    |   | 126,600 |   |
| Legal                fees                    |   |                     | 243,400 |                    |   | - |   |
| Sales                and property taxes      |   |                     | 46,521  |                    |   | 66,192 |   |
| Other                                        |   |                     | 14,113  |                    |   | 18,039 |   |
|                                         |   | $                        | 846,525 |                    | $      | 934,006 |   |

**Liabilities      Subject to Compromise**

|                                                |   | March                24, |      | June                30, |   |
|-----------------------------------------------------|--------|--------------------------|-----------|-------------------------|--------|
|                                                |   | 2004                     |      | 2003                    |   |
|                                                |   |                     |      |                    |   |
| Bank                of Texas, N.A. credit facility  |   | $                        | 5,629,538 |                    | $      | 6,090,085 |   |
| Trade                payables to AmerisourceBergen  |   |                     | 1,299,010 |                    |   | 1,299,010 |   |
| Trade                and other miscellaneous claims |   |                     | 213,552   |                    |   | 213,552 |   |
|                                                |   | $                        | 7,142,100 |                    | $      | 7,602,647 |   |

| **7.** | **CREDIT                FACILITY** |
|--------|------------------------------------|

**-48-**

----

| **8.** | **INCOME                TAXES** |
|--------|---------------------------------|

|                                                |   | March                24, |       | June                30 |   |
|-----------------------------------------------------|--------|--------------------------|------------|------------------------|--------|
|                                                |   | 2004                     |       | 2003                   |   |
|                                                |   |                     |       |                   |   |
| Deferred                tax assets:                 |   |                     |       |                   |   |   |   |
| Allowance                for doubtful accounts      |   | $                        | 1,083,800  |                   | $      | 1,035,900 |   |
| Capitalized                inventory costs          |   |                     | 88,900     |                   |   | 117,400 |   |
| Accrued                expenses, reserves and other |   |                     | 255,700    |                   |   | 489,500 |   |
| Deferred                compensation                |   |                     | 11,900     |                   |   | 28,400 |   |
| Net                operating loss carryforwards     |   |                     | 977,500    |                   |   | 841,200 |   |
| Total                deferred tax assets            |   |                     | 2,417,800  |                   |   | 2,512,400 |   |
|                                                |   |                     |       |                   |   |   |   |
| Deferred                tax liabilities:            |   |                     |       |                   |   |   |   |
| Property                and equipment depreciation  |   |                     | (37,700    | )                      |   | (47,900 | ) |
| Net                deferred tax asset               |   |                     | 2,380,100  |                   |   | 2,464,500 |   |
| Valuation                allowance                  |   |                     | (2,380,100 | )                      |   | (2,464,500 | ) |
| Net                deferred taxes                   |   |                     |       |                   | $      | $ |   |

** **

|                                           |   | Year                EndedJune                30, |     |
|------------------------------------------------|--------|--------------------------------------------------|----------|
|                                           |   | 2002                                             |     |
| Current                tax (benefit) expense:  |   |                                             |     |   |
| Federal                                        |   | $                                                | (400,400 | ) |
| State                                          |   |                                             | -        |   |
| Total                current                   |   |                                             | (400,400 | ) |
|                                           |   |                                             |     |   |
| Deferred                tax (benefit) expense: |   |                                             |     |   |
| Federal                                        |   |                                             | 277,215  |   |
| State                                          |   |                                             | 28,541   |   |
| Total                deferred                  |   |                                             | 305,756  |   |
| Income                tax (benefit) expense    |   | $                                                | (94,644  | ) |

**-49-**

----

|                                                               |   | Period                Ended   |               | Years                Ended June 30, |   |
|--------------------------------------------------------------------|--------|-------------------------------|--------------------|-------------------------------------|--------|
|                                                               |   | March                24, 2004 |               | 2003                                |   | 2002 |   |
| Federal                statutory rate                              |   |                          | 34%                |                                |   | 34% |   |   | 34% |   |
| Non-deductible                goodwill amortization and impairment |   |                          | -                % |                                |   | 12% |   |   | 12% |   |
| Net                operating loss carryforwards                    |   |                          | (34%)              |                                |   | (46%) |   |   | (47%) |   |
| Effective                tax rate                                  |   |                          | -                % |                                |   | -                % |   |   | (1%) |   |

| **9.** | **COMMITMENTS                AND CONTINGENCIES** |
|--------|--------------------------------------------------|

*Operating      Leases*

| Years                ended June 30, |   |   |      |
|-------------------------------------|--------|--------|-----------|
| 2004                                |   | $      | 831,000   |   |
| 2005                                |   |   | 841,000   |   |
| 2006                                |   |   | 756,000   |   |
| 2007                                |   |   | 493,000   |   |
| 2008                                |   |   | 400,000   |   |
| Thereafter                          |   |   | 188,000   |   |
|                                |   | $      | 3,509,000 |   |

