SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB


 (Mark One)

[X]  ANNUAL  REPORT  PURSUANT  TO  SECTION  13  or  15(d)  OF  THE  SECURITIES
     EXCHANGE ACT OF 1934
     For the fiscal year ended: December 31, 2001

[ ]  TRANSITION  REPORT  PURSUANT  TO  SECTION  13 or 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from:

                           COMMISSION FILE NO. 1-12451

                           NEW YORK HEALTH CARE, INC.

                 (Name of small business issuer in its charter)

                New  York                              11-2636089
     (State of other jurisdiction of       (I.R.S. Employer Identification No.)
     Incorporation or organization)

 1850 McDonald Avenue, Brooklyn, New York              11223
 (Address of principal executive offices)            (Zip Code)

Issuer's telephone number, including area code:   (718) 375-6700

Securities issued pursuant to Section 12(b) of the Act:
                                                          Name of exchange on
     Title  of  each  class                                which  registered
     ----------------------                                -----------------

  Common Stock $.01  par value                           Boston Stock Exchange


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


Common Stock $.01 par value

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

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

State issuer's revenues for its most recent fiscal year. $34,320,710

State  the  aggregate  market  value  of the voting stock held by non-affiliates
computed  by  reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past sixty
(60) days. $4,176,588 (as of 1/27/02).


                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)


State  the  number of shares outstanding of each of the issuer's class of common
equity,  as  of  the  latest  practicable  date:  3,696,730



                       DOCUMENTS INCORPORATED BY REFERENCE


The  following  document is incorporated by reference in this Form 10-KSB; Proxy
Statement  on  Form 14A dated November 15, 2000, Form S-8 Registration Statement
dated  October  25,  2001  and  Form  8-K/A  Report  dated  November  6,  2001.


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                            FORWARD LOOKING STATEMENTS


     Information  provided  by  the  Company in this annual report contains, and
from  time  to  time  the  Company may disseminate materials and make statements
which may contain, "forward-looking" information, as that term is defined by the
Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, the
information  contained  in  "Management's  Discussion  and Analysis of Financial
Condition  and  Results  of  Operation-Liquidity and Capital Resources" contains
information concerning the ability of the Company to service its obligations and
other  financial  commitments  as  they come due and "Company Strategy" contains
information  regarding  management's  belief concerning the growth opportunities
available to the Company. The aforementioned forward looking statements, as well
as  other forward looking statements made in this annual report are qualified in
their  entirety by these cautionary statements, which are being made pursuant to
the  provisions  of  the Act and with the intention of obtaining the benefits of
the  "safe  harbor"  provisions  of  the  Act.

     The  Company cautions investors that any forward-looking statements made by
the Company are not guarantees of future performance and that actual results may
differ  materially  from  those in the forward-looking statements as a result of
various  factors,  including,  but  not  limited  to,  the  following:

(a)     In recent years, an increasing number of legislative proposals have been
introduced  or  proposed  by Congress and in some state legislatures which would
effect  major  changes  in  the  healthcare  system. However, the Company cannot
predict  the  form  of  healthcare  reform legislation, which may be proposed or
adopted by Congress or by state legislatures. Accordingly, the Company is unable
to  assess  the  effect of any such legislation on its business. There can be no
assurance  that  any such legislation will not have a material adverse impact on
the  future  growth,  revenues  and  net  income  of  the  Company.

(b)     The  Company  derives  substantial  portions  of  its  revenues  from
third-party  payers  including,  both  directly  and  indirectly,  government
reimbursement  programs  such  as Medicare and Medicaid and some portions of its
revenues  from non-governmental sources, such as commercial insurance companies,
health  maintenance  organizations  and  other  charge-based  contracted payment
sources.  Both  government  and  non-government  payers  have  undertaken
cost-containment  measures  designed  to limit payments to healthcare providers.
There  can be no assurance that payments under governmental and non-governmental
payer  programs  will  be  sufficient  to  cover the costs allocable to eligible
patients.  The  Company  cannot  predict  whether  or  what  proposals  or
cost-containment  measures  will be adopted or, if adopted and implemented, what
effect,  if  any,  such  proposals  might have on the operations of the Company.

(c)     The Company is subject to extensive federal, state and local regulations
governing  licensure, conduct of operations at existing facilities, construction
of  new  facilities,  purchase  or lease of existing facilities, addition of new
services,  certain  capital expenditures, cost-containment and reimbursement for
services  rendered. The failure to obtain or renew required regulatory approvals
or  licenses,  the  delicensing  of  facilities owned, leased or operated by the
Company  or  the  disqualification  of the Company from participation in certain
federal  and  state  reimbursement programs could have a material adverse effect
upon  the  operations  of  the  Company.


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<PAGE>
(d)     There  can be no assurance that the Company will be able to continue its
substantial  historical  growth  or  be  able  to  fully  implement its business
strategies  or  that  management  will  be  able  to  successfully integrate the
operations  of  its  various  acquisitions.



                                     PART I


ITEM 1.    DESCRIPTION OF BUSINESS.

(a)  General  Development  of  Business.

     New  York  Health Care, Inc. (the "Company") is a licensed home health care
agency  engaged  primarily  in  supplying  the services of paraprofessionals who
provide  a  broad  range  of  health  care support services to patients in their
homes.  The  Company  was initially organized under the laws of the State of New
York,  in  February  1983.

     The Company operates 24 hours a day, seven days a week to receive referrals
and  coordinate  services  with  physicians,  case  managers, patients and their
families.

     The Company operates in all five boroughs of New York City and the counties
of Nassau, Westchester, Rockland, Orange, Dutchess, Ulster, Putnam and Sullivan,
in  the  State of New York. The Company, as a result of acquisitions as describe
elsewhere  in  this annual report, also operates in Jersey City, Edison, Bradley
Beach, Toms River, East Orange and Hackensack, New Jersey under the name Helping
Hands  Healthcare, (the business name of NYHC Newco Paxxon, Inc., a wholly owned
subsidiary  of  the  Company).  The  Company's services are supplied principally
pursuant to contracts with health care institutions and agencies such as various
county  Departments  of  Social  Services,  NYC  HRA,  New Jersey Medicaid, Beth
Abraham Health Services in the Bronx and Westchester County, Kingsbridge Medical
Center,  Mt.  Sinai  Medical  Center,  Aetna  US  Healthcare, and Gentiva Health
Services.

     The  Company's  primary  objective  is  to enhance its position in the home
health care market by increasing the promotion of its full service and specialty
health  care  capabilities  to  existing  and  new  referral sources; expand its
markets  and  enter  new  markets  by establishing additional branch offices and
acquiring  other related health care businesses; expand its provision of skilled
nursing  services,  principally  infusion  therapy  and the care of women during
pregnancy and their newborn children; and develop complimentary home health care
products  and  services, as well as maintaining its regular training and testing
programs,  and  recruitment  activities.

     On  October  11,  2001,  the Company entered into an agreement with The Bio
Balance  Corp., a privately owned Delaware corporation ("Bio Balance"), pursuant
to which the Company intends to acquire Bio Balance as a wholly-owned subsidiary
in  a  stock-for-stock  exchange  (the  "Transaction"),  which  will  operate
independently  with  its  own  officers,  board  of  directors  and  financing.


     Bio  Balance  is  a  developmental  stage  company  which  owns "probiotic"
technology  and  intellectual  property and has engaged in research, development
and  limited  marketing  in  Israel  of  a  product  for  the  treatment  of
gastrointestinal  diseases  and  disorders  in  animals  and  humans,  including
Irritable  Bowel  Syndrome  and  chronic  diarrhea. See Item 1. - Description of
Business;  (c)  Narrative  Description  of  Business;  Acquisitions.


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<PAGE>
     The  Company  maintains  its  principal  office  at  1850  McDonald Avenue,
Brooklyn,  NY  11223,  telephone  (718)  375-6700.


Industry  Background.

     The  home health care industry has grown substantially over the past decade
according  to  published  industry information. In 1997, HCFA estimated that 3.4
million  enrollees  received  fee-for-service  home  health  services  in  1997,
representing  a  greater than 40% rise from the number of home health recipients
in  1990.  For the period 1990-1997, Medicare home health expenditures increased
from  $5.1 billion to an estimated $17.2 billion and is projected to increase to
$20.1  billion in the year 2001 and $33.6 billion in the year 2008.  Most of the
rise in spending occurred as a result of the increase in visits, from 70 million
in  1990  to  an  estimated  258  million in 1997. Medicaid home health benefits
between  1994  and  1997  have  increased  from approximately $7 billion and $12
billion.  In  1998,  New  York State Medicaid expenditures for personal care and
home  health  aide  services totaled $2.3 billion. The Company believes that the
primary  reasons for the growth in the home health care market include the aging
of  the  U.S.  population;  the  realization of substantial cost savings through
treatment  at  home  as  an  alternative to hospitalization; advances in medical
technology  which  have enabled a growing number of treatments to be provided in
the  home  rather  than  requiring  hospitalization;  the  general preference of
patients  to  receive  treatment  in  a  familiar environment; reductions in the
length  of  hospital stays as a result of increasing cost containment efforts in
the  health  care  industry; growing acceptance within the medical profession of
home  health care and the increase in the incidence of AIDS-related diseases and
cancer.

Aging  Population.

     The  number of individuals over age 65 in the United States is estimated to
have  grown  from approximately 34.1 million in 1996, or 12.9% of the population
to  38.5  million or 14.2% in 1998, and is projected to increase to more than 53
million  in  the year 2020, or 16%. The elderly have traditionally accounted for
two  to three times the average per capita share of health care expenditures. As
the  number  of  Americans  over age 65 increases, the need for home health care
services  is  also  expected  to  increase.

Cost Effectiveness of Home Health Care Services.

     National  health  care  expenditures  increased  from  $993 billion in 1995
(13.7%  of  the  United  States  gross national product) to approximately $1,149
trillion  in  1998  (13.5%  of  the  United  States gross national product).  In
response  to  rapidly rising costs, governmental and private payers have adopted
cost  containment  measures  that encourage reduced hospital admissions, reduced
lengths  of  stay  in hospitals and delayed nursing, home admissions. Changes in
hospital  reimbursement  methods  under  Medicare  from a cost-based method to a
fixed  reimbursement  method  based  on  the patient's diagnosis have created an
incentive  for earlier discharge of patients from hospitals. These measures have
in  turn  fostered  an  increase  in  home  health care which, when appropriate,
provides  medically  necessary  care  at significantly less expense than similar
care  provided  in  an  institutional  setting.


                                        5
<PAGE>
Advances  in  Technology.

     Advances  in  technology  in  the  past  decade  now  enable  patients  who
previously  required  hospitalization  to  be  treated at home. For example, the
development  of  a compact and portable phototherapy blanket performing the same
functions  as  bilirubin  lighting  systems  in  hospitals  for the treatment of
newborn  children with Jaundice, a common condition, permits these infants to be
treated  at  home.  Prior  to the development of this device, these infants were
kept  in  the  neonatal unit of a hospital even after the mother was discharged.
This  practice  delayed mother-infant bonding, made breast-feeding difficult and
otherwise  caused  substantial  inconvenience  and concern to families at a time
when the mother was in a weakened state. Similar advances have been made in home
infusion therapy (which is provided by the Company) and rehabilitation equipment
permitting  treatments  at  home,  which  used  to require hospital settings for
pediatric  and  adult  populations.

Patient  Preference  and  Physician  Acceptance.

     The  Company  believes  that, if possible in any given case, a patient will
prefer  to  be treated at home rather than in an institutional setting. Further,
in  the last decade, the medical profession has shown greater acceptance of home
health  care in the clinical management of patients. As evidence of this greater
acceptance,  the American Medical Association Councils on Scientific Affairs and
Medical  Education  has recommended that training in the principles and practice
of  home  health  care  be  incorporated  into  the  undergraduate, graduate and
continuing  education  of  physicians.

Incidences  of  AIDS  and  Cancer.

     Increases in the incidence of AIDS/HIV infections and cancer have also been
responsible  for a significant portion of the growth in the home care market. As
of  December 31, 1999, 733,374 cases of AIDS had been reported to the Center for
Disease  Control  (not  including  those  with less advanced HIV who could still
benefit  from  treatment). During their treatment, AIDS/HIV patients may receive
several  courses  of  infusion  and  other  therapies  typically administered by
infusion  therapy  companies,  including  AZT,  aerosolized  Pentamidine  (TM),
antibiotics  and  nutritional  support. The Company presently provides a limited
amount  of infusion therapy with pharmaceuticals provided by licensed suppliers.

     The National Cancer Institute estimates that 8.4 million of Americans alive
today  have  a  history  of  cancer. The American Cancer Society, estimated that
about  1.3 million new cancer cases were diagnosed in 1999 and approximately 1.2
million new cases were expected to be diagnosed in 2000. Cancer treatment is one
of the fastest growing segments of outpatient infusion therapy due to increasing
numbers  of  patients and new technologies that allow for the therapy's safe and
effective  administration  in the home and at alternate site locations. Over the
course  of  their  treatment,  cancer  patients  may require a range of infusion
therapies,  including  chemotherapy,  pain  management  and nutritional support.

(b)  Financial  Information  About  Industry  Segments


                                        6
<PAGE>
        Not  Applicable

(c)  Narrative  Description  of  Business

     The Company's personnel currently provides a broad range of home health and
personal  care  support  services  in  capacities  ranging  from  companions  to
live-ins, including assistance with personal hygiene, dressing and feeding, meal
preparation,  light housekeeping and shopping and, to a limited extent, physical
therapy and standard skilled nursing services such as the changing of dressings,
injections,  catheterizations  and  administration of medications. The Company's
personnel also train patients in their own care, monitor patient compliance with
treatment plans, make reports to the physicians and process reimbursement claims
to  third-party  payers.  Among the paraprofessionals and nurses supplied by the
Company are those fluent in Spanish, Mandarin and Cantonese Chinese, Yiddish and
Russian  as well as personnel knowledgeable in the requirements and practices of
Kosher  homes.


Home  Health  Care  Services

     The  Company's  home  health  care services are provided principally by its
professional  and  paraprofessional staff, who provide personal care to patients
and,  to  a  lesser  extent,  by  its skilled nursing staff, who provide various
therapies  employing  medical  supplies  and  equipment  and  infusion  therapy.
Personal  care  and  nursing services for a particular patient can extend from a
few  visits to years of service and can involve intermittent or continuous care.
Approximately  97% of the Company's total net revenues in 2001 were attributable
to  services  by  its  paraprofessional  staff.


Certified  Paraprofessionals

     The  Company's  certified  paraprofessional staff provides a combination of
unskilled  nursing and personal care services to patients, as well as assistance
with daily living, tasks such as hygiene and feeding. Consistent with applicable
regulations,  all  of  the  Company's  aides  are  certified  and work under the
supervision  of a licensed professional nurse. Certain aides have been specially
trained  by the Company to work with patients with particular needs, such as new
mothers  and  their  newborn  infants, patients with particular diseases such as
Cancer,  AIDS  or Alzheimer's Disease and particular classes of patients such as
the  developmentally  disabled  and  terminally  ill.

     The  Company  is  approved  by  New York State Department of Health for the
training  and  certification of Home Health Aides and by the New York Department
of  Social  Services to train and certify Personal Care Aides.  In addition, the
Company  is  approved  by  the  New Jersey Board of  Nursing for the training of
Certified  Home  Health  Aides  in  the  State of New Jersey.  Medicare provides
reimbursement solely for Home Health Aide Service, while Medicaid is responsible
for reimbursement for both Home Health Aide and Personal Care Aide Services.  In
order  to  provide  a  qualified  and  reliable  staff, the Company continuously
recruits,  trains,  provides  continuing  education  for and offers benefits and
other  programs  to  encourage  retention  of its staff. Recruiting is conducted
primarily  through  advertising,  direct  contact  with  community  groups  and
employment  programs, and the use of benefits programs designed to encourage new
employee  referrals  by  existing  employees.

     All  paraprofessional  personnel  must  pass  a  written  exam and a skills
competency test prior to employment, with all certificates having been validated


                                        7
<PAGE>
by  the  issuing agency. The Director of Nursing in each of the Company's branch
offices  validates  the  professional  competency  of all new hires. Newly hired
employees  are  re-evaluated  as  to  competency  within  six  months  of  their
employment  and  all  employees  are re-evaluated on an on-going basis, at least
semi-annually.  In  addition, they undergo an orientation program which includes
material  regarding HIV, Hepatitis B, universal precautions, patients rights and
the  Company's  policies  and  procedures.

     Competition  for  qualified  staff  continues  to  be  intense. The Company
competes  to  attract  and  retain  personnel  on  the basis of compensation and
working  conditions. Among the benefits, which the Company provides to its staff
are  competitive  salaries,  a  401(k)  Plan,  employee-funded health insurance,
vacations and bonuses. The Company has generally not experienced difficulties in
the  past  in attracting and retaining personnel. It believes it will be able to
compete  effectively in this area and satisfy its overall staffing requirements.
However,  there  can be no assurance that shortages of health care professionals
in  the  future  will  not  occur and such shortages could materially effect the
Company's  ability  to  maintain  or  increase  its  current  commitments.


Licensed  Professional  Nurses

     The  Company  employs  licensed professional nurses (both registered nurses
and  licensed  practical  nurses)  who  provide special and general professional
nursing  services  (these  nurses are employed on a per diem basis). The Company
also  employs registered nurses who are responsible for training and supervising
the  Company's  paraprofessional staff, as well as providing backup in the field
for  the  nursing  staff which is providing care (these nurses are employed on a
salaried  basis).  General  nursing  care is provided by registered and licensed
practical nurses and includes periodic assessment of the appropriateness of home
care, the performance of therapy procedures, and patient and family instruction.
Patients  receiving  such  care  include  stabilized  postoperative  patients
recovering  at home, patients who, although acutely ill, do not need to be cared
for  in  an  acute  care facility and patients who are chronically or terminally
ill.

     Specialty  nurses are registered nurses with experience or certification in
particular  specialties,  such  as  emergency service, intensive care, oncology,
intravenous  therapy  or  infant  and  pediatric  nursing.  The  Company employs
specialty  nurses  to provide a variety of therapies and special care regimes to
patients in their homes. These specialty nurses also instruct patients and their
families  in  the  self-administration  of  certain  therapies  and in infection
control,  emergency procedures and the proper handling and usage of medications,
medical  supplies  and  equipment.

     The  Company's  licensed  professional  nurses  also provide a very limited
amount of in-home administration to patients of nutrients, antibiotics and other
medications  intravenously  (into  a  vein),  subcutaneously (under the skin) or
through  feeding  tubes, utilizing supplies provided by licensed suppliers. Such
intravenous  therapy  is  used for antibiotic treatment, parental nutrition (the
administration of nutrients), enteral nutrition (the administration of nutrients
directly into the digestive tract), growth hormone therapy, pain management, and
chemotherapy.  The  duration,  progression and complexity of infusion therapy is
governed  by  the  patient's disease and condition and can range anywhere from a
few  weeks  to  many  years.

     All  nurses  hired  by  the Company must have at least one year of current,
verifiable experience, including references and license verification. All nurses
working  in  specialty  areas  must  have  at  least  two  years  of experience.


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<PAGE>
     While the provision of licensed professional nursing services accounted for
less than 3% of the Company's net revenues in 2001, the Company has expanded its
nursing  operations in its existing markets as well as new geographic locations.
See  "Company  Strategy."

Company  Strategy

     The  Company  continues  to  move rapidly towards its objective to become a
comprehensive  provider  of  efficient  and  high quality home health care to an
increased  share  of  expanding  markets.  The primary elements of the Company's
strategy to achieve this objective are geographic expansion of its branch office
network  by  investment  in  additional branch offices and by the acquisition of
other  home  health care companies, and by expansion of the services provided by
its  licensed professional nurses, principally in the areas of infusion therapy,
pediatrics and maternal/child care. The Company intends to initially concentrate
its  expansion  efforts in its current market areas and the counties surrounding
those  market areas. In addition to expansion into geographic areas in proximity
to  the  Company's  current  branch  offices, the Company will generally seek to
enter  and  expand  into  new  metropolitan areas in the Northeast and Southeast
regions  of  the  United  States  which  have  large patient populations and, in
particular,  patients  traveling  between  these  regions.

     The  Company's  recent proposed acquisition of an Israel based company, Bio
Balance  Corporation  is evidence of their determination to make a difference in
the  health  care  industry.  The  Bio  Balance Corporation, is a privately held
development  stage company which engages in research, development, marketing and
sales  of  "Probiotic  Bacteria  Technology"  a  product  for  the  treatment of
gastrointestinal  disorders  in humans and farm animals.  This also includes the
treatment for Irritable Bowel Syndrome (IBS) and chronic diarrhea, which effects
up  to 40 million Americans and over 10% of the population of Western countries.
Many  pharmaceutical  companies have published data suggesting that an effective
treatment  for  IBS  could  have sales that exceed one billion dollars per year.
The Company's strategy is to expend on this technology and thereby anticipates a
positive  impact  on the Company's economic growth, as well as to participate in
the  development  for the treatment for these debilitating disorders that effect
so  many  Americans.


Acquisitions

     On  December  8,  1997,  Helping  Hands  Healthcare  purchased  from  Metro
Healthcare  Services,  Inc.,  a  New Jersey corporation ("Metro"), the home care
business  assets  (other  than accounts receivable) which Metro operated in West
Orange, Budd Lake and Jersey City, New Jersey for a purchase price consisting of
$580,000 paid at closing and a promissory note in the principal sum of $200,000,
which  has  been  paid in full.  As part of the acquisition transaction, Helping
Hands Healthcare assumed various leasehold obligations for offices together with
various  equipment  leases  for  items  of  business  equipment.

     On February 8, 1998, Helping Hands Healthcare purchased from Metro the home
care  business  assets  (other than accounts receivable) which Metro operated in
Edison, Shrewsbury and Toms River, New Jersey for a purchase price consisting of
$500,000 paid at closing and a promissory note in the principal sum of $580,000,
which  has  been  paid  in full. As part of the acquisition transaction, Helping
Hands  Healthcare  assumed  various  leasehold  obligations.

     On  March  26, 1998, Helping Hands Healthcare purchased from Heart to Heart
Healthcare  Services, Inc., a New Jersey corporation ("Heart to Heart") the home


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<PAGE>
care  business  assets  (other  than  accounts  receivable) which Heart to Heart
operated  in  East  Orange  and  Hackensack,  New  Jersey  for  a purchase price
consisting  of  a  promissory note in the principal sum of $1,150,000, which has
been  paid  in  full.  As  part  of  the  acquisition transaction, Helping Hands
Healthcare assumed various leasehold obligations together with various equipment
leases  for  items  of  business  equipment.

     Certain of the directors are principal stockholders of Heart to Heart.  The
Company  therefore obtained an independent opinion that the terms and conditions
of  the  acquisition  were,  under  all  circumstances,  fair  to  the  Company.

     On February 22, 1999, Helping Hands Healthcare completed the acquisition of
the  assets  of  a  home  health care office in Shrewsbury, New Jersey, formerly
owned  by Staff Builders Services, ("Staff Builders") Inc., for a purchase price
of  $65,000.

     On  June 11, 1999 Helping Hands Healthcare completed the acquisition of the
assets  of  a  Staff Builders home health care office in Hackensack, New Jersey,
for  the  purchase  price  of  $25,700.

     On  October  23, 1999 New York Health Care completed the acquisition of the
assets  of  a Staff Builders home health care office in Manhattan, New York, for
the  purchase  price of $30,000.  The business of this office was transferred to
other  existing  New  York  Health  Care  offices.

     Due  to  a decrease in revenue and projected reductions in revenue from the
operations  of certain offices and the closing of Shrewsbury, Budd Lake and West
Orange offices located in New Jersey, the Company evaluated the ongoing value of
its  intangible assets associated with those acquisitions which were made by the
Company from December 1997 through February 1999.  Based on this evaluation, the
Company  determined  that  the  intangible  assets  with  a  carrying  amount of
$1,688,134  were  impaired.  Accordingly, the Company reduced the estimated fair
value  of  those  intangible  assets  by  $1,487,192  as a charge to operations.
Estimated fair value was based on the value associated with current purchases of
similar  companies  in  the  home  health  care  industry.

     The  Company management believes that it has successfully integrated all of
its  acquisitions,  with minimum interruptions to its daily operations. This has
been  accomplished by the formation of a mergers and acquisitions ("M&A") group,
which includes Chief Executive Officer, Chief Operating Officer, Chief Financial
Officer  and  Vice  President of Clinical Operations. The Company has integrated
its  billing,  payroll and clinical services to all new locations to ensure they
meet  its  high  quality  standards. The experience acquired during this process
should  allow  the Company to continue down its path of significant M&A activity
in  order  to  become  one  of  the leading home health agencies in the New York
metropolitan  area.

     The Company is accounting for each of these acquisitions as a "purchase" in
accordance  with  Generally  Accepted  Accounting  Principles.

     On  October  11,  2001,  the Company entered into an agreement with The Bio
Balance  Corp., a privately owned Delaware corporation ("Bio Balance"), pursuant
to which the Company intends to acquire Bio Balance as a wholly-owned subsidiary
in  a  stock-for-stock  exchange  (the  "Transaction"),  which  will  operate
independently  with  its  own  officers,  board  of  directors  and  financing.


                                       10
<PAGE>
     Bio  Balance  is  a  developmental  stage  company  which  owns "probiotic"
technology  and  intellectual property  and has engaged in research, development
and  limited  marketing  in  Israel  of  a  product  for  the  treatment  of
gastrointestinal  diseases  and  disorders  in  animals  and  humans,  including
Irritable  Bowel  Syndrome  and  chronic  diarrhea.

     "Probiotics"  are  live  microorganisms  or  microbial  mixtures  which are
administered  to  the  animal  or human host to improve its microbial balance by
stimulating  the  growth  of  healthy  bacteria.  Bio  Balance  has filed patent
applications  in  Israel  and  the  United  States  on  its  core  technologies.

     Bio  Balance's first product, BACTRIX(TM), which has undergone toxicity and
animal  studies  in  established  laboratories  in  Israel, has received Israeli
approval  for  veterinarian  use  and  is  expected  to  be available in Israeli
pharmacies  for  human  use  in  the  near  future.  BACTRIX(TM)  consists  of a
proprietary strain of non-pathogenic (i.e. non-toxic) M-17 Escherichia Coli ("E.
coli")  bacteria preserved in a proprietary vegetable extract formulation. There
appears to be substantial evidence found in scientific literature supporting the
beneficial  effects  of  non-pathogenic  E.  coli.

     Bio  Balance  plans to comply with United States Food & Drug Administration
requirements  for the introduction of BACTRIX(TM) to the United States market as
a  prescription  medical  food  or  pharmaceutical  drug  in the belief that the
extensive  animal  studies,  and  limited  human studies, undertaken thus far in
Israel  and  in  the  Soviet  Union,  have shown BACTRIX(TM) to be non-toxic and
effective  in  dealing  with  IBS  and  chronic  diarrhea  symptoms.

     The  terms  of  the Transaction require that Bio Balance complete a private
placement of its securities in which it raises at least $6,000,000 in new equity
for 3,000,000 shares (appx. 13.5%) of its common stock. The net proceeds of that
transaction  are  to  be  used  exclusively  for  the operations of Bio Balance.
Similarly, the Company's revenues from its ongoing operations and its sources of
financing  (including  its $4,000,000 line of credit) are to be used exclusively
for  its  home  health  care  business  and  related  operations.

     The  Company's  six-seat  Board  of  Directors  will consist of four of the
present directors,  including  the  Company's  president and  secretary, and two
directors  appointed  by  Bio  Balance.  The  terms of  the  existing employment
agreements  of  the  Company's  president  and  secretary  are  expected  to  be
extended  for  five  years. See Item 9 - Directors and Executive Officers of the
Company;  Compliance  with  Section  16(a)  of  the  Exchange  Act  - Employment
Agreements;  and  Item  12  -  Certain  Relationships  and Related Transactions.

     As  of  the proposed closing of the Transaction (expected to occur in April
2002),  Bio  Balance is expected to have issued and outstanding up to 22,333,334
shares  (including  up  to 3,000,000 shares being sold in its private placement)
and  up  to 710,000 common stock purchase warrants. The terms of the Transaction
provide  for  a  share-for-share exchange of Company shares and warrants for Bio
Balance  shares  and warrants following the Company's shareholders approving the
Transaction  together  with an increase of its authorized shares of common stock
from  50,000,000 to 100,000,000 and a 1 for 1.5 share reverse stock split, which
would  result  in  2,868,069 issued and outstanding Company shares and 1,099,167
outstanding  options and warrants. There will be approximately 25,200,000 issued
and  outstanding  Company  shares  upon  the  closing  of  the  Transaction.


                                       11
<PAGE>
     The  Transaction  provides  for  restrictions  on  the  sale or transfer of
approximately  17,400,000 of the Company shares being issued in exchange for Bio
Balance  shares.  Approximately  9,000,000  shares  will be restricted until the
earlier  of June  27, 2003 or one year after the effective date of the Company's
Form  S-4  Registration Statement (the "Effective Date"); 400,000 shares will be
restricted  until  the  earlier  of  August  10,  2003  or  one  year  after the
Effective  Date;  990,000  shares  will  be  restricted for a period of 150 days
after  the closing of the  Transaction, 10% of those shares will be transferable
between  the120th  day  and  the 150th day after the closing, following which an
additional 7% of those shares will become unrestricted in each succeeding month;
and  7,000,000  of  the  Company's shares will be restricted for a period of 180
days  after  the  Effective  Date.  Similarly,  all of the 1,501,985 (pre-split)
Company shares (comprised of 1,169,899 shares owned of record and 332,086 shares
issuable  upon  the conversion of issued and outstanding shares of the Company's
Convertible  Preferred  Stock)  held  by  its  president  and  secretary will be
restricted for a period of 120 days after the Effective Date, after which, while
they  are  directors of the Company, they will be limited to sale or transfer of
not more than10% of their shares per month. The restrictions on the shares owned
by  the  president  and  secretary  permits  them, however, to make transfers to
family  trusts  and  registered charities providing the transferees abide by the
restrictions  imposed  upon  the  transferors, except that registered  charities
will  be  limited  to selling not more than 1,000 Company shares per trading day
during  a  period  ending120  days  after  the  closing.

     New  York  State  Department  of  Health  ("DOH")  regulations  provide
requirements  for  the  licensing  of  home  health  care  services agencies and
significant  transfers of their ownership. Any transfer to a person or entity of
10%  or  more  of the capital stock generally requires some form of clearance by
the  New York State Public Health Council ("PHC"). Obtaining clearance generally
involves  a  showing  of good character and competence on the part of all of the
officers  and  directors of the licensed company and any holder or transferee of
10%  or  more  of  the Company's stock. The Transaction is subject to compliance
with  these regulatory requirements. The Company has been advised that, since it
is anticipated that no new shareholder or affiliated group will be acquiring 10%
or  more  of  the  Company's issued and outstanding equity shares, and since the
Company's  board of directors will at closing have a majority of members who are
current  directors  of  the  Company,  there  will  be no "change of control" as
contemplated  by  the  applicable regulations and no application for approval by
the  DOH  or  PHC  will  be  required.

     The  Company  is  preparing  and  intends  to  file with the SEC a Form S-4
Registration  Statement  describing  the  exchange  offer  together with a proxy
statement  for  distribution to its shareholders for the shareholders meeting to
be  held  to  obtain  shareholder  approval  of  the  Transaction.


                                       12
<PAGE>
Branch  Offices

     The  home health care industry is, fundamentally, a local one in which both
the  patients and the referral sources (such as hospitals, home health agencies,
social service agencies and physicians) are located in the local geographic area
in  which  the  services  are provided.  The Company seeks to serve local market
needs  through  its  branch  office  network,  run  by  branch  managers who are
responsible  for  all  aspects  of  local  office  decision-making,  including
recruiting,  training,  staffing,  and marketing.  In December 1997, the Company
acquired  three  branch  offices  in West Orange, Budd Lake and Jersey City, New
Jersey.  In  February  1998,  the  Company  acquired  an additional three branch
offices  in  Edison,  Shrewsbury  and Toms River, New Jersey. In March 1998, the
Company  acquired  another two branch offices in East Orange and Hackensack, New
Jersey.  In February 1999, the Company acquired the assets of a branch office in
Shrewsbury,  New  Jersey.  In  June  1999,  the Company acquired the assets of a
branch  office in Hackensack, New Jersey.  In October 1999, the Company acquired
the assets of a branch office in Manhattan.  See Item 1(a) - General Development
of  Business;  Item  2  -  Description  of  Properties;  Item  6  - Management's
Discussion  and  Analysis  of  Financial  Condition  and Results of Operations -
Liquidity and Capital Resources; and Item 12 - Certain Relationships and Related
Transactions.  The Company intends to open additional branch offices in New York
State,  subject  to  entering  agreements  with the local New York Department of
Social  Services agencies. In addition, the Company hopes to expand further into
New  Jersey,  Pennsylvania  and Connecticut in order to offer a wider geographic
coverage  to  the  health  maintenance  organizations  ("HMO's") and health care
insurance  organizations  with  which  it  deals,  and  to  add  additional
organizations.  This  further  expansion  is subject to the completion of market
surveys  in the various locations to ascertain the extent to which existing home
care  medical  needs  are  not  being met as well as competition and recruitment
issues.