*General*

| **10.** | **STOCKHOLDERS’                EQUITY** |
|---------|-----------------------------------------------|

*Preferred      Stock*

*Series      A Preferred Stock*

**-50-**

----

*Stock      Option Plan*

** **

|                                  |   | Number                of Options |       | Weighted                Average Exercise Price |   |
|---------------------------------------|--------|----------------------------------|------------|------------------------------------------------|--------|
|                                  |   |                             |       |                                           |   |
| Balance,                June 30, 2001 |   |                             | 5,836,832  |                                           | $      | 0.75 |   |
| Granted                               |   |                             | 3,258,000  |                                           | $      | 0.46 |   |
| Exercised                             |   |                             | -          |                                           | $      | - |   |
| Canceled                or expired    |   |                             | (4,717,500 | )                                              | $      | 0.74 |   |
|                                  |   |                             |       |                                           |   |   |   |
| Balance,                June 30, 2002 |   |                             | 4,377,332  |                                           | $      | 0.54 |   |

|                                         | Options                Outstanding |                              | Options                Exercisable |                                                   |
|-----------------------------------------|------------------------------------|-----------------------------------|------------------------------------|--------------------------------------------------------|
| Range                of Exercise Prices |                               | Number                Outstanding |                               | Weighted                Average Remaining Life (Years) |   | Weighted                Average Exercise Price |   | Number                Exercisable |   | Weighted                Average Exercise Price |   |
| Less                than $0.75          |                               |                              | 2,568,000                          |                                                   |   | 3.9 |   | $ | 0.39 |   |   | 1,563,668 |   |   | 0.34 |   |
| $0.75                                   |                               |                              | 1,809,332                          |                                                   |   | 3.1 |   | $ | 0.75 |   |   | 983,446 |   |   | 0.75 |   |
|                                    |                               |                              | 4,377,332                          |                                                   |   | 3.5 |   | $ | 0.54 |   |   | 2,547,114 |   | $ | 0.50 |   |
|                                    |                               |                              |                               |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |

**-51-**

----

|                                                                 |   | Year                Ended June 30, |   |
|----------------------------------------------------------------------|--------|------------------------------------|--------|
|                                                                 |   | 2002                               |   |
| Options                with exercise price less than market price    |   | $                                  | -      |   |
| Options                with exercise price equal to market price     |   | $                                  | 0.29   |   |
| Options                with exercise price greater than market price |   | $                                  | 0.08   |   |

*Stock-Based      Compensation and Pro Forma Disclosures*

**.      **

|                                           |   | Year                Ended June 30, |        |
|------------------------------------------------|--------|------------------------------------|-------------|
|                                           |   | 2002                               |        |
| Net                loss:                       |   |                               |        |   |
| as                reported                     |   | $                                  | (9,945,028  | ) |
| Pro                forma                       |   | $                                  | (10,371,873 | ) |
|                                           |   |                               |        |   |
| Net                loss per share:             |   |                               |        |   |
| as                reported - basic and diluted |   | $                                  | (0.28       | ) |
| Pro                forma - basic and diluted   |   | $                                  | (0.29       | ) |

| Volatility                    |   |   | 118                    | %      |
|-------------------------------|--------|--------|------------------------|--------|
| Interest                rate  |   |   | 2.25                   | %      |
| Dividend                yield |   |   | -                      | %      |
| Expected                life  |   |   | 2                years |   |

| **11.** | **Earnings                Per Share** |
|---------|---------------------------------------|

**-52-**

----

|                                                                |   | Period                From July 1, 2003 to March 24, |       | Years                Ended June 30, |   |
|---------------------------------------------------------------------|--------|------------------------------------------------------|------------|-------------------------------------|--------|
|                                                                |   | 2004                                                 |       | 2003                                |   | 2002 |   |
| Numerator:                                                          |   |                                                 |       |                                |   |   |   |   |   |   |
| Income                (loss) from continuing operations             |   | $                                                    | 253,265    |                                | $      | (967,154 | ) | $ | (3,213,132 | ) |
| Loss                from discontinued operations                    |   | $                                                    | -          |                                | $      | (764,904 | ) | $ | (6,731,896 | ) |
|                                                                |   |                                                 |       |                                |   |   |   |   |   |   |
| Net                income (loss)                                    |   | $                                                    | 253,265    |                                | $      | (1,732,058 | ) | $ | (9,945,028 | ) |
| Denominator:                                                        |   |                                                 |       |                                |   |   |   |   |   |   |
| Weighted                average common shares:                      |   |                                                 |       |                                |   |   |   |   |   |   |
| Common                shares outstanding                            |   |                                                 | 8,784,037  |                                |   | 8,784,037 |   |   | 8,784,037 |   |
| Common                share equivalents of Series A Preferred Stock |   |                                                 | 27,251,393 |                                |   | 27,251,393 |   |   | 27,251,393 |   |
| Basic                weighted average shares                        |   |                                                 | 36,035,430 |                                |   | 36,035,430 |   |   | 36,035,430 |   |
| Effect                of dilutive securities:                       |   |                                                 |       |                                |   |   |   |   |   |   |
| Employee                stock options                               |   |                                                 | -          |                                |   | - |   |   | - |   |
| Diluted                weighted average common shares               |   |                                                 | 36,035,430 |                                |   | 36,035,430 |   |   | 36,035,430 |   |
| Income                (loss) per share - basic and diluted:         |   |                                                 |       |                                |   |   |   |   |   |   |
| Continuing                operations                                |   | $                                                    | 0.01       |                                | $      | (0.03 | ) | $ | (0.09 | ) |
| Discontinued                operations                              |   | $                                                    | -          |                                | $      | (0.02 | ) | $ | (0.19 | ) |
| Net                income (loss)                                    |   | $                                                    | 0.01       |                                | $      | (0.05 | ) | $ | (0.28 | ) |

**12.**
**EMPLOYEE      BENEFIT PLAN**

| **13.** | **BUSINESS                SEGMENT INFORMATION** |
|---------|-------------------------------------------------|