                                       13
<PAGE>
Infusion  Therapy

     The  Company  presently  provides  infusion  therapy  service  to patients,
utilizing  pharmaceuticals  provided  by licensed suppliers. Management believes
that  the  total  market  for home infusion therapy is continuing its growth and
that  increasing  the  provision of infusion therapy will build on the Company's
strength in providing nursing services, because such therapies generally require
administration  by  specialty  nurses.  The  Company  will  also  seek to supply
infusion  therapy  patients  with  the  other  home  health  care  services  and
therapies,  which  they  often  require  and  which  are offered by the Company.
However,  there  can  be  no assurance that the Company will expand its infusion
therapy  business  or,  if  expanded  that  it will conduct such a business on a
profitable  basis.

Professional  Care  Resources

     The Company intends to expand its skilled nursing programs in order to meet
the  needs  which  management  believes  are  being  created  by early discharge
programs.  The  existing  referral base utilized by the Company from the various
agencies, insurance companies, social workers, case managers and physicians will
be  used  to  meet  what  management perceives to be a need not being met by the
current  pool  of  home  health  care  agencies.  The  Company  expects that the
expansion  of  this  program  will  require  the hiring of an additional service
directors  with  an  extensive  background  in  skilled  nursing  to  assist the
Directors of Nursing in each of the Company's branch offices. Additional support
staff  will  also  be  required,  as  well as new training, materials, assistant
directors,  coordinators  and  marketing  staff.

Organization  and  Operations

     The  Company  operates  24  hours  a  day,  seven  days  a week, to receive
referrals  and  coordinate services with physicians, case managers, patients and
their  families.  The  Company  provides  services  through its 11 principal and
branch  offices  and two recruitment and training, offices. The Company seeks to
achieve  economies  of  scale by having each branch office serve a large patient
population. Each office conducts its own marketing efforts, negotiates contracts
with  referral  sources, recruits and trains professionals and paraprofessionals
and  coordinates  patient care and care givers. Each office is typically staffed
with  a  branch  manager,  director  of  nursing,  nursing supervisor, home care
coordinators,  clerical  staff  and  nursing  services  staff.

     The  Company's  principal  office retains all functions necessary to ensure
quality of patient care and to maximize financial efficiency. Services performed
at  the  principal  office  include  billing  and collection, quality assurance,
financial  and  accounting  functions,  policy and procedure development, system
design  and  development,  corporate development and marketing. The Company uses
financial  reporting  systems  through  which  it  monitors data for each branch
office,  including  patient mix, volume, collections, revenues and staffing. The
Company's systems also provide monthly budget analysis, financial comparisons to
prior  periods  and  comparisons  among  the  Company's  branch  offices.


                                       14
<PAGE>
Work  Flow

     A  case  is initiated by one of the Company's referral sources contacting a
branch  office  and  advising  it  of the patient's general location, diagnosis,
types  of  services required, hours of service required and the time of day when
the  services  are  to be rendered. The branch office then contacts the referral
source  as  promptly as possible with the identification of the staff person who
will  be rendering the service, after which the referral source transmits to the
branch  office  a  detailed  copy of the plan for the patient's home care, which
includes  the  type  of  care  to  be rendered, the method by which it should be
rendered,  the  precise  location  and  hours.

     The  supervisory staff at the branch office then reviews the care plan with
the staff member(s) who will be providing the care and then dispatches the staff
member(s)  to  begin  rendering  the  care,  usually  the  next  day.

     The  clerical  staff  at  the  branch  office enters all of the information
regarding  the  case  into the local area computer network of the branch office,
which then generates the work schedule for the staff member(s), which provides a
detailed  description  of  the  services to be rendered, the hours and number of
days  during  which  the  care  is  to  be  provided. All of this information is
spontaneously received by the Company's principal office by way of the wide area
computer  network  linking  the  principal office to each of the branch offices.
This  information is then processed by the principal office computer system on a
weekly  basis  to  (generate  the documentation of the services being provided).
Such  documentation is then used to generate the billing for the service as well
as  process  the  payroll  for  the  staff  member(s)  providing  the  service.


Referral  Sources

     The  Company  obtains  patients primarily through contracts, referrals from
hospitals, community-based health care institutions and social service agencies,
case  management and insurance companies. Referrals from these sources accounted
for  substantially  all  of  the  Company's  net  revenues  in 2001. The Company
generally  conducts  business  with  most of its institutional referral sources,
including  those referred to below, under one-year contracts which fix the rates
and terms of all future referrals but do not require that any referrals be made.
Under  these  contracts,  the referral sources refer patients to the Company and
the  Company bills the referral sources for services provided to patients. These
contracts  also  generally designate the kinds of services to be provided by the
Company's employees, liability insurance requirements, billing and recordkeeping
responsibilities,  complaint  procedures,  compliance  with applicable laws, and
rates  for  employee  hours  or  days  depending on the services to be provided.
Approximately  220  such  contracts  were  in  effect  as  of December 31, 2001.

     In  January  1999,  the Company obtained a significant referral source from
The  City  of  New  York  to  provide services for Medicaid patients residing in
Brooklyn,  New  York.  In October 1999, the Company was recommended for an award
of  an  extension  of  up  to  six  years.  The annualized gross revenues to the
Company  during  each  of  the  years  of  contract  implementation  would  be
approximately  $12  million,  for a potential total $72 million over the life of
the  agreement.  The  revenue  for  year  ended  2001  from  this  contract  was
approximately  $15,000,000.

     One  or  more referring institutions have accounted for more than 5% of the
Company's  net revenues during the Company's last two fiscal years, as set forth
in  the  following  table:


                                       15
<PAGE>
                                        Percentage of Net Revenues
                                        --------------------------
Referring Institution                         2001       2000
----------------------                       ------     ------

New York City Medicaid (HRA)                 45.05%     37.58%
New Jersey Medical Assistance Program        14.53%     15.17%
County Departments of Social Services (1)     6.81%      6.60%
Beth Abraham Health Services                  6.37%      5.27%
Mount Sinai Medical Center                    4.94%      5.32%

     (1)     The various county departments of social services are funded by the
New  York  State  Department of Health which, as of October 1, 1996, assumed the
responsibility  for  the overall administration of Medicaid programs in New York
formerly administered by the New York Department of Social Services.

     Overall,  the  Company's  ten  largest referring institutions accounted for
approximately  88%  of  net  revenues  for  2001  and approximately 81.2% of net
revenues  for  2000.


Billing  and  Collection

     The  Company  screens  each  new  case  to  determine  whether  adequate
reimbursement  will  be  available  and  has  developed substantial expertise in
processing  claims. The Company makes a concerted effort to provide complete and
accurate  claims  data  to the relevant payer sources in order to accelerate the
collectibility  of  its  accounts  receivable.

     Days  Sales  Outstanding ("DSO") is a measure of the average number of days
taken  by  the  Company  to collect its accounts receivable, calculated from the
date services are billed. For the year ended December 31, 2001 the companies DSO
was  61 compared to 84 for the year ended December 31, 2000.  The improvement of
23 days in DSO is the net effect of combining the New Jersey DSO of 30 days with
the Home Attendant program DSO of 38 days and New York's DSO which are 103 days.

     The  Company licenses the Dataline Home Care System, a computerized payroll
system  designed  to  produce  invoices for services rendered as a by-product of
employee  compensation.  Automated  schedules  and  staffing  requirements  are
maintained  in  the  Company's  offices,  with the ability to enter all relevant
patient and employee demographic information. The payroll is processed weekly at
the  Company's  principal office in Brooklyn. This office is responsible for the
processing  of  data,  ensuring  the  availability  of  all  required  billing
documentation  and  its accuracy, and the printing and distributing of payments.

     Once  payroll  processing  is  completed,  the  Company's  computer  system
generates  the  resulting invoices automatically. The necessary documentation is
attached  to  all  invoices  that  are  mailed  to  clients.

     In  the  opinion  of  management,  there  is  no reason to believe that any
computer  system  or  software  used  internally  by the Company will materially
affect  transactions  with any customer, supplier or business partner, now or in
the  future.

     Management  reviews  reports  for  all  phases  of  the billing process and
prepares reconciliations for the purpose of ensuring accuracy and maintenance of
controls. When errors are found, new processes are developed, as appropriate, to
ensure  and  improve  the  quality  and  accuracy  of  the  billing  process and
responsiveness  to  clients'  needs  and  requirements.

     Accounts  receivable  reports  are  produced  weekly  and  are analyzed and
reviewed  by staff and management to locate negative trends or emerging problems
which  would  require  immediate attention. All unpaid invoices are reviewed and


                                       16
<PAGE>
telephone  contacts  established  for  invoices  over 90 days old. The Company's
experience  with  collection  of  accounts  receivable  has been favorable, with
uncollectible  accounts  within  the  allowances  provided  by  the  Company.

     Private  patients are required to pay the one-week fee for their service in
advance,  as  a deposit for services to be provided. For patients with insurance
covering  home  health services, the Company accepts assignment of the insurance
and  submits  claims  if  the  carrier  first verifies coverage and eligibility.
Payments  from  private patients are required to be made weekly, as invoices are
submitted  and,  if unpaid over three weeks, result in follow-up telephone calls
to ensure prompt payment. Requests for terms from private patients are generally
honored  and  payment  arrangements  structured based on the patient's financial
resources  and  ability  to  pay.  Unresponsive accounts are referred to outside
collection  agencies.

Reimbursement

     The  Company  is  reimbursed  for  its  services,  primarily  by  referring
institutions,  such  as  health  care  institutions and social service agencies,
which in turn receive their reimbursement from Medicaid, Medicare and, to a much
lesser  extent,  through  direct  payments  by  insurance  companies and private
payers. New York State and New Jersey Medicaid programs constitute the Company's
largest  reimbursement source, when including both direct Medicaid reimbursement
and  indirect  Medicaid  payments  through  many  of  the  Company's  referring
institutions.  For  each  of 1999 and 2001, payments from referring institutions
which  receive  direct payments from Medicare and Medicaid, together with direct
reimbursement  to  the Company from Medicaid, accounted for approximately 97% of
net  revenues.  Direct  reimbursements  from  private  insurers,  prepaid health
plans,  patients and other private sources accounted for approximately 3% of net
revenues  for  each  of  the  calendar  years  2000  and  2001.

     The  New  York  State  Department  of  Health,  in  conjunction  with local
Departments  of  Social  Services,  promulgates  annual  reimbursement rates for
patients  covered  by  Medicaid.  These  rates  are  generally  established on a
county-by-county  basis,  using  a complex reimbursement formula applied to cost
reports  filed  by  providers.  Generally,  the  first  report  filed  (called a
"budgeted"  report) uses projections to develop the current year's reimbursement
rate,  subject  to retroactive recapture of any monies paid by local Departments
of  Social  Services  for  budgeted  expenses  which are greater than the actual
expenses  incurred.  The  Company has filed all required annual cost reports for
each  of  its  offices,  which  provide  services  to  Medicaid  recipients. The
Company's  expenses  have  always  equaled  or  exceeded  the  budgeted amounts.

     Third party payers, including Medicaid, Medicare and private insurers, have
taken extensive steps to contain or reduce the costs of health care. These steps
include  reduced  reimbursement  rates, increased utilization review of services
and  negotiated  prospective or discounted pricing and adoption of a competitive
bid  approach  to  service  contracts. Home health care, which is generally less
costly  to  third party payers than hospital-based care, has benefited from many
of  these  cost  containment  measures.

     On June 28, 2000, the Health Care Financing Administration (HCFA) finalized
a  new  Medicare  Payment  System  to help assure appropriate reimbursements for
quality,  efficient home health care.  On October 1, 2000, Medicare began paying
all  certified  home  health  agencies  under a prospective payment system.  The
change  was  mandated  by  the  Balanced  Budget  Act of 1997 amended by Omnibus
Consolidated  and  Emergency  Supplemental  Appropriations  Act  of 1998 and the


                                       17
<PAGE>
Balanced  Budget  Refinement  Act of 1999.  While the Company is not currently a
Medicare-Certified  Home  Health  Agency  subject  to these changes, most of the
Company's  referral  sources  are  and  they  may be negatively impacted by this
legislation  which  was  adopted  to  control  home  health  care  costs.

     The  New  York  State  Department of Health issues Certificates of Need for
Certified  Home  Health  Agencies ("CHHA's"), which provide post-acute home care
services  for  people  who have just been discharged from a hospital but are not
yet  fully recovered, and Long-Term Home Health Care Programs ("LTHHCP's"), also
known  as the "Nursing Home Without Walls," which is intended to provide elderly
people  with  an alternative for long-term care other than by entering a nursing
home  at  less  than  the  cost of nursing home care. The Company negotiates its
contracts  with  CHHA's and LTHHCP's on the basis of services to be provided, in
connection  with  contracts  either currently in effect with the Company or with
other  agencies.  Prevailing market conditions are such that, despite escalating
operating  expenses, reduced contract rates are regularly "demanded" as a result
of  internal budget restraints and reductions mandated by managed care contracts
between  the  Company's  clients and HMO's and other third party administrators.
While  management  anticipates  that  this  trend  is likely to continue for the
foreseeable  future,  it  does  not  expect  the  impact  on  the  Company to be
significant,  since its rates are competitive and, therefore, are expected to be
subject  to  only  minor reductions. However, as expenditures in the home health
care  market continue to grow, initiatives aimed at reducing the costs of health
care  delivery  at  non-hospital  sites  are increasing. A significant change in
coverage or a reduction in payment rates by third party payers, particularly New
York  State  Medicaid,  would  have a material adverse effect upon the Company's
business.

Quality  Assurance

     The  Company has established a total quality management program including a
quality  assurance  program to ensure that its service standards are implemented
and that the objectives of those standards are met. The Company believes that it
has  developed  and implemented service standards that comply with or exceed the
service  standards  required by JCAHO. The Company received "Accreditation" from
JCAHO  after  its triannual survey in November 1997.  In November 2000, New York
Health  Care  was  surveyed  by JCAHO and received accreditation of its New York
offices  for  the next three years (expiring in November 2003).  New York Health
Care  did  not seek JCAHO accreditation for it's New Jersey offices because it's
not  required  by any of the contracts in that state.  The Company believes that
its  reputation  for  quality  patient  care  has been and will continue to be a
significant  factor  in its success. An adverse determination by JCAHO regarding
the Company on any branch office could adversely affect the Company's reputation
and  competitive  position.

     The  Company's  quality  assurance  program  includes  the  following:

     Quality Advisory Board. The Company maintains a Professional Advisory Board
for its branch offices, which consists of a physician, nursing professionals and
representatives of branch management. The Professional Advisory Board identifies
problems  and  suggests  ways  to improve patient care based on internal quality
compliance  audits  and  clinical  and  personnel  record  reviews.


                                       18
<PAGE>
     Internal  Quality  Compliance Review Process. Periodic internal reviews are
conducted  by  the  Company's  management  to  ensure  compliance  with  the
documentation  and  operating  procedures required by state law, JCAHO standards
and internal standards. Written reports are forwarded to the director of nursing
and branch managers. The Company believes that the internal review process is an
effective  management  tool  for  the  director  of nursing and branch managers.

     Case  Conferences.  Staff  professionals regularly hold case conferences to
review  problem  and  high  risk  cases,  the  physician's treatment and Company
services  provided  for  such cases in order to ensure appropriate, safe patient
care  and  to  evaluate  patient  progress  and  plans  for  future  care.

     Clinical  Record  Review. Clinical record review is the periodic evaluation
of  the  documentation  in patient clinical records. In this review process, the
Company  evaluates  the performance of the nursing services staff to ensure that
professional  and  patient  care  policies are followed in providing appropriate
care  and  that  the  needs  of  patients  are being met. Clinical record review
findings  are  documented  and reviewed by the applicable Quality Advisory Board
for  recommendations.


Sales  and  Marketing

     The  Company's  executive  officers,  Jerry  Braun and Jacob Rosenberg, are
principally responsible for the marketing of the Company's services. Each branch
office  director is also responsible for sales activities in the branch office's
local  market  area.  The  Company  attempts  to  cultivate  strong,  long-term
relationships  with  referral sources through high quality service and education
of local health care personnel about the appropriate role of home health care in
the  clinical  management  of  patients.


Government  Regulation

Home  Health  Care

     The federal government and the States of New York and New Jersey, where the
Company currently operates, regulates various aspects of the Company's business.
Changes  in  the law or new interpretations of existing laws can have a material
effect  on  permissible activities of the Company, the relative costs associated
with  doing  business  and  the  amount of reimbursement by government and other
third-party  payers.

     The  Company  is licensed by New York State as a home care services agency.
The  state  requires  approval  by  the  New  York  State  Public Health Council
("Council")  of  any  change  in  "the  controlling  person" of an operator of a
licensed  home  care services agency ("LHCSA"). Control of an entity is presumed
to  exist if any person owns, controls or holds the power to vote 10% or more of
the  voting  securities of the LHCSA. A person seeking approval as a controlling
person of a LHCSA, or of an entity that is the operator of a LHCSA, must file an
application  for  Council approval within 30 days of becoming controlling person
and,  pending a decision by the Council, such person may not exercise control of
the  LHCSA.  If any person should become the owner or holder, or acquire control
of  or  the right to vote 10% or more of the issued and outstanding Common Stock
of  the  Company,  such person could not exercise control of the Company's LHCSA
until  an  application  for  approval of such ownership, control or holding, has


                                       19
<PAGE>
been  submitted to the Council and approved. In the event such an application is
not  approved, such owner or holder may be required to reduce their ownership or
holding  to  less than 10% of the Company's issued and outstanding Common Stock.

     The  Company is also subject to federal and state laws prohibiting payments
for  patient  referrals  and  regulating  reimbursement procedures and practices
under  Medicare,  Medicaid and state programs. The federal Medicare and Medicaid
legislation  contains  anti-kickback provisions, which prohibit any remuneration
in  return  for  the referral of Medicare and Medicaid patients. Courts have, to
date,  interpreted  these  anti-kickbacks  laws  to  apply  to  a broad range of
financial  relationships. Violations of these provisions may result in civil and
criminal  penalties,  including fines of up to $15,000 for each separate service
billed  to  Medicare  in  violation  of the anti-kickback  provisions, exclusion
from  participation  in  the Medicare and state health programs such as Medicaid
and  imprisonment  for  up  to  five  years.

     The  Company's healthcare operations potentially subject it to the Medicare
and  Medicaid  anti-kickback  provisions  of  the  Social  Security  Act.  These
provisions  are broadly worded and often vague, and the future interpretation of
these  provisions  and their applicability to the Company's operations cannot be
fully  predicted with certainty. There can be no assurance that the Company will
be  able  to  arrange its acquisitions or business relationships so as to comply
with  these  laws or that the Company's present or future operations will not be
accused  of  violating', or be determined to have violated, such provisions. Any
such  result  could  have  a  material  adverse  effect  on  the  Company.

     Various Federal and state laws regulate the relationship among providers of
healthcare  services,  including employment or service contracts, and investment
relationships.  These laws include the broadly worded fraud and abuse provisions
of  the  Social  Security  Act  that are applicable to the Medicare and Medicaid
programs,  which  prohibit  various  transactions involving Medicare or Medicaid
covered  patients  or  services.  Among  other things, these provisions restrict
referrals  for certain designated health services by physicians to entities with
which  the physician or the physician's immediate family member has a "financial
relationship"  and  the  receipt  of remuneration by anyone in return for, or to
induce,  the  referral  of  a  patient  for  treatment  or purchasing or leasing
equipment  or  services  that  are paid for, in whole or in part, by Medicare or
Medicaid.  Violations  of  these  provisions  may  result  in  civil or criminal
penalties for individuals or entities and/or exclusion from participation in the
Medicare  and  Medicaid  programs. The future interpretation of these provisions
and  their  applicability  to the Company's operations cannot be fully predicted
with  certainty.

     In  May  1991,  the  United  States Department of Health and Human Services
adopted  regulations  creating  certain "safe harbors" from federal criminal and
civil  penalties  by  identifying  certain types of joint venture and management
arrangements  that  would  not be treated as violating the federal anti-kickback
laws  relating  to  referrals  of patients for services paid by the Medicare and
Medicaid  programs. It is not possible to accurately predict the ultimate impact
of  these  regulations  on  the  Company's  business.

     New  York  and  other states also have statutes and regulations prohibiting
payments  for  patient  referrals and other types of financial arrangements with
health  care  providers  which,  while  similar  in many respects to the federal
legislation,  vary  from  state  to state, are often vague and have infrequently
been  interpreted  by  courts or regulatory agencies. Sanctions for violation of
these  state  restrictions  may include loss of licensure and civil and criminal
penalties.  In  addition,  the  professional  conduct of physicians is regulated


                                       20
<PAGE>
under  state  law.  Under  New  York  law,  it  is  unprofessional conduct for a
physician to receive, directly or indirectly, any fee or other consideration for
the  referral  of  a  patient.  Finally,  under New York law, a physician with a
financial  interest  in a health care provider must disclose such information to
the  patients  and  advise  them  of  alternative  providers.

     The  Company believes that the foregoing arrangements in particular and its
operations  in  general  comply in all material respects with applicable federal
and  state  laws relating to anti-kickbacks, and that it will be able to arrange
its  future  business  relationships  so  as  to comply with the fraud and abuse
provisions.

     Management  believes  that the trend of federal and state legislation is to
subject  the  home  health  care  and  nursing  services  industry  to  greater
regulation,  particularly  in  connection  with  third-party  reimbursement  and
arrangements  designed  to  induce  or  encourage  the referral of patients to a
particular  provider  of  medical  services.  The  Company  is  attempting to be
responsive  to  such  regulatory  climate.  However,  the  Company  is unable to
accurately  predict  the  effect,  if  any,  of  such  regulations  or increased
enforcement  activities  on  the  Company's  future  results  of  operations.

     In  addition,  the Company is subject to laws and regulations, which relate
to  business  corporations  in  general,  including antitrust laws, occupational
health and safety laws and environmental laws (which relate, among other things,
to  the  disposal,  transportation  and  handling  of  hazardous  and infectious
wastes). None of these laws and regulations has had a material adverse effect on
the Company's business or competitive position or required material expenditures
on  the  part  of the Company, although no assurance can be given that such will
continue  to  be  the  case  in  the  future.

     The Company is unable to accurately predict what additional legislation, if
any,  may  be  enacted  in  the future relating to the Company's business or the
health  care  industry,  including third-party reimbursement, or what effect any
such  legislation  may  have  on  the  Company.

     The  Company has never been denied any license it has sought to obtain. The
Company  believes  that its operations are in material compliance with all state
and  federal  regulations  and  licensing  requirements.

Bio  Balance

     The  business  of  Bio  Balance,  which  the  Company  has  entered into an
agreement  to  acquire  as  a  wholly-owned  subsidiary, is subject to extensive
regulation  by  the  United States Food & Drug Administration ("FDA") and health
authorities  in foreign countries. Regulatory approval for Bio Balance's initial
product is required before it can be marketed. Obtaining regulatory approval may
involve,  among  other  things,  lengthy  and  detailed  laboratory and clinical
testing,  manufacturing  validation  and  other complex procedures. The approval
process can be costly, time-consuming and subject to unexpected delays. The time
frame  for  approval  depends  upon, among other things, whether the Bio Balance
product  is approved as a "medical food" (approval time could be as little as120
days)  or  as a medical drug (at least 2-3 years, including testing phases). The
FDA  has  discretion in the approval process, and there can be no assurance when
or  whether  the  FDA  will  approve  a  product. The FDA may require additional
information  or  additional  clinical  trials  that  could  substantially  delay
approval  of  an  application.  Moreover,  there  can  be  no assurance that FDA
approval  will  cover  the  clinical indications sought for a product or that it
will  not  contain significant limitations in the form of warnings, precautions,


                                       21
<PAGE>
or  contra-indications.  Even  after  approval, a marketed product is subject to
continuing  regulatory review and later discovery of previously unknown problems
with the product or its manufacturers. A failure to comply with manufacturing or
labeling  requirements  may  also  result  in  restrictions  on  a  product  or
enforcement action against the manufacturer, including withdrawal of the product
from  the  market. Any failure to obtain, or any material delay in obtaining, or
later  suspension or loss of, regulatory approval could materially and adversely
affect  Bio  Balance's  ability  to  generate  product  sales.


Competition

     The  home  health  care  market  is  highly  fragmented  and  significant
competitors  are  often  localized  in  particular  geographical  markets.  The
Company's  largest  competitors include Gentiva Health Services, Premiere Health
Services, National Home Health Care, Patient Care, Inc., and Personal Touch Home
Care  Services, Inc. The home health care business is marked by low entry costs.
The  Company  believes  that,  given  the increasing level of demand for nursing
services,  significant  additional competition can be expected to develop in the
future.  Some of the companies with which the Company presently competes in home
health  care  have  substantially greater financial and human resources than the
Company.  The  Company  also  competes  with  many other small temporary medical
staffing  agencies.

     The  home  infusion  therapy  market  is highly competitive and the Company
expects  that the competition will intensify. As the Company seeks to expand its
provision  of  infusion therapy services, it will compete with a large number of
companies and programs in the areas in which its facilities are located. Many of
these  are local operations servicing a single area; however, there are a number
of  large  national  and  regional companies, including Gentiva Health Services,
Coram  Health  Care  Corp.,  and  Tender Loving Care, Inc.  In addition, certain
hospitals,  clinics  and  physicians,  who  traditionally may have been referral
sources  for  the  Company,  have  entered  or  may  enter the market with local
programs.

     The Company believes that the principal competitive factors in its industry
are  quality  of  care,  including  responsiveness  of  services  and quality of
professional  personnel;  breadth  of  therapies  and  nursing services offered;
successful  referrals  from  referring Government agencies, hospitals and health
maintenance  organizations;  general  reputation with physicians, other referral
sources  and  potential  patients;  and  price.  The  Company  believes that its
competitive  strengths  have  been  the quality, responsiveness, flexibility and
breadth  of  services and staff it offers, and to some extent price competition,
as  well  as  its  reputation  with  physicians,  referral sources and patients.

     The  United  States  health  care  industry  generally  faces a shortage of
qualified  personnel.  Accordingly,  the Company experiences intense competition
from  other companies in recruiting qualified health care personnel for its home
health  care  operations.  The  Company's  success  to  date  has depended, to a
significant  degree,  on its ability to recruit and retain qualified health care
personnel.  Most  of  the  registered  and  licensed  nurses  and  health  care
paraprofessionals  who are employed by the Company are also registered with, and
may accept placements from time to time through, competitors of the Company. The
Company  believes  it  is  able  to  compete  successfully  for  nursing  and
paraprofessional  personnel  by  aggressive  recruitment  through  newspaper
advertisements,  work  fairs/job  fairs, flexible work schedules and competitive
compensation  arrangements. There can be no assurance, however, that the Company
will  be  able  to  continue  to  attract  and  retain  qualified personnel. The
inability  to  either  attract  or  retain such qualified personnel would have a
material  adverse  effect  on  the  Company's  business.


                                       22
<PAGE>
Employees

     On  January  1,  2002,  the  Company  had  1,821  employees, of whom 90 are
salaried,  including 3 executive officers, 17 administrators/branch managers, 12
nurses,  11  accounting staff, 13 clerical staff and 34 field staff supervisors.
The  remaining  1,731  employees  are  paid  on  an  hourly basis and consist of
professional and paraprofessional employees. None of the Company's employees are
compensated on an independent contractor basis.  None of the Company's employees
are  represented  by  a  labor  union.  The  Company  believes that its employee
relations  are  good.

Common  Stock

     The Company is authorized to issue up to 50,000,000 shares of Common Stock,
$.01  par  value each.  The holders of Common Stock are entitled to one vote for
each  share  held of record on all matters to be voted on by stockholders. There
is  no  cumulative  voting  with  respect  to the election of directors with the
result that the holders of more than 50% of the shares of Common Stock can elect
all  of  the  directors.  The  holders  of  Common Stock are entitled to receive
dividends  when,  and if declared by the Board of Directors out of funds legally
available  therefore. In the event of the liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to share ratably in all
assets remaining available for distribution to them after payment of liabilities
and  after  provision  has  been  made  for  each class of stock, if any, having
preference  over  the Common Stock, as such, having no conversion, preemptive or
other  subscription rights, and there are no redemption provisions applicable to
the  Common  Stock.  The  Company  currently has outstanding 3,696,730 shares of
Common  Stock.


Preferred  Stock

     The  Board  of  Directors  of  the  Company  is  authorized  to issue up to
2,000,000 shares of preferred stock in one or more series and to fix the rights,
preferences, privileges and restrictions thereof, including the dividend rights,
dividend  rate, conversion rights, voting rights, terms of redemption (including
sinking  fund  provisions), redemption price or prices, liquidations preferences
and  the  number  of  shares constituting any series or the designations of such
series,  without  any  further  vote  or action by the stockholders. It would be
possible for the Board of Directors to issue shares of such preferred stock in a
manner  which  would  make  acquisition of control of the Company, other than as
approved  by  the  Board,  exceedingly  difficult.

     The  Company  currently  has outstanding 590,375 of its Class A Convertible
Preferred Stock, each share of which is convertible into one share of its common
stock.

Transfer  Agent

     Continental  Stock  Transfer  &  Trust  Company, New York, New York, is the
transfer  agent  for  the  shares  of  Common  Stock.


                                       23
<PAGE>
ITEM 2.   DESCRIPTION OF PROPERTIES.

     The  Company's  principal  place  of  business  is  a  one-story commercial
building  of  approximately  6,000  square feet located at 1850 McDonald Avenue,
Brooklyn, New York 11223, which is leased from an unaffiliated person. The lease
is  for  a  period  ending  March 30, 2005.  The rent is $6,327 per month and is
subject  to  annual increases equal to 4% of the total prior year's monthly rent
and  all  increases  in  real  estate  taxes for the original and renewal terms.

     The  table below sets forth certain information with respect to each of the
Company's  existing  branch  and  recruitment office locations, all of which are
leased,  from  non-affiliated  lessors.

<TABLE>
<CAPTION>
                                                                 Lease  Terms
                                                                 ------------
                                            Approximate
                                   Opening    Square        Expiration       Annual
Location                            Date      Footage          Date        Rental(l)
---------------------------------  -------  -----------  ----------------  ----------
<S>                                <C>      <C>          <C>               <C>

Kings County (2)(5)
Branch Office
1667 Flatbush Avenue
Brooklyn, NY 11210                   11/95        2,000          04/30/01  $   43,758

Kings County (6)
Branch Office
408 Jay Street, #401 & #402
Brooklyn, NY 11201                   07/01        4,000          06/30/06  $   25,800

Nassau County Office
175 Fulton Avenue
Hempstead, NY 11550                  09/93        1,600          10/31/03  $   24,225

Westchester County Office
6 Gramatan Avenue
Mt. Vernon, NY 10550                 12/96        2,000  (month to month)  $   25,603

Rockland County Office
49 South Main Street
Spring Valley, NY 10977              10/94        1,500  (month to month)  $   21,300

Orange County Office
45 Grand Street
Newburgh, NY 11250                   09/92        1,500          04/30/04  $   12,600

Jersey City Office
880 Bergen Avenue
Jersey City, NJ 07306                06/01        1,000          05/01/02  $    9,600

Bradley Beach Recruitment Office
716 Main Street
Bradley Brach, NJ  07720             09/01        1,000          05/30/02  $    9,000


                                       24
<PAGE>
Toms River Office
617 Highway 37 West
Toms River, NJ 08753                 02/98        2,400  (month to month)  $   33,000

Edison Office
629 Amboy Avenue
Edison, NJ 08837                     08/99        1,450          07/31/04  $   19,575

East Orange Office
60 Evergreen Place, #301B
East Orange, NJ 07018                11/01        3,000          08/31/06  $   33,000

Hackensack Office
193 Main Street, Suite 211
Hackensack, NJ 07601                 06/01         1200          05/31/03  $   12,000

Bronx Recruitment Office
2488 Grand Concourse
Bronx, NY  10458                     10/00         1000          10/31/02  $   15,360
</TABLE>

(1)     All of the leases provide for additional rentals based upon increases in
real  estate  taxes  and  other  cost  escalations.