**-53-**

----

|                                                           |   | Period                    From July 1, 2003 to March 24, |       | Years                    Ended June 30, |   |
|----------------------------------------------------------------|--------|----------------------------------------------------------|------------|-----------------------------------------|--------|
|                                                           |   | 2004                                                     |       | 2003                                    |   | 2002 |   |
| Segment                    Revenues:                           |   |                                                     |       |                                    |   |   |   |   |   |   |
| Pharmacy                                                       |   |                                                     | 20,182,800 |                                    | $      | 28,933,600 |   | $ | 31,166,000 |   |
| Infusion                                                       |   |                                                     | 9,302,900  |                                    |   | 10,434,600 |   |   | 12,620,200 |   |
| Total                    segment revenues                      |   | $                                                        | 29,485,700 |                                    | $      | 39,368,200 |   | $ | 43,786,200 |   |
|                                                           |   |                                                     |       |                                    |   |   |   |   |   |   |
| Segment                    Earnings (Loss):                    |   |                                                     |       |                                    |   |   |   |   |   |   |
| Pharmacy                                                       |   | $                                                        | 1,056,500  |                                    | $      | 885,300 |   | $ | 354,800 |   |
| Infusion                    (a)                                |   |                                                     | 1,034,400  |                                    |   | 670,900 |  (a) |   | (503,300 | ) |
| Total                    segment earnings (loss)               |   | $                                                        | 2,090,900  |                                    | $      | 1,556,200 |   | $ | (148,500 | )) |
|                                                           |   |                                                     |       |                                    |   |   |   |   |   |   |
| Corporate                    expenses                          |   |                                                     | (1,387,500 | )                                       |   | (1,594,400 | ) |   | (2,240,000 | ) |
| Interest                    and financing expense, net         |   |                                                     | (323,800   | )                                       |   | (734,000 | ) |   | (568,000 | ) |
| Depreciation                    and amortization               |   |                                                     | (126,300   | )                                       |   | (195,000 | ) |   | (351,300 | ) |
|                                                           |   |                                                     |       |                                    |   |   |   |   |   |   |
| Net                    income (loss) before income taxes       |   | $                                                        | 253,300    |                                    | $      | (967,100 | ) | $ | (3,307,800 | ) |
|                                                           |   |                                                     |       |                                    |   |   |   |   |   |   |
| Segment                    Depreciation and Amortization:      |   |                                                     |       |                                    |   |   |   |   |   |   |
| Pharmacy                                                       |   | $                                                        | 59,700     |                                    | $      | 87,900 |   | $ | 215,900 |   |
| Infusion                                                       |   |                                                     | 48,300     |                                    |   | 61,600 |   |   | 96,400 |   |
| Total                    segment depreciation and amortization |   |                                                     | 108,000    |                                    |   | 149,500 |   |   | 312,300 |   |
|                                                           |   |                                                     |       |                                    |   |   |   |   |   |   |
| Corporate                                                      |   |                                                     | 18,300     |                                    |   | 45,500 |   |   | 39,000 |   |
| Total                    depreciation and amortization         |   | $                                                        | 126,300    |                                    | $      | 195,000 |   | $ | 351,300 |   |

|   | a | Included                in the results of the Infusion segment for the years ended June 30,                2003                and 2002 is approximately $1,032,000 related to impairment of goodwill                associated with the Company’s Park Infusion                pharmacies. |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-54-**

----

|                                                     |   | March                24, |       | Years                Ended June 30, |   |
|----------------------------------------------------------|--------|--------------------------|------------|-------------------------------------|--------|
|                                                     |   | 2004                     |       | 2003                                |   | 2002 |   |
|                                                     |   |                     |       |                                |   |   |   |
| Segment                Assets                            |   |                     |       |                                |   |   |   |   |   |   |
| Pharmacy                                                 |   | $                        | 4,676,100  |                                | $      | 5,179,600 |   | $ | 6,017,500 |   |
| Infusion                                                 |   |                     | 4,205,500  |                                |   | 3,746,500 |   |   | 3,700,700 |   |
| Total                segment assets                      |   | $                        | 8,881,600  |                                | $      | 8,926,100 |   | $ | 9,718,200 |   |
|                                                     |   |                     |       |                                |   |   |   |   |   |   |
| Discontinued                RX-Pro                       |   | $                        | -          |                                | $      | - |   | $ | 469,300 |   |
| Discontinued                non-drug segment             |   |                     | -          |                                |   | - |   |   | 573,700 |   |
| Corporate                                                |   |                     | 1,123,200  |                                |   | 931,200 |   |   | 863,000 |   |
| Goodwill                and other intangible assets, net |   |                     |       |                                |   |   |   |   | 2,035,800 |   |
| Total                assets                              |   | $                        | 10,004,800 |                                | $      | 9,857,300 |   | $ | 13,660,000 |   |