(2)     The  Company's  Kings  County  Branch  Office  occupies two of the three
floors  of  a commercial building owned by 1667 Flatbush Avenue, LLC, a New York
limited  liability  company  owned  by  the  Company's current stockholders. See
"Certain  Relationships  and  Related  Transactions."  The lease is subject to a
renewal  option  for  five years in favor of the Company. The rent is subject to
annual  increases  equal  to  5%  of the total prior year's monthly rent for the
original  term  and  all  renewal  terms  of  the  lease.

(3)  The  Company  did  not  renew  this  lease.

(4)  The Company has since moved out from the space and is still responsible for
lease  obligations.

(5)  The  Company  closed  this  facility  in  October  2001.

(6)  The  Company  opened  this  facility  in  October  2001.


ITEM 3.   LEGAL PROCEEDINGS.

     The  Company  is  subject  to  various legal proceedings and claims, either
asserted  or  unasserted,  which arise in the ordinary course of business. While
the  outcome of these claims cannot be predicted with certainty, management does
not  believe that the outcome of any of these legal matters will have a material
adverse  effect  on  the  Company's results of operations or financial position.


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

     No  matters  were  submitted  a  shareholders for vote during the Company's
fiscal  year  ended  December  31,  2001.


                                       25
<PAGE>
                                     PART II


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

     The  Company's  Common  Stock  is  quoted  on  the  National Association of
Securities  Dealers Automated Quotation System ("NASDAQ") SmallCap Market and is
traded on the Boston Stock Exchange. The following table sets forth the range of
the  last  price  on  NASDAQ  for  the  Company's  Common  Stock for the periods
indicated.  Quotations do not necessarily present actual transactions and do not
reflect  related  mark-ups,  mark-downs  or  commissions:

<TABLE>
<CAPTION>
Fiscal 2001     High   Low
--------------  -----  ----
<S>             <C>    <C>

First Quarter   2.938  0.594

Second Quarter   3.19  2.05

Third Quarter    5.25  2.70

Fourth Quarter   5.35  3.05
</TABLE>

     At January 25, 2002, the Company had 92 holders of record and more than 486
beneficial  holders of its shares of Common Stock. On January 25, 2002, the last
sale  price  of  the  shares of Common Stock as reported by NASDAQ was $3.39 per
share.


ITEM 6.   MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

Results of Operations:
----------------------

          Fiscal year ended December 31, 2001 compared
          with fiscal year ended December 31, 2000.


     Revenues  for  the  year  ended  December  31,  2001  increased  17%  to
approximately  $34,321,000  from  approximately  $29,384,000  for the year ended
December  31,  2000.  Most of the increase is attributable to increased hours of
service  provided  under  the  new  HRA  contract  with  the  City  of New York.


                                       26
<PAGE>
     Cost  of professional care of patients for the year ended December 31, 2001
increased  to  18%  approximately $25,711,000 from approximately $21,698,000 for
the  year  ended December 31, 2000. The increase resulted from hiring additional
home  health  care  personnel  to  service  the  increased  business  of the HRA
contract.  The cost of professional care of patients as a percentage of revenues
increased  1.1% to approximately 74.9% for the year ended December 31, 2001 from
approximately  73.8%  for  prior  year ended December 31, 2000. The increase was
primarily  caused  by the HRA contract, which provides a lower gross profit than
the  other  contracts.

     Selling,  general  and  administrative expenses for the year ended December
31, 2001 increased to approximately $7,198,000 from approximately $6,478,000 for
the  year ended December 31, 2000. The increase resulted primarily from the cost
associated  with  the  increased  revenue.  Selling,  general and administrative
expenses as a percentage of revenue decreased to 21% for the year ended December
31,  2001  from  22%  for  the  year  ended  December  31,  2000.

     Interest  expense  for  the  year ended December 31, 2001 was approximately
$130,000  as  compared to approximately $322,000 for the year ended December 31,
2000.  The  decrease  resulted from reduced borrowing against our line of credit
made  possible  by  improved  collection  efforts  which  lowered  our  DSO.

     The  provision  for federal, state and local taxes of $150,000 for the year
ended  December  31,  2001  is  a  result  of income for this period compared of
$182,000 is the result of the profit for the year as compared to the benefit for
taxes  of  $35,000  for  the  year  ended  December  31,  2000.

     In  view  of  the  foregoing,  the  Company  recognized  a  net  profit  of
approximately $353,000 for the year ended December 31, 2001 as compared to a net
loss of approximately $1,195,000 for the year ended December 31, 2000. While the
income for the year ended December 31, 2001 was a result of increased sales, the
loss  for  the year ended December 31, 2000 was attributable to the write-off of
$1,487,000  for  the  impairment  of  intangible assets. If not for the one time
write-off in the year 2000 of approximately $1,487,000 of intangible assets, the
Company would have had a net profit of approximately $292,000 for the year ended
December  31,  2000.

     The  impairment  of  intangible assets was due to a decrease in revenue and
projected  reductions  in revenue from the operations of certain offices located
in  New Jersey. The Company evaluated the ongoing value of its intangible assets
associated with those acquisitions (which were made by the Company from December
1997  through  February  1999) and based on those evaluations, at June 30, 2000,
the  Company  has  determined  that  intangible assets with a carrying amount of
$1,688,000  were impaired. Accordingly, such amount was reduced by $1,487,000 to
their  estimated  fair  value  by  charge  to operations. The goodwill write-off
represented  a per-share net loss of $.41 both on a basic and diluted. Estimated
fair  value  was based on the value associated with current purchases of similar
companies  in  the  home  health  care industry. There was no write-down for the
impairment  of intangible assets necessary for the year ended December 31, 2001.


Liquidity  and  Capital  Resources

     The  Company's  liquidity  and  capital  resources  are  generated  through
internally generated funds, cash on hand and amounts available under its line of
credit. The Company has recently established a new line of credit with a lending
institution  for  $4,000,000  that  expires  November  28,  2002.

     For  the  year ended December 31, 2001, net cash provided by operations was
$2,976,000  as  compared to net cash provided by operations of $1,194,000 during
the  year  ended  December  31,  2000, an increase of $1,782,000. The $2,976,000
provided  by operations for the year ended December 31, 2001 was principally due
to  the  decrease  in  accounts  receivable  and  unbilled services, increase in
accrued  payroll,  increase  in  other payables and a net income for the period.

     Net  cash used in investing activities for the year ended December 31, 2001
was approximately  $20,000 for the acquisition of fixed assets. Net cash used by
financing  activities for the year ended December 31, 2001 totaled approximately
$1,948,000, resulting from repayment of the credit line of $1,759,000, repayment
of  notes  payable  $125,000 off set by an decrease in bank overdraft of $85,000
and exercise  of  stock  options  of  $21,000.

     As  of  December  31, 2001, approximately $5,503,000 (approximately 65%) of
the Company's total assets consisted of accounts receivable from clients who are
reimbursed  by third-party payers, as compared to $6,621,000 (approximately 76%)
as of December 31, 2000, a decrease of 11%. The decrease is the direct result of
a  more  aggressive collection effort and an increase in Medicaid business which
has  more  favorable  payment  terms.

     Days  Sales  Outstanding ("DSO") is a measure of the average number of days
taken  by  the  Company  to collect its accounts receivable, calculated from the
date services are billed. For the year ended December 31, 2001 the Company's DSO
was  61  compared to 84 for the year ended December 31, 2000. The improvement of
23 days in DSO is the net effect of combining the New Jersey DSO of 30 days with
the  Home  Attendant  program DSO of 38 days and New York's DSO of 103 days.


                                       27
<PAGE>
     The  Company is actively pursuing potential acquisitions. Further expansion
of  the  Company's  business may require the Company to incur additional debt or
offer  additional equity if internally generated funds, cash on hand and amounts
available  under  its  bank credit facilities are inadequate to meet such needs.
There  can be no assurance that such additional debt or equity will be available
to  the  Company,  or, if available, will be on terms acceptable to the Company.

Pending Acquisitions

     On  October  11,  2001,  the  Corporation  entered  into  a Stock for Stock
Exchange Agreement (the "Agreement") with The Bio Balance Corp. ("Bio Balance").
Bio  Balance  is  engaged  in  the  research  and development, manufacturing and
marketing  of  probiotic  agents  for  therapy  of  gastrointestinal diseases. A
probiotic  is  a  live  microorganism  or  microbial  mixture  administered  to
beneficially  affect the host by improving its microbial balance. Bio Balance is
a  company  in  the  development  stage.

     The  Agreement  provides for Bio Balance's shareholders exchanging at least
90%  of  their  shares and 100% of their options for common stock and options of
the  Corporation  in  a  share for share transaction. Just prior to the proposed
closing  presently  scheduled for February 2002, Bio Balance is expected to have
approximately  22,350,000  shares of common stock issued and outstanding and the
Corporation  is  expected to have approximately 4,000,000 issued and outstanding
shares of common stock, options, and warrants (after the 1 for 1.5 share reverse
split).  After  the  proposed  closing,  the  shareholder's  of  Bio Balance are
expected  to  own  approximately  90%  of  the  common stock of the Corporation.

     The  Agreement is subject to the approval of the Corporation's shareholders
at  a  meeting,  and  to  compliance  with  various federal and state regulatory
requirements,  as more fully described in the Corporation's Form 8-K/A report of
the  events  of  October  11,  2001  filed  with  the  SEC  on November 6, 2001.

Potential  Regulatory  Changes

     There  has  been recent news reports concerning federal budget negotiations
regarding potential changes in the way the Government will reimburse home health
care companies in the future, including the possibility of capitation. While the
Company  is  not  currently  a  Medicare-Certified Home Health Agency subject to
these  changes,  most  of  the  Company's  referral  sources are and they may be
negatively impacted by this legislation which was adopted to control home health
care  costs.  While  it  is  still premature to discern what impact, if any, the
potential  changes  may  have  on  the  Company's  operations,  there  can be no
assurance that future legislation will not result in reduced reimbursement rates
from  referral  sources.


                                       28
<PAGE>
ITEM 7.   FINANCIAL STATEMENTS.


     (1)  FINANCIAL  STATEMENTS:

     Independent Auditors' Report.

     Consolidated  Balance  Sheet  at  December  31,  2001.

     Consolidated Statements of Operations for the Years Ended December 31, 2000
     and  2001.

     Consolidated  Statements  of  Shareholders'  Equity  for  the  Years  Ended
     December  31,  2000  and  2001.

     Consolidated Statements of Cash Flows for the Years Ended December 31, 2000
     and  2001.

     Notes  to  Consolidated  Financial  Statements.

     (2)  FINANCIAL  STATEMENT  SCHEDULES.

     NONE


                                       29
<PAGE>
                           NEW YORK HEALTH CARE, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS

                               FOR THE YEARS ENDED
                           DECEMBER 31, 2000 AND 2001


<PAGE>
                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------



To the Board of Directors
New York Health Care, Inc.

We  have  audited the accompanying consolidated balance sheet of New York Health
Care,  Inc.  and Subsidiary (the "Corporation") as of December 31, 2001, and the
related  consolidated  statements  of  operations, shareholders' equity and cash
flows  for  the  years  ended  December  31,  2000  and  2001.  These  financial
statements  are  the  responsibility  of  the  Corporation's  management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

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

In  our  opinion,  the financial statements referred to above present fairly, in
all  material respects, the financial position of New York Health Care, Inc. and
Subsidiary  as  of  December 31, 2001, and the results of its operations and its
cash  flows  for  the  years ended December 31, 2000 and 2001 in conformity with
accounting  principles  generally  accepted  in  the  United  States of America.




                                            M.R.  Weiser  &  Co.  LLP
                                            Certified  Public  Accountants



New  York,  NY
January  22,  2002


                                       F-1
<PAGE>
<TABLE>
<CAPTION>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2001

                                  A S S E T S

<S>                                                              <C>
Current assets:
  Cash and cash equivalents                                      $1,007,444
  Accounts receivable, net of allowance for uncollectible
    amounts of $290,000                                           5,442,229
  Unbilled services                                                  60,828
  Prepaid expenses                                                   74,324
  Deferred tax asset                                                116,000
                                                                 -----------
      Total current assets                                        6,700,825

Property and equipment, net                                         292,059
Deferred tax assets                                                 117,000
Intangibles, net                                                  1,277,866
Deposits                                                             55,851
                                                                 -----------

      Total assets                                               $8,443,601
                                                                 ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accrued payroll                                                $2,779,297
  Line of credit                                                    130,472
  Current portion of lease obligations payable                       16,654
  Accounts payable and accrued expenses                             854,283
  Income taxes payable                                              160,000
  Due to HRA                                                        268,859
                                                                 -----------
      Total current liabilities                                   4,209,565
                                                                 -----------

Lease obligations payable, less current portion                      18,281
                                                                 -----------

Commitments, contingencies and other comments

Shareholders' equity:
  Preferred stock $.01 par value, 2,000,000 shares authorized;
    590,375 shares issued                                             5,904
  Common stock, $.01 par value, 50,000,000 shares authorized;
    3,750,000 shares issued; 3,696,730 outstanding                   37,500
  Additional paid-in capital                                      4,737,640
  Deficit                                                          (516,698)
                                                                 -----------
                                                                  4,264,346
      Less: Treasury stock (53,270 common shares at cost)           (48,591)
                                                                 -----------
      Total shareholders' equity                                  4,215,755
                                                                 -----------

      Total liabilities and shareholders' equity                 $8,443,601
                                                                 ===========
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.


                                       F-2
<PAGE>
<TABLE>
<CAPTION>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS


                                                               For The Years Ended
                                                                  December 31,
                                                           --------------------------
                                                               2000          2001
                                                           ------------  ------------
<S>                                                        <C>           <C>

Net patient service revenue                                $29,383,547   $34,320,710
                                                           ------------  ------------

Expenses:
  Professional care of patients                             21,698,189    25,711,247
  General and administrative                                 6,478,140     7,198,359
  Bad debts expense                                            398,856       586,499
  Impairment of goodwill                                     1,487,192
  Depreciation and amortization                                229,605       191,985
                                                           ------------  ------------
      Total operating expenses                              30,291,982    33,688,090
                                                           ------------  ------------

(Loss) income from operations                                 (908,435)      632,620

Nonoperating expenses:
  Interest expense                                            (322,046)     (129,734)
                                                           ------------  ------------

(Loss) income before (benefit) provision for income taxes   (1,230,481)      502,886
                                                           ------------  ------------

(Benefit) provision for income taxes:
  Current                                                       30,000       219,000
  Deferred                                                     (65,000)      (69,000)
                                                           ------------  ------------
                                                               (35,000)      150,000
                                                           ------------  ------------

Net (loss) income applicable to common stock               $(1,195,481)  $   352,886
                                                           ============  ============


Basic (loss) earnings per share                            $      (.33)  $       .10
                                                           ============  ============


Diluted  (loss) earnings per share                         $      (.33)  $       .07
                                                           ============  ============


Weighted average shares outstanding                          3,668,730     3,681,268
                                                           ============  ============

Diluted weighted average shares outstanding                  3,668,730     5,323,954
                                                           ============  ============
</TABLE>

    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.


                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                                             NEW YORK HEALTH CARE, INC. AND SUBSIDIARY
                                          CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                          FOR THE YEARS ENDED DECEMBER 31, 2000 AND 2001



                                  Common Stock      Preferred Stock  Additional     Treasury Stock       Retained
                               ------------------  ----------------    Paid-In    -------------------   Earnings/
                                Shares    Amount   Shares   Amount     Capital     Shares    Amount      Deficit        Total
                               ---------  -------  -------  -------  -----------  --------  ---------  ------------  ------------
<S>                            <C>        <C>      <C>      <C>      <C>          <C>       <C>        <C>           <C>
Balance at January 1, 2000     3,750,000  $37,500  590,375  $ 5,904  $4,758,414    81,270   $(90,296)  $   325,897   $ 5,037,419

Net loss                                                                                                (1,195,481)   (1,195,481)
                               ---------  -------  -------  -------  -----------  --------  ---------  ------------  ------------

Balance at December 31, 2000   3,750,000   37,500  590,375    5,904   4,758,414    81,270    (90,296)     (869,584)    3,841,938

Exercise of options through the
  issuance of treasury stock
  (during July through
  December) (at an average
  exercise price of $.75 per
  share)                                                                (20,774)  (28,000)    41,705                      20,931

Net income                                                                                                 352,886       352,886
                               ---------  -------  -------  -------  -----------  --------  ---------  ------------  ------------

Balance at December 31, 2001   3,750,000  $37,500  590,375  $ 5,904  $4,737,640    53,270   $(48,591)  $  (516,698)  $ 4,215,755
                               =========  =======  =======  =======  ===========  ========  =========  ============  ============
</TABLE>


    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.