| **14.** | **SUBSEQUENT                EVENTS** |
|---------|--------------------------------------|

**-55-**

----

**-56-**

----

**THE      STAUBACH COMPANY - WEST, INC.**

**BALANCE      SHEETS**

|                                                                                                           |   | **December                31,** |       |
|----------------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                                                           |   | **2003**                        |       | **2002** |   |
| **Assets**                                                                                                     |   |                            |       |   |   |
| **Current                assets**                                                                              |   |                            |       |   |   |   |   |
| Cash                and cash equivalents                                                                       |   | $                               | 362,688    |   | $ | 1,072,135 |   |
| Accounts                receivable                                                                             |   |                            | 2,551,116  |   |   | 884,917 |   |
| Related                party receivables                                                                       |   |                            | 15,534     |   |   | 295,909 |   |
| Deferred                expenses                                                                               |   |                            | 128,420    |   |   | 128                110 |   |
| Prepaid                expenses                                                                                |   |                            | -          |   |   | 51,663 |   |
|                                                                                                           |   |                            |       |   |   |   |   |
| Total                current assets                                                                            |   |                            | 3,057,758  |   |   | 2,432,734 |   |
|                                                                                                           |   |                            |       |   |   |   |   |
| **Property,                plant and equipment,**                at                cost:                       |   |                            |       |   |   |   |   |
| Computer                equipment and software                                                                 |   |                            | 367,347    |   |   | 344,860 |   |
| Automobiles                and trucks                                                                          |   |                            | 58,386     |   |   | 81,176 |   |
| Furniture                and fixtures                                                                          |   |                            | 447,105    |   |   | 404,470 |   |
| Leasehold                improvements                                                                          |   |                            | 41,122     |   |   | 33,929 |   |
|                                                                                                           |   |                            | 913,960    |   |   | 864,435 |   |
| Less                - accumulated depreciation                                                                 |   |                            | (503,673   | ) |   | (341,452 | ) |
|                                                                                                           |   |                            | 410,287    |   |   | 522,983 |   |
| **Non-current                assets**                                                                          |   |                            |       |   |   |   |   |
| Other                assets                                                                                    |   |                            | 90,810     |   |   | 73,468 |   |
|                                                                                                           |   | $                               | 3,558,855  |   | $ | 3,029,185 |   |
|                                                                                                           |   |                            |       |   |   |   |   |
| **Liabilities                and Stockholder's Deficit**                                                       |   |                            |       |   |   |   |   |
| **Current                liabilities**                                                                         |   |                            |       |   |   |   |   |
| Line                of credit                                                                                  |   | $                               | -          |   | $ | 655,000 |   |
| Accounts                payable                                                                                |   |                            | 978,009    |   |   | 1,222,078 |   |
| Accrued                expenses                                                                                |   |                            | 2,658,949  |   |   | 1,258,407 |   |
| Current                portion of long-term debt and capitallease                obligations                   |   |                            | 132,234    |   |   | 217,136 |   |
| Total                current liabilities                                                                       |   |                            | 3,769,192  |   |   | 3,352,621 |   |
|                                                                                                           |   |                            |       |   |   |   |   |
| **Long-term                debt and capital lease obligations,**net                of current portion          |   |                            | 34,324     |   |   | 177,487 |   |
|                                                                                                           |   |                            |       |   |   |   |   |
| **Stockholder's                deficit:**                                                                      |   |                            |       |   |   |   |   |
| Common                stock, $1.00 par value 250 shares, authorized                issued and outstanding |   |                            | 250        |   |   | 250 |   |
| Additional                paid-in capital                                                                      |   |                            | 1,850,739  |   |   | 1,850,739 |   |
| Accumulated                deficit                                                                             |   |                            | (2,095,650 | ) |   | (2,351,912 | ) |
|                                                                                                           |   |                            |       |   |   |   |   |
|                                                                                                           |   |                            | (244,661   | ) |   | (500,923 | ) |
|                                                                                                           |   | $                               | 3,558,855  |   | $ | 3,029,185 |   |

*See      accompanying notes to financial statements.*

**-57-**

----

**THE      STAUBACH COMPANY - WEST, INC.**

**STATEMENTS      OF OPERATIONS**

|                                                                    |   |                                    |       |
|-------------------------------------------------------------------------|--------|-----------------------------------------|------------|
|                                                                    |   | Years                Ended December 31, |       |
|                                                                    |   | 2003                                    |       | 2002 |   |
|                                                                    |   |                                    |       |   |   |
|                                                                    |   |                                    |       |   |   |
| Net                Revenues                                             |   | $                                       | 14,436,202 |   | $ | 11,629,143 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Cost                of Revenues                                         |   |                                    | 8,710,136  |   |   | 7,235,779 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| License                Fees                                             |   |                                    | 1,671,041  |   |   | 1,330,757 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Gross                Profit                                             |   |                                    | 4,055,025  |   |   | 3,062,607 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Selling,                General and Administrative Expenses             |   |                                    | 2,970,945  |   |   | 2,791,729 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Income                (Loss) from Operations                            |   |                                    | 1,084,080  |   |   | 270,878 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Other                Income (Expense):                                  |   |                                    |       |   |   |   |   |
| Interest                expense, net                                    |   |                                    | (35,080    | ) |   | (45,384 | ) |
| Gain                (loss) on disposal                                  |   |                                    | (16,296    | ) |   | (87,920 | ) |
|                                                                    |   |                                    | (51,376    | ) |   | (133,304 | ) |
|                                                                    |   |                                    |       |   |   |   |   |
| Income                before Provision for Franchise                Tax |   |                                    | 1,032,704  |   |   | 137,574 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Provision                for Franchise Tax                              |   |                                    | 24,000     |   |   | 2,100 |   |
|                                                                    |   |                                    |       |   |   |   |   |
| Net                Income                                               |   | $                                       | 1,008,704  |   | $ | 135,474 |   |