                                       F-4
<PAGE>
<TABLE>
<CAPTION>
                       NEW YORK HEALTH CARE, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                               For the Years Ended
                                                                  December 31,
                                                           --------------------------
                                                               2000          2001
                                                           ------------  ------------
<S>                                                        <C>           <C>
Cash flows from operating activities:
  Net (loss) income                                        $(1,195,481)  $   352,886
  Adjustments to reconcile net (loss) income to net cash
    provided by operating activities:
      Depreciation and amortization                            229,605       191,985
      Bad debts expense                                        398,856       586,499
      Deferred tax credit                                      (65,000)      (69,000)
      Impairment of goodwill                                 1,487,192
      Changes in operating assets and liabilities:
        (Increase) decrease in accounts receivable and
          unbilled services                                   (655,341)      531,786
        (Increase) decrease in prepaid expenses                 (7,293)       46,771
        Decrease in prepaid income taxes and
           income tax receivable                               154,906
        Increase in deposits                                    (1,082)       (2,043)
        Increase in accrued payroll                          1,157,449       651,673
        Increase in accounts payable and accrued expenses       11,482       256,672
        (Decrease) increase in due to HRA                     (321,544)      268,859
        Increase in income taxes payable                                     160,000
                                                           ------------  ------------
          Net cash provided by operating activities          1,193,749     2,976,088
                                                           ------------  ------------

Cash flows from investing activities:
  Acquisition of fixed assets                                  (38,708)      (20,252)
                                                           ------------  ------------
          Net cash used in investing activities                (38,708)      (20,252)
                                                           ------------  ------------

Cash flows from financing activities:
  Repayments of line of credit                                (960,608)   (1,758,920)
  Repayment of long-term debt                                 (376,577)     (125,373)
  Bank overdraft                                                85,030       (85,030)
  Exercise of options                                                         20,931
                                                           ------------  ------------
          Net cash used in financing activities             (1,252,155)   (1,948,392)
                                                           ------------  ------------

Net (decrease) increase in cash and cash equivalents           (97,114)    1,007,444

Cash and cash equivalents at beginning of year                  97,114           -0-
                                                           ------------  ------------

Cash and cash equivalents at end of year                   $       -0-   $ 1,007,444
                                                           ============  ============
</TABLE>


    THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                   STATEMENTS.


                                       F-5
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

     BASIS OF CONSOLIDATION AND THE COMPANY:

     The  accompanying consolidated financial statements include the accounts of
     New  York  Health Care, Inc. ("NYHC") and its wholly owned subsidiary which
     was  formed on August 20, 1997, NYHC Newco Paxxon, Inc. D/B/A Helping Hands
     Healthcare  ("Helping  Hands"),  (the  "Corporation").  All  material
     intercompany  transactions  and  accounts  have  been  eliminated  in
     consolidation.

     The  Corporation  provides  services  of  registered  nurses  and
     paraprofessionals  to  patients  throughout  New  York  and  New  Jersey.

     In  February 2001, the Corporation amended its certificate of incorporation
     to provide for an increase in the Corporation's number of authorized common
     stock  from  12,500,000  shares  to  a  total  of  50,000,000  shares.

     ESTIMATES:

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

     REVENUE  RECOGNITION:

     The Corporation recognizes net patient service revenue on the date services
     are  rendered.  Unbilled  services  represent  amounts  due  for  services
     rendered,  which  were  not  billed  at  the  end  of  each  period.

     PROPERTY,  PLANT  AND  EQUIPMENT:

     Property,  plant  and equipment is carried at cost and is being depreciated
     under the straight-line method over the following estimated useful lives of
     the  assets  or  the  life  of  the  lease,  whichever  is  shorter.

<TABLE>
<CAPTION>
<S>                                  <C>
          Machinery  and  equipment     5  years
          Furniture  and  fixtures      7  years
          Leasehold  improvements     Life  of  lease
</TABLE>


                                      F-6
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     LONG-LIVED  ASSETS:

     The  Corporation's  policy  is  to evaluate long-lived assets, goodwill and
     certain identifiable intangibles for possible impairment whenever events or
     changes  in  circumstances indicate that the carrying amount of such assets
     may  not  be  recoverable. This evaluation is based on a number of factors,
     including  expectations  for  operating  income and undiscounted cash flows
     that  will  result  from  the  use  of  such  assets.

     INCOME  TAXES:

     The  Corporation  uses the asset and liability method to calculate deferred
     tax  assets  and  liabilities.  Deferred  taxes are recognized based on the
     differences  between financial reporting and income tax bases of assets and
     liabilities  using  enacted  income  tax  rates.  Deferred  tax  assets and
     liabilities are measured using enacted tax rates in effect for the years in
     which  those temporary differences are expected to be recovered or settled.
     The  effect on deferred tax assets and liabilities of a change in tax rates
     is  recognized  in  income  in the period that includes the enactment date.

     CASH  EQUIVALENTS:

     For purposes of the statements of cash flows, the Corporation considers all
     highly  liquid  investments  with  maturities  of three months or less when
     purchased  to  be  cash  equivalents.

     STOCK  BASED  COMPENSATION:

     The  Corporation applies SFAS 123 "Accounting for Stock Based Compensation"
     in  accounting  for its stock based compensation plan and other stock based
     compensation  arrangements.  As  permitted  by  SFAS  123,  the Corporation
     applies  Accounting  Principles  Board  Opinion  No.  25  and  related
     interpretations  for  expense  recognition.

     EARNINGS  (LOSS)  PER  SHARE:

     Basic  earnings  (loss)  per  share  excludes  dilution  and is computed by
     dividing  income  available  to common shareholders by the weighted average
     number  of  common  shares  outstanding  for  the  period.


                                       F-7
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Diluted  earnings (loss) per share is computed by dividing income available
     to  common  shareholders  by  the  weighted average number of common shares
     outstanding  for  the  period,  adjusted  to  reflect  potentially dilutive
     securities  including  the  presumed conversion of the Preferred Stock from
     the  date of its issuance. During the year ended December 31, 2001, options
     and warrants were included in the computation of diluted earnings per share
     because  the  exercise  price was less than the average market price of the
     Corporation's  common stock during that period. Common shares issuable as a
     result  of the assumed conversion of the Corporation's Preferred Stock were
     also  included  in  the computation of diluted earnings per share. Due to a
     loss  in  2000,  the options, warrants, and Convertible Preferred Stock are
     not  included  in  the  computation  of  diluted loss per share because the
     effect  would  be  to  reduce  the  loss  per  share.

     OTHER  ACCOUNTING  PRONOUNCEMENTS:

     In  July  2001,  the  Financial  Accounting Standards Board ("FASB") issued
     Statement  of  Financial  Accounting  Standards  (SFAS)  No. 141, "Business
     Combinations"  and  No.  142,  "Goodwill  and Other Intangible Assets." The
     statements  eliminate  the  pooling-of-interest  method  of  accounting for
     business  combinations  and  require  that  goodwill and certain intangible
     assets  not  be  amortized.  Instead,  these  assets  will  be reviewed for
     impairment  annually  with  any  related losses recognized in earnings when
     incurred. SFAS 141 is effective for the Company July 1, 2001. SFAS 142 will
     be effective for the Company January 1, 2002. In July 2001, the FASB issued
     SFAS  No. 143, "Accounting for Asset Retirement Obligations" which requires
     the  recognition  of  a liability for an asset retirement obligation in the
     period  in  which it is incurred. When the liability is initially recorded,
     the  carrying  amount  of  the  related long-lived asset is correspondingly
     increased.  Over  time,  the liability is accreted to its present value and
     the  related  capitalized charge is depreciated over the useful life of the
     asset.  SFAS  143  is  effective  for fiscal years beginning after June 15,
     2002.  In  August  2001,  the FASB issued Statement of Financial Accounting
     Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
     Assets"  which is effective for fiscal periods beginning after December 15,
     2001 and interim periods within those fiscal years. SFAS 144 establishes an
     accounting  model for impairment or disposal of long-lived assets including
     discontinued  operations. The Company is currently evaluating the impact of
     SFAS  141,  142,  143  and  144.


                                       F-8
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


2.   PROPERTY  AND  EQUIPMENT:

     Property  and  equipment  consist  of  the  following at December 31, 2001:

<TABLE>
<CAPTION>
<S>                                                        <C>
           Machinery and equipment                         $408,175
           Furniture and fixtures                           209,796
           Leasehold improvements                           131,955
                                                           --------
                                                            749,926

           Less accumulated depreciation and amortization   457,867
                                                           --------

                                                           $292,059
                                                           ========
</TABLE>

     At  December  31,  2001,  the  amounts  shown  above  include  assets  of
     approximately  $79,550  under  capitalized  leases  and  accumulated
     depreciation  of  approximately  $47,750,  relating  thereto.

3.   IMPAIRMENT  OF  INTANGIBLE  ASSETS:

     Due  to  a  decrease  in  revenue  during  2000  and  prior,  and projected
     additional  reductions  in  revenue  from the operations of certain offices
     located  in  New  Jersey,  at  June  30, 2000 the Corporation evaluated the
     ongoing  value of its intangible assets associated with those acquisitions,
     which  were  made by the Corporation from December 1997 through 2000. Based
     on  this evaluation, the Corporation determined that intangible assets with
     a carrying amount of $1,688,134 were impaired. Accordingly, such amount was
     reduced  by  $1,487,192  to  their  estimated  fair  value  by  a charge to
     operations.  For  the  year  ended December 31, 2000, the impairment charge
     represented a per-share net loss of $.41 both on a basic and diluted basis.
     Estimated fair value was determined based on the management's evaluation of
     current  purchases  of  similar companies in the home health care industry.
     The Corporation has determined that no additional write-down for impairment
     of  intangible  assets  is  necessary  at  December  31,  2001.


                                       F-9
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


4.   INTANGIBLES:

     Intangibles  consist  of  the  following  at  December  31,  2001:

<TABLE>
<CAPTION>
                                                        Lives
                                                      ---------
<S>                                       <C>         <C>
           Goodwill                       $1,396,712  25 years
           Contract value                     60,217  10 years
           Customer lists                     38,470  10 years
                                          ----------
                                           1,495,399

           Less accumulated amortization     217,533
                                          ----------

                                          $1,277,866
                                          ==========
</TABLE>

5.   LINE  OF  CREDIT:

     The  Corporation has a $4,000,000 line of credit with a lending institution
     that  expires  November 28, 2002. The availability of the line of credit is
     based on a formula of eligible accounts receivable. All property and assets
     of the Corporation collateralize the line of credit. The agreement contains
     various  restrictive  covenants,  which  among  other things, requires that
     certain  ratios  be  maintained.  At  December  31,  2001,  $130,472  was
     outstanding.  Borrowings  under  the  agreement bear interest at prime plus
     2 1/2%  (7.25%  at  December  31,  2001).

6.   LEASE  OBLIGATIONS  PAYABLE:

     Lease  obligations  payable consists of the following at December 31, 2001:

         Capitalized  computer  equipment  lease,  payable  in  equal
           monthly installments of approximately $1,100, including
           principal  and  interest  through  December  2003,
           collateralized  by  computer  equipment  costing
           approximately  $51,400                                        $22,952

         Capitalized  phone  system  lease,  payable in equal monthly
           installments of approximately $600, including principal
           and  interest  through  October 2003, collateralized by
           the  phone  system costing approximately $28,150               11,983
                                                                        --------
                                                                          34,935
          Less  current  maturities                                       16,654
                                                                        --------

                                                                         $18,281
                                                                        ========


                                      F-10
<PAGE>
<TABLE>
<CAPTION>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The following are maturities of capitalized leases:

<S>                                                  <C>
           2002                                       $20,000
           2003                                        19,000
                                                     --------

     Total minimum future payments                    39,000

     Less amounts representing interest               (4,000)
                                                     --------

     Present value of net minimum payments           $35,000
                                                     ========
</TABLE>

     Interest rates on capitalized leases vary from 10.3% to 11.0%.

7.   INCOME  TAXES:

     The  components  of  deferred  tax  assets  as  of December 31, 2001 are as
follows:

<TABLE>
<CAPTION>
<S>                                                            <C>
      Deferred tax assets current:
         Accounts receivable reserve                           $116,000
                                                               ========

      Deferred tax assets non-current:
         Property and equipment                                $  7,000
         Intangibles                                            110,000
                                                               --------

                                                               $117,000
                                                               ========
</TABLE>

     The  temporary  differences  that  give  rise  to  deferred  tax assets are
     impairment  of  intangible  assets for book purposes over tax purposes, the
     direct  write-off  method  for  receivables,  using  accelerated methods of
     amortization  and  depreciation  for  property  and  equipment,  and  using
     statutory lives for intangibles for tax purposes. At December 31, 2001, the
     Corporation has computed a deferred tax asset in the amount of $547,000 and
     has  provided  a valuation allowance of $314,000 (all related to impairment
     of  intangible  assets)  on  the  deferred tax asset due to the uncertainty
     regarding  the  realization  of  the  future tax benefits. Upon a return to
     profitability  during  the  year  ended  December  31,  2001, the valuation
     allowance  was  decreased  by  $70,000  to  reflect  a  reduction  in  the
     uncertainty regarding realization. Such amount was reflected as a reduction
     of  the  provision  for  deferred  taxes  2001.


                                      F-11
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  historical  (benefit)  provision  for income taxes is comprised of the
     following:

<TABLE>
<CAPTION>
                                   2000     2001
                                ---------  ---------
<S>                             <C>        <C>
            Current:
                 Federal        $(15,000)  $128,000
                 State            45,000     91,000
                                ---------  ---------
                                  30,000    219,000
                                ---------  ---------

            Deferred:
                 Federal         (58,500)   (62,100)
                 State            (6,500)    (6,900)
                                ---------  ---------
                                 (65,000)   (69,000)
                                ---------  ---------

                                $(35,000)  $150,000
                                =========  =========
</TABLE>

     The statutory Federal income tax rate and the effective rate of the benefit
     for  income  taxes  is  reconciled  as  follows:

<TABLE>
<CAPTION>
                                                          2000       2001
                                                        ---------  ---------
<S>                                                     <C>        <C>
            Statutory Federal income tax rate               (34)%       34%
            State taxes, net of Federal tax benefit         (10)        10
            Valuation allowance                              31        (14)
            Other                                            10
                                                        ---------  ---------

                                                             (3)%       30%
                                                        ---------  ---------
</TABLE>

8.   FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS:

     As  of  December  31,  2001,  the  carrying  amount of accounts receivable,
     unbilled  services,  accounts  payable  and  accrued  expenses  and accrued
     payroll  approximates  fair value due to the short-term maturities of these
     instruments.


                                      F-12
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


9.   THIRD-PARTY  RATE  ADJUSTMENTS  AND  REVENUE  AND  CERTAIN
     CONTRACTS:

     Approximately  7% of net patient service revenue was derived under New York
     State  third-party  reimbursement  programs  during each of the years ended
     December  31,  2000  and  2001.  These revenues are based, in part, on cost
     reimbursement  principles  and  are  subject  to  audit  and  retroactive
     adjustment by the respective third-party fiscal intermediaries. Differences
     between  current  rates  and  subsequent revisions will be reflected in the
     statement  of  operations  in  the  year  revisions  are  calculated.

     The  Corporation  has an agreement with the City of New York acting through
     the  Department  of  Social  Services of The Human Resources Administration
     ("HRA")  to provide personal care services to certain qualified individuals
     as determined by HRA. Per the agreement with HRA, if the Corporation incurs
     direct  costs of home attendant services below the maximum allowable amount
     per the contract, the Corporation must repay the difference to HRA, subject
     to final audit by the City of New York. As of December 31, 2001, the amount
     due  to  HRA  amounted  to  $268,859.