*See      accompanying notes to financial statements.*

**-58-**

----

**THE      STAUBACH COMPANY - WEST, INC.**

**STATEMENTS      OF STOCKHOLDER’S EQUITY (DEFICIT)**

|                                          |   |                          |   | *Additional* |   |          |   | *Total*               |      |
|-----------------------------------------------|--------|-------------------------------|--------|--------------|--------|---------------|--------|-----------------------|-----------|
|                                          |   | *Common                Stock* |   | *Paid-in*    |   | *Accumulated* |   | *Stockholder’s* |      |
|                                          |   | *Shares*                      |   | *Amount*     |   | *Capital*     |   | *Deficit*             |      | *Equity                (Deficit)* |   |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |
| **Balance,**                January 1, 2002   |   |                          | 250    |         | $      | 250           |   | $                     | 1,850,739 |   | $ | (2,340,667 | ) | $ | (489,678 | ) |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |   |   |   |   |   |
| Net                income                     |   |                          | -      |         |   | **-**         |   |                  | -         |   |   | 135,474 |   |   | 135,474 |   |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |   |   |   |   |   |
| Dividends                paid                 |   |                          | -      |         |   | **-**         |   |                  | -         |   |   | (146,719 | ) |   | (146,719 | ) |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |   |   |   |   |   |
| **Balance,**                December 31, 2002 |   |                          | 250    |         |   | 250           |   |                  | 1,850,739 |   |   | (2,351,912 | ) |   | (500,923 | ) |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |   |   |   |   |   |
| Net                income                     |   |                          | -      |         |   | **-**         |   |                  | -         |   |   | 1,008,704 |   |   | 1,008,704 |   |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |   |   |   |   |   |
| Dividends                paid                 |   |                          | -      |         |   | **-**         |   |                  | -         |   |   | (752,442 | ) |   | (752,442 | ) |
|                                          |   |                          |   |         |   |          |   |                  |      |   |   |   |   |   |   |   |
| **Balance,**                December 31, 2003 |   |                          | 250    |         | $      | 250           |   | $                     | 1,850,739 |   | $ | (2,095,650 | ) | $ | (244,661 | ) |

*See      accompanying notes to financial statements.*

**-59-**

----

**THE      STAUBACH COMPANY - WEST, INC.**

**STATEMENTS      OF CASH FLOWS**

|                                                                                                                      |   | **Years                Ended**  |       |
|---------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------|------------|
|                                                                                                                      |   | **December                31,** |       |
|                                                                                                                      |   | **2003**                        |       | **2002** |   |
|                                                                                                                      |   |                            |       |   |   |
| **Cash                Flows from Operating Activities:**                                                                  |   |                            |       |   |   |   |   |
| Net                income                                                                                                 |   | $                               | 1,008,704  |   | $ | 135,474 |   |
| Adjustments                to reconcile net income to net cash provided by (used in) operating                activities: |   |                            |       |   |   |   |   |
| Depreciation                                                                                                              |   |                            | 167,102    |   |   | 137,311 |   |
| (Gain)                loss on disposal of property                                                                        |   |                            | 16,296     |   |   | 87,920 |   |
| Changes                in assets and liabilities:                                                                         |   |                            |       |   |   |   |   |
| Accounts                receivable                                                                                        |   |                            | (1,666,199 | ) |   | 30,591 |   |
| Related                party receivables                                                                                  |   |                            | 280,375    |   |   | (116,419 | ) |
| Deferred                expenses                                                                                          |   |                            | (310       | ) |   | 28,961 |   |
| Prepaid                expenses                                                                                           |   |                            | 51,663     |   |   | (45,959 | ) |
| Other                assets                                                                                               |   |                            | (17,342    | ) |   | (42,880 | ) |
| Accounts                payable                                                                                           |   |                            | (244,069   | ) |   | 478,960 |   |
| Accrued                expenses                                                                                           |   |                            | 1,400,542  |   |   | (300,279 | ) |
| Net                cash provided by (used in) operating activities                                                        |   |                            | 996,762    |   |   | 393,680 |   |
|                                                                                                                      |   |                            |       |   |   |   |   |
| **Cash                Flows from Investing Activities:**                                                                  |   |                            |       |   |   |   |   |
| Cash                payments for the purchase of property                                                                 |   |                            | (88,252    | ) |   | (279,176 | ) |
| Cash                proceeds from the sale of assets, net                                                                 |   |                            | 60,000     |   |   | 10,000 |   |
| Net                cash used in investing activities                                                                      |   |                            | (28,252    | ) |   | (269,176 | ) |
|                                                                                                                      |   |                            |       |   |   |   |   |
| **Cash                Flows from Financing Activities:**                                                                  |   |                            |       |   |   |   |   |
| Borrowings                from line of credit                                                                             |   |                            | -          |   |   | 1,010,000 |   |
| Payments                on line of credit                                                                                 |   |                            | (655,000   | ) |   | (706,982 | ) |
| Dividends                to stockholder                                                                                   |   |                            | (752,442   | ) |   | (146,719 | ) |
| Increase                in long-term debt                                                                                 |   |                            | -          |   |   | - |   |
| Payments                on capital leases                                                                                 |   |                            | (37,733    | ) |   | (74,290 | ) |
| Payments                on long-term debt                                                                                 |   |                            | (232,782   | ) |   | (185,615 | ) |
| Net                cash (used in) provided by financing activities                                                        |   |                            | (1,677,957 | ) |   | (103,606 | ) |
|                                                                                                                      |   |                            |       |   |   |   |   |
| Net                increase (decrease) in cash and cash equivalents                                                       |   |                            | (709,447   | ) |   | 20,898 |   |
| **Cash                and Cash Equivalents,**                beginning of period                                          |   |                            | 1,072,135  |   |   | 1,051,237 |   |
| **Cash                and Cash Equivalents,**                end of period                                                |   | $                               | 362,688    |   | $ | 1,072,135 |   |
| **Supplemental                Cash Flow Information:**                                                                    |   |                            |       |   |   |   |   |
| Cash                paid during the period for:                                                                           |   |                            |       |   |   |   |   |
| Interest                                                                                                                  |   | $                               | 35,080     |   | $ | 45,384 |   |
| Franchise                tax                                                                                              |   | $                               | 24,000     |   | $ | - |   |
| Non-cash                activity:                                                                                         |   |                            |       |   |   |   |   |
| Assets                under capital lease                                                                                 |   | $                               | -          |   | $ | 52,002 |   |
| Purchase                of automobile                                                                                     |   | $                               | 42,450     |   | $ | 71,176 |   |

*See      accompanying notes to financial statements.*

**-60-**

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| **1.** | **Summary                of Significant Accounting                Policies** |
|--------|------------------------------------------------------------------------------|

| Computer                equipment and software |   | 3-5                years |                         |
|------------------------------------------------|--------|--------------------------|------------------------------|
| Automobiles                and trucks          |   |                     | 3                years       |   |
| Furniture                and fixtures          |   |                     | 5-7                years     |   |
| Leasehold                improvements          |   |                     | Life                of lease |   |

**-61-**

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| **2.** | **Line                of Credit** |
|--------|-----------------------------------|

**-62-**

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| **3.** | **Long-Term                Debt and Capital Lease                Obligations** |
|--------|--------------------------------------------------------------------------------|

|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | December                31, |        |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------|-------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   | 2003                        |        | 2002 |   |
| Note                payable to Northern Trust Bank is due July 2004, with interest at                the                prime plus 0.50%, (4.50% at December 31, 2003). Principal payments                of                $13,889 and interest are due monthly. The note is secured by substantially                all of the assets of the Company and is guaranteed personally by                the sole                stockholder |   | $                           | 83,333      |   | $ | 250,000 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |        |   |   |   |   |
| 6.75%                automobile installment note, with principal and interest payments                of                $1,400 due monthly through August 2007 and secured by the vehicle                itself                                                                                                                                                                                                                           |   |                        | -           |   |   | 66,115 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |        |   |   |   |   |
| 4.5%                note payable to Company’s stockholder, interest calculated monthly,                principal and unpaid interest due August 2004                                                                                                                                                                                                                                                                                |   |                        | -           |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |        |   |   |   |   |
| Automobile                installment note, with principal only payments of $987 due monthly                through                July 2007 and secured by the vehicle itself                                                                                                                                                                                                                                                            |   |                        | 42,450      |   |   | - |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |        |   |   |   |   |
| Capital                lease obligations with interest rates ranging from 10.5% to 16.5%,                secured                by office equipment, maturing through 2005                                                                                                                                                                                                                                                                |   |                        | 40,775      |   |   | 78,508 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |        |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        | **166,558** |   |   | 394,623 |   |
| Less                current portion                                                                                                                                                                                                                                                                                                                                                                                                       |   |                        | (132,234    | ) |   | (217,136 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |   |                        |        |   |   |   |   |
| Long-term                portion                                                                                                                                                                                                                                                                                                                                                                                                          |   | $                           | 34,324      |   | $ | 177,487 |   |

| Future                principal payments on long-term debt and capital lease obligations                at                December 31, 2003 are as follows: |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2004   |   | $      | 132,234 |   |
|--------|--------|--------|---------|--------|
| 2005   |   |   | 15,566  |   |
| 2006   |   |   | 11,846  |   |
| 2007   |   |   | 6,912   |   |
|   |   | $      | 166,558 |   |

| **4.** | **Commitments** |
|--------|-----------------|

**-63-**

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|                                                              |   | Operating |      | Capital |   |
|-------------------------------------------------------------------|--------|-----------|-----------|---------|--------|
|                                                              |   | Leases    |      | Leases  |   |
| 2004                                                              |   | $         | 517,264   |    | $      | 40,274 |   |
| 2005                                                              |   |      | 535,765   |    |   | 3,809 |   |
| 2006                                                              |   |      | 554,212   |    |   | - |   |
| 2007                                                              |   |      | 574,065   |    |   | - |   |
| 2008                                                              |   |      | 594,892   |    |   | - |   |
| Thereafter                                                        |   |      | 1,069,754 |    |   | - |   |
|                                                              |   | $         | 3,845,952 |    |   | 44,083 |   |
| Less                amount representing interest                  |   | 3,308     |      |
| Net                present value of future minimum lease payments |   |      |      |    | $      | 40,775 |   |

| **5.** | **Related-Party                Transactions** |
|--------|-----------------------------------------------|

| **6.** | **Employee                Benefit Plan** |
|--------|------------------------------------------|

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| **7.** | **Subsequent                Events** |
|--------|--------------------------------------|

|                                           |   | **Years                  Ended**  |      |
|------------------------------------------------|--------|-----------------------------------|-----------|
|                                           |   | **December                  31,** |      |
|                                           |   | **2003**                          |      | **2002** |   |
| Revenues                                       |   | $                                 | 2,977,166 |   | $ | 2,478,454 |   |
| Gross                  Profit                  |   |                              | 993,594   |   |   | 727,298 |   |
| Income                  (loss) from operations |   |                              | 292,556   |   |   | 204,182 |   |
|                                           |   |                              |      |   |   |   |   |
| Total                  assets                  |   |                              | 397,080   |   |   | 544,768 |   |
| Total                  liabilities             |   |                              | 290,914   |   |   | 401,388 |   |

**-65-**

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**PART      IV.**

**ITEM      15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

|   | 1. | *Financial                Statements:*                See “Index to Consolidated Financial Statements and Supplementary Data”                under Part II, Item 8 of this Amendment No. 1 to the Annual Report                on Form                10-K/A. |
|--------|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2. | All                other schedules are omitted because they are not applicable or the                required information is included in the Company’s Consolidated Financial                Statements or Notes thereto included in this Amendment No. 1 to the                Annual                Report on Form 10-K/A. |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3. | *Exhibits:*The                exhibits listed on the accompanying Index to Exhibits immediately                following the certifications are filed as part of, or incorporated                by                reference into, this Amendment No. 1 to the Annual Report on Form                10-K/A. |
|--------|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**-66-**