10.  PERFORMANCE  INCENTIVE  PLAN,  OPTIONS AND 401(K) PLAN:

     PERFORMANCE  INCENTIVE  PLAN:

     On  March  26,  1996,  the  Corporation's  Board  of  Directors adopted the
     Performance  Incentive  Plan,  (the  "Option Plan"). Under the terms of the
     amended  Option  Plan,  1,482,500  shares of common stock may be granted at
     December 31, 2001. The Option Plan will be administered by the Compensation
     Committee which was appointed by the Board of Directors. The Committee will
     determine which key employee, officer or director on the regular payroll of
     the  Company,  shall receive stock options. Granted options are exercisable
     in  commencing  six  months  after  the date of grant, and expire up to ten
     years  after  the  date of grant. The exercise price of any incentive stock
     option or nonqualified option granted under the Option Plan may not be less
     than  100%  of  the  fair market value of the shares of common stock of the
     Company  at  the  time  of  the  grant.

     On  July  10, 2000, the Corporation granted 400,000 stock options, pursuant
     to the Option Plan to key employees at exercise prices ranging from $.50 to
     $.55  per  share.  The  options expire in 5-10 years. The exercise price of
     these  options  was not less than the fair market price of the Common Stock
     as  of  the  date  of  grant.


                                      F-13
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     On January 2, 2001, the Corporation granted 430,000 stock options, pursuant
     to the Option Plan, to key employees at an exercise price ranging from $.59
     to  $.65 per share. The options expire in 5-10 years. The exercise price of
     these  options  was not less than the fair market price of the Common Stock
     as  of  the  date  of  grant.

     On  March  26,  1996,  the  Corporation issued an option to purchase 93,750
     shares  of  Common Stock to the President of the Corporation at an exercise
     price  of  $3.00 per share. The option may be exercised at any time through
     March  26,  2006. These options were not issued under the Option Plan. None
     of  these  options  have  been  exercised  or  cancelled.

     During the year ended December 31, 2001, employees exercised 28,000 options
     at  exercise  prices  ranging  from  $.59  to  $1.63  per  share.

     Activity  in  stock  options,  and  warrants  including  those  outside the
     Performance  Incentive  Plan,  is  summarized  as  follows:

<TABLE>
<CAPTION>
                                              Shares Under     Weighted Average
                                            Options/Warrants   Exercise Price
                                            -----------------  ---------------
<S>                                         <C>                <C>
Balance at December 31, 1999                         845,750   $          1.93

Options and warrants granted                         420,000               .52
Options cancelled                                    (16,000)              .98
                                            -----------------

Balance at December 31, 2000                       1,249,750              1.48

Options and warrants granted                         450,000               .62

Options exercised                                    (28,000)              .75

Options cancelled/expired                           (100,500)             4.82
                                            -----------------

Balance at December 31, 2001                       1,571,250   $           .94
                                            =================

Eligible for exercise at December 31, 2001         1,571,250   $           .94
                                            =================
</TABLE>


                                      F-14
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  following  table  summarizes  information  about  options and warrants
     outstanding  and  exercisable  at  December  31,  2001.

<TABLE>
<CAPTION>
                          Options Outstanding/Warrants           Options/Warrants Exercisable
                 ----------------------------------------------  ----------------------------
                                                                                Weighted
                                    Weighted                                    Average
                   Options/         Average         Weighted       Options/     Options/
   Range of        Warrants       Remaining         Average        Warrants      Warrants
Exercise Price   Outstanding  Contractual Life  Exercise Price   Exercisable   Exercisable
---------------  -----------  ----------------  ---------------  ------------  ------------
<S>              <C>          <C>               <C>              <C>           <C>
  $3.00              93,750        5.25 years  $          3.00        93,750  $       3.00
$1.63-$1.79         224,000        4.54 years  $          1.71       224,000  $       1.71
$.94-$1.03          152,000        4.70 years  $           .98       152,000  $        .98
$.63-$.69           220,000        5.27 years  $           .65       220,000  $        .65
$.50-$.55           400,000        6.50 years  $           .53       400,000  $        .53
$.59-$.65           411,500        7.43 years  $           .62       411,500  $        .62
  $1.63              10,000        6.50 years  $          1.63        10,000  $       1.63
   $.63              20,000        3.00 years  $           .63        20,000  $        .63
   $.50              20,000        4.00 years  $           .50        20,000  $        .50
   $.60              20,000        5.00 years  $           .60        20,000  $        .60
                 -----------                                     ------------

                  1,571,250        5.95 years   $          .94     1,571,250   $       .94
                 ===========                                     ============
</TABLE>

     The  Corporation  does not recognize compensation expense for stock options
     granted  at  or  above  fair  market  value, as permitted by the accounting
     standards.  The  fair  value  of  options  granted during 2000 and 2001 was
     $213,400  and  $269,000, respectively. Fair value is estimated based on the
     Black-Scholes  option-pricing  model  with  the  following  assumptions for
     grants  in  2000  and 2001: expected volatility of 161% and 153%; risk-free
     interest  rates  of  5.85%  in 2000 and 2.43% in 2001 and expected lives of
     approximately 7.5 years for the years ended 2000 and 2001. Had compensation
     expense been determined based on the fair value of the options on the grant
     dates,  the  Corporation's  net  loss would have been increased by $213,400
     ($.06  basic  and  diluted loss per share) in 2000 and its net income would
     have  been  decreased  by  $269,000  ($.07  basic earnings and $.05 diluted
     earnings  per  share)  in  2001.

     401  (K)  PLAN:

     NYHC  maintains  an  Internal  Revenue  Code Section 401(k) salary deferred
     savings plan (the "Plan") for eligible employees who have been employed for
     at  least  one  year  and  are  at  least  21 years old. Subject to certain
     limitations,  the  Plan allows participants to voluntarily contribute up to
     15%  of  their pay on a pretax basis. The Corporation currently contributes
     50%  of each dollar contributed to the Plan by participants up to a maximum
     of  6%  of  the  participants  salary.  The  Plan also provides for certain
     discretionary  contributions  by the Corporation as determined by the Board
     of Directors. The Corporation's contributions offset by unvested forfeiture
     matching funds amounted to $56,000 and $22,000 for the years ended December
     31,  2000  and  2001,  respectively.


                                      F-15
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



11.  COMMITMENTS,  CONTINGENCIES  AND  OTHER  COMMENTS:

     LEASE  COMMITMENTS:

     The  Corporation  leases office space under noncancellable operating leases
     in New York and New Jersey that expire between April 2002 and October 2006.

     At  December  31,  2001,  future minimum lease payments due under operating
     leases  approximate:

              2002                             $ 272,000
              2003                               235,000
              2004                               190,000
              2005                                99,000
              2006                                47,000
                                               ---------

             Total minimum future payments     $ 843,000
                                               =========

     Rental  expense  charged  to  operations  was  approximately  $356,000  and
     $370,000  for  the  years  ended  December 31, 2000 and 2001, respectively.

     EMPLOYMENT  AGREEMENTS:

     On  November  10,  1999, the Corporation entered into employment agreements
     with two officers, with terms beginning December 27, 1999 expiring in 2004.
     The  agreements  call  for  an  initial  aggregate  annual  compensation of
     approximately  $420,000  with  an  annual  increase  of 10% and provide for
     certain  additional  benefits.  On  February  1,  2001,  the  Compensation
     Committee  approved  a bonus of $100,000 to be paid to the two officers for
     the  year  ended  December  31,  2000;  such  amount has been accrued as of
     December 31, 2000. On January 16, 2002, the Compensation Committee approved
     a  bonus  of  $250,000  to  be paid to the two officers, for the year ended
     December  31,  2001;  such amount has been accrued as of December 31, 2001.

     BONUS  PLAN:

     The  Corporation  has established a bonus plan pursuant to which 10% of the
     Corporation's  pre-tax  net  income is contributed to a bonus pool which is
     available  for  distribution  to  all  employees  as  decided  upon  by the
     Corporation's  Compensation  Committee. There was no bonus accrual for 2000
     due  to  a net loss for the year. A bonus of $56,000 has been accrued as of
     December  31,  2001.


                                      F-16
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     CONCENTRATIONS  OF  CREDIT  RISK:

     Financial  instruments  which  potentially  subject  the  Corporation  to
     concentrations  of  credit risk consist of temporary cash investments which
     from  time-to-time  exceed  the  Federal  depository insurance coverage and
     commercial  accounts  receivable.  The  Corporation  has  cash  investment
     policies  that  restrict  placement  of  these  investments  to  financial
     institutions  evaluated  as  highly creditworthy. Cash and cash equivalents
     exceeding  federally insured limits approximated $1,251,000 at December 31,
     2001.  The  Corporation  does not require collateral on commercial accounts
     receivable  as  the  customer  base  generally  consists  of  large,
     well-established  institutions.

     MAJOR  CUSTOMERS:

     Two  major customers accounted for approximately 53% and 60% of net patient
     service  revenue  for  the  years  ended  December  31,  2000  and  2001,
     respectively.  In  addition,  the  Corporation  has  three  customers whose
     accounts  receivable  balance  represent  approximately  52%  of  accounts
     receivable  at  December  31,  2001.

     BUSINESS  RISKS:

     Certain  factors relating to the industry in which the Corporation operates
     and  the  Corporation's  business  should  be  carefully  considered.  The
     Company's  primary business, offering home health care services, is heavily
     regulated  at  both  the federal and state levels. While the Corporation is
     unable  to  predict  what regulatory changes may occur or the impact on the
     Corporation  of  any  particular  change,  the Corporation's operations and
     financial  results  could  be  negatively  affected.

     Further,  the  Corporation  operates in a highly competitive industry which
     may  limit  the  Corporation's ability to price its services at levels that
     the  Corporation  believes  appropriate.  These  competitive  factors  may
     adversely  affect  the  Corporation's  financial  results.


                                      F-17
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


12.  RELATED  PARTY  TRANSACTION:

     The  Corporation leased one of its offices from an affiliated company.  The
     lease  expired  on  October  31,  2001.  Rent  expense  for the years ended
     December  31,  2000 and 2001 amounted to approximately $44,000 and $35,000,
     respectively.

     One  of  the  Corporation's directors provides consulting services on an as
     needed  basis.  Consulting  expense to the director amounted to $12,000 for
     the  years  ended  December  31,  2000  and  2001.

     At  December  31,  2000, the Corporation had a promissory note payable to a
     related party. The note bore interest at prime plus 1% and was paid in full
     during  January  2001.

13.  SHAREHOLDERS'  EQUITY:

     PREFERRED  STOCK:

     The  Board  of  Directors  authorized 590,375 shares of Class A Convertible
     Preferred  Stock. The holders of the Preferred Stock shall be entitled to a
     dividend  equal  to  9%  of  the purchase price for shares of the Preferred
     Stock  before  any  dividend  is  paid  on  Common  Stock. Dividends may be
     declared  quarterly  at the discretion of the Board of Directors commencing
     with the first calendar quarter of 2000 and are not cumulative. The holders
     of Preferred Stock receive no preference on liquidation and such shares may
     be  converted  into  one  share  of  Common  Stock  at  any  time.

     WARRANTS:

     In  connection with the initial public offering of the Corporation's Common
     Stock,  the  underwriter  acquired  for  nominal  consideration warrants to
     purchase  an  aggregate of 125,000 shares of Common Stock. The warrants are
     exercisable  at  a price of $5.20 for a period of four years commencing one
     year  from  December  20,  1996. These warrants grant to the holder certain
     "piggyback"  registration  rights for a period of seven years from December
     20,  1997,  and demand registration rights for a period of seven years from
     December 20, 1996 with respect to the registration under the Securities Act
     of  the  securities  issuable  upon  the  exercise  of  the warrants. These
     warrants  have  expired  as  of  December  31,  2001.


                                      F-18
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     On  December  18,  2000, the Corporation granted two of its board members a
     warrant  for  each  to  purchase  up to 10,000 shares of Common Stock at an
     exercise  price  of  $.50 per share which was not less than the fair market
     value  on  date  of  grant  during  a  period  commencing June 18, 2000 and
     concluding  December  18,  2005.

     On  January  2,  2001,  the  Corporation granted two of its board members a
     warrant  for  each  to  purchase  up to 10,000 shares of Common Stock at an
     exercise  price  of  $.60 per share which was not less than the fair market
     value  on  date  of  grant  during  a  period  commencing  July 2, 2001 and
     concluding  January  2,  2006.

     TREASURY  STOCK:

     The  Corporation  issued  treasury  stock  for the exercise of options that
     occurred  during  the  period  July  through December 2001. The Corporation
     assigned  a  cost  to  the  treasury stock based on the first-in, first-out
     method.

     RESERVES:

     The  Corporation  has  reserved  an aggregate of 1,648,750 shares of Common
     Stock for the exercise of options under the Option Plan referred to in Note
     10  and  warrants.

14.  SUPPLEMENTAL  CASH  FLOW  DISCLOSURES:

<TABLE>
<CAPTION>
                                             For the Years Ended
                                                 December 31,
                                              --------  --------
                                                2000      2001
                                              --------  --------
<S>                                           <C>       <C>

     Cash paid during the year for:
          Interest                            $350,105  $131,709
                                              ========  ========

          Income taxes                        $  7,133  $ 81,719
                                              ========  ========
</TABLE>

     Supplemental disclosure of noncash financing activities:

     The Corporation issued 28,000 shares of treasury stock in connection with
     the  exercise  of stock options which reduced additional paid-in capital by
     $20,774.


                                      F-19
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



15.  (LOSS)  EARNINGS  PER  SHARE:

     (Loss) earnings per share are computed as follows:

<TABLE>
<CAPTION>
                                                                  For The Years Ended
                                                                      September 30,
                                                                ------------------------
                                                                    2000         2001
                                                                ------------  ----------
<S>                                                             <C>           <C>
Basic and diluted (loss) earnings
  per share:

(Loss) Earnings:
    Net (loss) income applicable to common stock                $(1,195,481)  $  352,886
                                                                ============  ==========

  Shares:
  Weighted average number of common shares outstanding - basic    3,668,730    3,681,268
  Effect of dilutive options                                                   1,052,311
  Effect of dilutive convertible preferred stock                                 590,375
                                                                ------------  ----------

  Diluted weighted average shares outstanding                     3,668,730    5,323,954
                                                                ============  ==========

  Basic (loss) earnings per share                               $      (.33)  $      .10
                                                                ============  ==========

  Diluted (loss) earnings per share                             $      (.33)  $      .07
                                                                ============  ==========
</TABLE>

16.  PROPOSED  ACQUISITION:

     On  October  11,  2001,  the  Corporation  entered  into  a Stock for Stock
     Exchange  Agreement  (the  "Agreement")  with  The  Bio Balance Corp. ("Bio
     Balance").  Bio  Balance  is  engaged  in  the  research  and  development,
     manufacturing  and  marketing  of  probiotic  agents  for  therapy  of
     gastrointestinal diseases. A probiotic is a live microorganism or microbial
     mixture  administered  to  beneficially  affect  the  host by improving its
     microbial  balance.  Bio  Balance  is  a  company in the development stage.


                                      F-20
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



     The  Agreement  provides for Bio Balance's shareholders exchanging at least
     90%  of their shares and 100% of their options for common stock and options
     of  the  Corporation  in  a  share for share transaction. Just prior to the
     proposed  closing presently expected to occur in April 2002, Bio Balance is
     expected to have approximately 22,350,000 shares of common stock issued and
     outstanding and the Corporation is expected to have approximately 4,000,000
     issued  and outstanding shares of common stock, options and warrants (after
     a  1  for  1.5  share  reverse  split).  After  the  proposed  closing, the
     shareholders  of  Bio  Balance are expected to own approximately 90% of the
     common  stock  of  the  Corporation.

     The  Agreement is subject to the approval of the Corporation's shareholders
     at  a  meeting, and to compliance with various federal and state regulatory
     requirements,  as  more  fully  described  in  the Corporation's Form 8-K/A
     report  of the events of October 11, 2001 filed with the SEC on November 6,
     2001.


                                      F-21
<PAGE>
ITEM 8.   CHANGES IN DISAGREEMENTS WITH ACCOUNTANTS ON
          ACCOUNTING AND FINANCIAL DISCLOSURES.

          NONE



                                    PART III


ITEM 9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY;
          COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.


     The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
Name                 Age                  Position
-------------------  ---  -----------------------------------------------
<S>                  <C>  <C>
 Jerry Braun          44  President, Chief Executive Officer and Director

 Jacob Rosenberg      44  Vice President, Chief Operating Officer,
                          Chief Financial and Accounting Officer,
                          Secretary and Director

 Hirsch Chitrik       73  Director

 Sid Borenstein       48  Director

 H. Gene Berger       61  Director

 Charles J. Pendola   56  Director
</TABLE>

     Jerry  Braun  has  been  the  President,  Chief Executive Officer and Chief
Operating  Officer  of  the  Company  since  its  inception  in  1983.