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**SIGNATURES**

|   | **ASCENDANT                SOLUTIONS, INC.** |
|--------|----------------------------------------------|
|   |                                         |   |
|   |                                         |   |
|   | By:                                          | /s/                David E. Bowe |
|   |                                         | David                E. Bowe |
|   |                                         | *President                and Chief Executive Officer (Duly Authorized Officer and Principal                Executive Officer)* |
|   |                                         |   |
|   |                                         |   |
|   | By:                                          | /s/                Gary W. Boyd |
|   |                                         | Gary                W. Boyd |
|   |                                         | *Vice                President-Finance and Chief Financial Officer (Duly Authorized Officer                and                Principal Financial Officer)* |

| Signature                                                                   |   | Title                                                                   |
|----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------|
| /s/                James C. LeslieJames                C. Leslie            |   |  Chairman                of the Board                                   |
| /s/                David E. BoweDavid                E. Bowe                     |   |  Director,                President and Chief Executive Officer,   |
| /s/                Anthony J. LeVecchioAnthony                J. LeVecchio  |   |  Director,                Audit Committee Chairman                      |
| /s/                Jonathan R. BlochJonathan                R. Bloch        |   |  Director                                                               |
| /s/                Will CuretonWill                Cureton                  |   |  Director                                                               |

**-67-**

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**INDEX      TO EXHIBITS **

| Exhibit Number |   | Description                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 2.1                 |   | Agreement                and Plan of Merger by and between ASD Systems, Inc. d/b/a Ascendant                Solutions, a Texas corporation, and Ascendant Solutions, Inc., a                Delaware                corporation (Exhibit 2.1) (1)                                                                                                                              |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 2.2                 |   | Stock                Purchase Agreement by and between ASDS of Orange County, Inc., a                Delaware                corporation f/k/a Orange County Acquisition Corp. and Kevin Hayes                dated                March 23, 2004 (Exhibit 2.1) (2)                                                                                                            |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 2.3                 |   | ASDS                of Orange County, Inc. Promissory Note due May 1, 2007 (Exhibit 2.2)                (2)                                                                                                                                                                                                                                                                    |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 3.1                 |   | Certificate                of Incorporation of Ascendant Solutions, Inc. (Exhibit 3.1)                (1)                                                                                                                                                                                                                                                                      |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 3.2                 |   | Bylaws                of Ascendant Solutions, Inc. (Exhibit 3.2) (1)                                                                                                                                                                                                                                                                                                           |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 4.1                 |   | Specimen                of Ascendant Solutions, Inc. Common Stock Certificate (Exhibit 4.1)                (1)                                                                                                                                                                                                                                                                 |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 4.2                 |   | 1999                Long-Term Incentive Plan for ASD Systems, Inc. (Exhibit 4.2)                (3)                                                                                                                                                                                                                                                                            |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 4.3                 |   | Form                of Stock Option Agreement under 1999 Long-Term Incentive Plan (Exhibit                4.3) (3)                                                                                                                                                                                                                                                             |
|                |   |                                                                                                                                                                                                                                                                                                                                                                           |
| 10.1           |   | Form                of Indemnification Agreement with directors (Exhibit 10.10) (3)                                                                                                                                                                                                                                                                                       |
| 10.2           |   | Form                of Warrant granted to affiliates of CKM Capital LLC (Exhibit 10.15)                (3)                                                                                                                                                                                                                                                                |
| 10.3           |   | Stock                Option Agreement dated as of March 14, 2002 between Ascendant Solutions,                Inc. and David E. Bowe (Exhibit 10.6) (4)                                                                                                                                                                                                                    |
| 10.4           |   | Stock                Option Agreement dated as of March 14, 2002 between Ascendant Solutions,                Inc. and James C. Leslie (Exhibit 10.7) (4)                                                                                                                                                                                                                  |
| 10.5           |   | Restricted                Stock Agreement dated as of April 2, 2002 between Ascendant Solutions,                Inc. and David E. Bowe (Exhibit 10.8) (4)                                                                                                                                                                                                                 |
| 10.6           |   | Licensing                and Co-Marketing Agreement, dated October 23, 2002 among CRESA Capital                Markets Group, L.P. and CRESA Partners LLC (Exhibit 10.9) (4)                                                                                                                                                                                              |
| 10.7           |   | Asset                Purchase Agreement between Dougherty’s Holdings, Inc. and Park Pharmacy                Corporation dated December 9, 2003 (Exhibit 2.1) (5)                                                                                                                                                                                                    |
| 10.8           |   | First                Amendment to the Asset Purchase Agreement between Dougherty’s Holdings,                Inc. and Park Pharmacy Corporation dated February 27, 2004 (Exhibit                2.2)                (6)                                                                                                                                              |
| 10.9           |   | Amended                Warrant Agreement dated as of July 21, 2003 between Ascendant Solutions,                Inc. and affiliates of CKM Capital LLC (Exhibit 10.10) (7)                                                                                                                                                                                                 |
| 10.10          |   | Parent                Guaranty dated as of May 1, 2004, by and among Ascendant Solutions,                Inc.,                ASDS Orange County, Inc., a Delaware corporation, and the successor                corporation of the merger of Orange County Acquisition Corp. and                CRESA                Partners of Orange County, Inc. (Exhibit 10.1) (8)  |

**-68-**

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| 10.11                  |   | Parent                Pledge Agreement dated May 1, 2004, by and between Ascendant Solutions,                Inc. and Kevin J. Hayes. (Exhibit 10.2) (8)                                                                                                                                                                                                                                                                                             |
|-----------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.12                  |   | Subsidiary                Guaranty dated as of May 1, 2004 by and among CRESA Partners of Orange                County, LP, a Delaware limited partnership, ASDS Orange County, Inc.,                a                Delaware corporation, and the successor corporation of the merger                of                Orange County Acquisition Corp. and CRESA Partners of Orange County,                Inc.                (Exhibit 10.3) (8)  |
| 10.13                  |   | Amended                Promissory Note of CRESA Partners of Orange County, Inc. dated August                12,                2004, payable to the order of Kevin J. Hayes (Exhibit 10.1)                (9)                                                                                                                                                                                                                                        |
| 10.14                  |   | Restricted                Stock Agreement dated October 18, 2004, between Ascendant Solutions,                Inc.                and Gary W. Boyd (Exhibit 1.01) (10)                                                                                                                                                                                                                                                                               |
| 10.15                  |   | Master                Agreement Regarding Frisco Square Partnerships dated December 31,                2004                (Exhibit 10.1) (11)                                                                                                                                                                                                                                                                                                       |
| 10.16                  |   | Participation                Agreement between Ascendant Solutions, Inc. and Fairways Partners,                LLC                dated August 2003 (12)                                                                                                                                                                                                                                                                                             |
| 10.17                  |   | Restricted                Stock Agreement dated June 25, 2004, between Ascendant Solutions,                Inc. and                Anthony J. LeVecchio(12)                                                                                                                                                                                                                                                                                          |
| 10.18                  |   | Amended                and Restated Agreement of Limited Partnership of Fairways Frisco,                L.P.                effective December 30, 2004(12)                                                                                                                                                                                                                                                                                          |
| 21.1                   |   | Subsidiaries                of Ascendant Solutions, Inc.(12)                                                                                                                                                                                                                                                                                                                                                                                         |
| 23.1                   |   | Consent                of Hein & Associates, LLP *                                                                                                                                                                                                                                                                                                                                                                                               |
| 23.2                   |   | Consent                of BDO Seidman, LLP *                                                                                                                                                                                                                                                                                                                                                                                                         |
| 23.3                   |   | Consent                of Ernst and Young, LLP*                                                                                                                                                                                                                                                                                                                                                                                                      |
| 31.1                   |   | Written                Statement of President and Chief Executive Officer pursuant to Section                302                of the Sarbanes-Oxley Act of 2002. *                                                                                                                                                                                                                                                                                 |
| 31.2                   |   | Written                Statement of Vice President-Finance and Chief Financial Officer pursuant                to Section 302 of the Sarbanes-Oxley Act of 2002.*                                                                                                                                                                                                                                                                                    |
| 32.1                   |   | Certification                of Ascendant Solutions, Inc. Annual Report on Form 10-K for the period                ended December 31, 2004, by David Bowe as President and Chief Executive                Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to                Section                906 of the Sarbanes-Oxley Act of 2002. *                                                                                          |
| 32.2                   |   | Certification                of Ascendant Solutions, Inc. Annual Report on Form 10-K for the period                ended December 31, 2004, by Gary Boyd as Vice President-Finance and                Chief                Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted                pursuant                to Section 906 of the Sarbanes-Oxley Act of 2002.*                                                                |
| 99.1                        |   | Certificate                of Incorporation for Orange County Acquisition Corp. (Exhibit 99.1)                (8)                                                                                                                                                                                                                                                                                                                                         |
|                        |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 99.2                   |   | Certificate                of Ownership and Merger of Staubach Company - West, Inc. into Orange                Co.                (Exhibit 99.2) (8)                                                                                                                                                                                                                                                                                                 |
| 99.3                   |   | Table                reflecting certain ownership after giving effect to the transactions                contemplated by the Master Agreement. (Exhibit 99.1) (11)                                                                                                                                                                                                                                                                                   |

**-69-**

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|   | (1) | Incorporated                by reference to the exhibits shown in parenthesis filed in our current                report on Form 8-K filed October 23, 2000. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | Incorporated                by reference to the exhibits shown in parenthesis filed in our current                report on Form 8-K/A filed July 21,                2004. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Incorporated                by reference to the exhibits shown in parenthesis filed in our                Registration Statement on Form S-1, File No.                333-85983. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (4) | Incorporated                by reference to the exhibits shown in parenthesis filed in our annual                report on Form 10-K for the fiscal year ended December 31,                2002. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (5) | Incorporated                by reference to the exhibits shown in parenthesis filed in our current                report on Form 8-K filed December 11,                2003. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (6) | Incorporated                by reference to the exhibits shown in parenthesis filed in our current                report on Form 8-K filed March 29,                2004. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (7) | Incorporated                by reference to the exhibits shown in parenthesis filed in our annual                report on Form 10-K for the fiscal year ended December 31,                2003. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (8) | Incorporated                by reference to the exhibits shown in parenthesis filed in our quarterly                report on Form 10-Q for the period ended June 30, 2004. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (9) | Incorporated                by reference to the exhibits shown in parenthesis filed in our quarterly                report on Form 10-Q for the period ended September 30,                2004. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (10) | Incorporated                by reference to the exhibits shown in parenthesis filed in our current                report on Form 8-K filed October 19,                2004. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (11) | Incorporated                by reference to the exhibits shown in parenthesis filed in our current                report on Form 8-K filed January 7,                2005. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (12) | Incorporated                by reference to the exhibits included in our Annual Report on Form                10-K                for the year ended December 31, 2004, as originally filed on March                29,                2005. |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| * | Filed                herewith |
|---|-------------------------------|

** -70-**

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