     Jacob  Rosenberg,  has  been  Secretary  and a Director since the Company's
inception in 1983, and Vice President and Chief Operating Officer since February
1995.  Jacob Rosenberg is currently acting as the Chief Financial and Accounting
Officer  for  the  Company.

     Hirsch  Chitrik has been a Director of the Company since May 1995. For more
than  the  last  five years, Mr. Chitrik has been the President of Citra Trading
Corporation,  a  privately-held  company  in  New  York  engaged  in the jewelry
business.


                                       30
<PAGE>
     Sid  Borenstein has been a Director of the Company since May 1995. For more
than  the  last  five years, Mr.  Borenstein, a Certified Public Accountant, has
been  a  General  Partner in Sid Borenstein & Co., CPA's, in Brooklyn, New York.

     H.  Gene  Berger  has  been  a director of the Company since February 1998.
Since  1981  Mr.  Berger  has  been  the  president  of  Jay Isle  Associates, a
consulting firm to the health care industry.  From October 1991 to October 1997,
Mr.  Berger  was  employed  by Transworld Health Care, Inc., which is a regional
provider  of  alternate  site  health care services and products, in a number of
capacities  including  executive  vice  president,  president,  chief  operating
officer  and  chief  executive  officer.

     Charles  J. Pendola has been a director of the Company since February 1998.
Since  March  2000,  Mr.  Pendola  has  been  the President of DLJ Managed Plans
Corporation,  a  division of an  investment banking firm; he is also Senior Vice
President  of  Black  Mountain  Management,  a  management consulting firm.  Mr.
Pendola  has  been an independent management consultant to various organizations
in  the  health  care industry since April 1997.  From August 1996 to March 1997
Mr.  Pendola  was  the  president  and  chief executive officer of First Medical
Corporation,  an international health care management firm providing services to
health  care  networks,  managed  care  organizations  and  independent  health
providers  in  the  United States and Europe.  From April 1989 to June 1996, Mr.
Pendola  was  the  president  and  chief  executive officer of Preferred  Health
Network,  a  not-for-profit  corporation  which managed a  diversified  group of
health care providers and health related organizations including five acute care
hospitals  and  20  ambulatory  care centers.  Mr. Pendola is a certified public
accountant.

     Directors  hold  their  offices  until  the  next  annual  meeting  of  the
stockholders  and thereafter  until their  successors have been duly elected and
qualified. Executive officers are elected by the Board of Directors on an annual
basis  and  serve at the direction of the Board.  All of the executive  officers
devote  approximately  90% of their time to the business affairs of the Company.
See  "Certain  Relationships  and  Related  Transactions."

     The  Company's  Board  of  Directors met three times during the fiscal year
ended  December  31,  2001 and also took action in lieu of meetings by executing
unanimous  written  consents.

     The  Company  has an Audit Committee, which was formed in February 1998 and
consists  of  three non-employee directors:  Mr. Borenstein, Mr. Pendola and Mr.
Berger.  The  Audit  Committee  assists  in selecting the independent  auditors,
designating  services  they  are  to  perform  and  maintaining  effective
communications  with  those  auditors.

EMPLOYMENT  AGREEMENTS

     On  November  10,  1999, the Company entered into new employment agreements
with  Jerry  Braun  and  Jacob  Rosenberg, each of which is for a term beginning
December  27,  1999  and  ending  December  26,  2004.

     Mr.  Braun's  agreement  provides that he will serve as President and Chief
Executive  Officer  in  consideration of (i) initial annual base compensation of
$232,925;  (ii)  reimbursement  of  authorized  business  expenses  incurred  in


                                       31
<PAGE>
connection  with  the  conduct of the Company's business; (iii) participation in
the  Company's  Bonus  Plan,  401  (k)  Plan and Option Plan; (iv) an automobile
reimbursement  allowance  of  $750 per month toward automobile leasing costs and
payment  of  reimbursement of automobile insurance and maintenance costs; (v) an
allowance  of $5,000 per year towards the cost of life and disability insurance;
(vi)  four  weeks  paid  vacation  and eighteen sick or personal leave days; and
(vii)  an  annual  increase  in  salary  of  10%  for  each  year.

     Mr.  Rosenberg's agreement has the same general terms and conditions as Mr.
Braun's,  except  that  he  will  serve  as  Vice President, Secretary and Chief
Operating  Officer,  and  the  annual  base  compensation  is  $186,340.

     These  new executive employment agreements also provide additional benefits
in  the  event there is a "change of control" of the Company, which is generally
defined as a merger or consolidation of the Company with another corporation, or
the sale of all or substantially all of its assets, or the acquisition of either
a  majority  of the Company's assets or its voting equity stock, or the power to
designate  a  majority of the Company's Board of Directors by persons other than
the  present  shareholders  of  the  Company.  In the event of such a "change of
control,"  the  executives'  unexercised  stock  options will become immediately
vested  and exercisable in full, they will each receive a lump-sum payment equal
to 2.99 times the average of their annual base salary and bonus for the previous
five  years  and  the  Company will pay the cost to either maintain the lease or
transfer  the  ownership  of  the  automobile for which the Company has paid the
leasing  costs  for  the  executive.  The  Company  has also agreed that, to the
extent  any  payments  received  by  an  executive from the Company subjects the
executive  to  an excise tax under Section 499 of the Internal Revenue Code, the
Company  will  make an additional payment to the executive so that net after-tax
compensation  is  not  reduced  by  the  excise  tax.  All  "change  of control"
compensation  is  limited, to the extent it may qualify as a "parachute payment"
under  Section 280G of the Internal Revenue Code, to the maximum amount that may
be  paid to that executive without any part of that compensation being deemed to
be an "excess parachute payment." That maximum amount is generally determined by
multiplying  the average of the executive's annual base salary and bonus for the
previous  five  years  by  a  factor  of  three.

     Mr.  Braun  and Mr. Rosenberg also participate, together with all employees
of  the  Company,  in a bonus plan pursuant to which 10% of the Company's annual
pre-tax net income is contributed to the bonus pool which is distributed to such
persons  and  in  such  amounts  as  decided  upon by the Company's Compensation
Committee.



                                       32
<PAGE>
SECTION  16(A)  BENEFICIAL  OWNERSHIP  REPORTING  COMPLIANCE

     The following directors of the Company were late in filing reports required
by  Section  16(a)  of  the  Securities  Exchange  Act  of  1934:

     Jerry  Braun  was  late  in  filing two reports concerning two transactions
during  the  Company's  fiscal  year  ended  December  31,  2001.

     Jacob  Rosenberg  was late in filing one report  concerning one transaction
during  the  Company's  fiscal  year  ended  December  31,  2001.

     Sid  Borenstein  was  late  in  filing  three  reports  concerning  three
transactions  during  the  Company's  fiscal  year  ended  December  31,  2001.

     Hirsch  Chitrik  was  late  in filing one report concerning one transaction
during  the  Company's  fiscal  year  ended  December  31,  2001.

     H.  Gene  Berger was late in filing two reports concerning two transactions
during  the  Company's  fiscal  year  ended  December  31,  2001.

     Charles J. Pendola was late in filing one report concerning one transaction
during  the  Company's  fiscal  year  ended  December  31,  2001.


                                       33
<PAGE>
ITEM 10.     EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
--------------------------

          The  following  table  sets forth, for the fiscal years ended December
31,  1999,  2000 and 2001, the cash compensation paid by the Company, as well as
certain  other  compensation paid with respect to those years and months, to the
Chief  Executive  Officer and, to the extent applicable, each of the three other
most  highly  compensated executive officers of the Company in all capacities in
which  they  served.

<TABLE>
<CAPTION>
                                         ANNUAL COMPENSATION          LONG-TERM COMPENSATION
                                         -------------------          ----------------------
                                                                                    AWARDS                        PAYOUTS
NAME AND                                                                            ------                        -------
PRINCIPAL POSITION (1)                                         OTHER ANNUAL        RESTRICTED       SECURITIES
          ------------                                       -----------------  ----------------    UNDERLYING       LTIP
                                YEAR   SALARY    BONUS ($)   COMPENSATION ($)   STOCK AWARDS ($)   OPTIONS/SARS   PAYOUTS (#)
                                ----  ---------  ----------  -----------------  ----------------  --------------  -----------
                                         ($)
                                      ---------
<S>                             <C>   <C>        <C>         <C>                <C>               <C>             <C>
Jerry Braun (1)                 1999  $ 212,395  $   37,000  $      25,081 (1)                    773,750 Shares
  President and Chief           2000  $ 251,290  $        0  $      38,893 (1)
  Executive Officer             2001  $ 256,710  $        0  $      45,111 (1)
------------------------------  ----  ---------  ----------  -----------------  ----------------  --------------  -----------
Jacob Rosenberg (2)             1999  $ 169,726  $   25,000  $      25,314 (2)                    680,000 Shares
  Chief Operating Officer and   2000  $ 210,149  $        0  $      34,839 (2)
  Chief Financial Officer       2001  $ 213,252  $        0  $      45,145 (2)
------------------------------  ----  ---------  ----------  -----------------  ----------------  --------------  -----------

NAME AND
PRINCIPAL POSITION (1)
          ------------              ALL OTHER
                                COMPENSATION ($)
                                -----------------
<S>                             <C>
Jerry Braun (1)
  President and Chief
  Executive Officer             $      50,000 (3)
------------------------------  -----------------
Jacob Rosenberg (2)
  Chief Operating Officer and
  Chief Financial Officer       $      50,000 (3)
------------------------------  -----------------

<FN>

(1)          Includes $22,769, $18,343 and $15,898 of medical insurance premiums
     paid  on  behalf  of such individual for each of the years ended 2001, 2000
     and  1999  respectively,  $17,342,  $15,550  and  $9,184 for automobile and
     automobile-related  costs,  including insurance, incurred on behalf of such
     individual,  respectively,  for each of the years ended 2001, 2000 and 1999
     and  $5,000  in  expense allowance for each of the fiscal years ended 2001,
     2000  and  1999.

(2)          Includes $22,769, $18,343 and $15,898 of medical insurance premiums
     paid  on  behalf  of such individual for each of the years ended 2001, 2000
     and  1999  respectively,  $17,376  ,  $11,496 and $9,416 for automobile and
     automobile-related  costs,  including insurance, incurred on behalf of such
     individual,  respectively,  for each of the years ended 2001, 2000 and 1999
     and  $5,000  in  expense allowance for each of the fiscal years ended 2001,
     2000  and  1999.

(3)          This  compensation was accrued in 2000 and paid in 2001.  This
     compensation is not the same as the 10% pre-tax bonus.
</TABLE>

Directors  Compensation

     The  Company  currently  reimburses  each  non-employee  director for their
expenses  in  connection  with  attending  meetings.

Savings  and  Stock  Option  Plans

401(k)  Plan
     The  Company  maintains  an  Internal  Revenue  Code  Section 401(k) salary
deferral  savings  plan  (the "Plan") for all of its eligible New York employees
who  have  been  employed  for  at  least one year and are at least 21 years old
(effective  July  1,  1996, field staff employees at the Company's Orange County
branch  office in Newburgh, New York ceased being eligible to participate in the
Plan).  Subject  to  certain  limitations,  the  Plan  allows  participants  to
voluntarily  contribute  up  to  15% of their pay on a pre-tax basis.  Under the
Plan,  the  Company  may  make  matching  contributions on behalf of the pre-tax
contributions  made  by  participants.

Stock  Option  Plan

     In  March  1996, the Company's Board of Directors and stockholders approved
and  adopted  the  New  York  Health  Care, Inc. Performance Incentive Plan (the
"Option  Plan") providing for options to purchase up to 262,500 shares of Common
Stock  for  to  key  employees  of  the  Company.

     On  June  25, 1998, the Company's shareholders ratified an amendment to the
Option  Plan  authorizing  the  reservation  of  an additional 210,000 shares of
Common  Stock  for  issuance  under  that plan for each of two additional years,
resulting  in  a  total  of  682,500  shares  in  the  Option  Plan.

     On  July  28, 1999, the Company's shareholders ratified an amendment to the
Option Plan that each stock option granted under the plan, including unexercised
options  outstanding  on the date of the amendment, may be exercisable in either
one,  two  or  three  equal  annual  installments  at  the  discretion  of  the
Compensation Committee. The amendment also provided an additional 350,000 shares
of common stock for issuance under the Option Plan after January 1, 2000 so that
the  total  number  of  shares which may be issued under the plan increased from
682,500  to  1,032,500  shares.

     On  December  18,  2000  the  Company's  shareholders  further  ratified an
amendment  to the Option Plan to provide for an additional 450,000 shares of the
Corporation's  $.01  par  value  common  stock for issuance under the plan after
January 1, 2001 so that the total number of shares which may be issued under the
plan  increased  from  1,032,500  to  1,482,500  shares.

     To  date, options have been granted under the plan for a total of 1,407,500
shares.  The  Option  Plan is administered by a Compensation Committee appointed
by  the  Board  of  Directors  (the  "Committee"),  which is authorized to grant
incentive stock options and non-qualified stock options to selected employees of
the  Company  and  to  determine  the  participants, the number of options to be
granted  and  other  terms  and  provisions  of  each  option.


                                       34
<PAGE>
     The  exercise  price  of  any incentive stock option or nonqualified option
granted under the Option Plan may not be less than 100% of the fair market value
of  the  shares of Common Stock of the Company at the time of the grant.  In the
case  of  incentive  stock  options  granted  to holders of more than 10% of the
voting power of the Company, the exercise price may not be less than 110% of the
fair  market  value.

     Under  the  terms  of  the  Option  Plan,  the  aggregate fair market value
(determined  at  the time of grant) of shares issuable to any one recipient upon
exercise  of  incentive  stock options exercisable for the first time during any
one  calendar  year  may  not exceed $100,000.  Options granted under the Option
Plan  become  exercisable in whole or in part from time to time as determined by
the  Committee,  but  in  no  event  may  a  stock option granted in conjunction
therewith  be exercisable prior to the expiration of six months from the date of
grant, unless the grantee dies or becomes disabled prior thereto.  Stock options
granted  under  the Option Plan have a maximum term of 10 years from the date of
grant,  except  that  with  respect  to  incentive  stock  options granted to an
employee  who,  at  the  time  of the grant, is a holder of more than 10% of the
voting  power  of the Company,  the stock option shall expire not more than five
years  from the date of the grant.  The option price must be paid in full on the
date  of  exercise  and is payable in cash or in shares of Common Stock having a
fair market value on the date the option is exercised equal to the option price.

     If  a  grantee's  employment  by,  or provision of services to, the Company
shall  be terminated,  the Committee may, in its discretion, permit the exercise
of  stock options for a period not to exceed one year following such termination
of  employment  with respect to incentive  stock options and for a period not to
extend beyond the expiration date with respect to non-qualified options,  except
that no incentive stock option may be exercised after three months following the
grantee's  termination  of  employment,  unless it is due to death or  permanent
disability,  in which case they may be exercised  for a period of up to one year
following  such  termination.


                                       35
<PAGE>
<TABLE>
<CAPTION>
                      Option/SAR Grants in Last Fiscal Year

                                Individual Grants

--------------------------------------------------------------------------------
                  Number of      % of Total
                  Securities     Options/SARs
                  Underlying     Granted to
                  Options/SARs   Employees in   Exercise or    Expiration
Name              Granted        Fiscal Year    Base Price     Date
---------------  --------------  -------------  ------------  -------------
<S>              <C>             <C>            <C>           <C>
Jerry Braun      100,000 Shares            25%  $  .60/Share  Jan 1, 2006
                 100,000 Shares            25%  $  .65/Share  Jan 1, 2011

Jacob Rosenberg  100,000 Shares            25%  $  .60/Share  Jan 1, 2006
                 100,000 Shares            25%  $  .65/Share  Jan 1, 2010
---------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
              Aggregated Option/SAR Exercises in Last Fiscal Year
                      and Fiscal Year-End Option/SAR Values

--------------------------------------------------------------------------------
                                                     Number of
                                                     Securities       Value of
                                                     Underlying       Unexercised
                                                     Unexercised      In-the-Money
                                                     Options/SARs at  Options/SARs at
                                                     Fiscal Year-End  Fiscal Year-End
                  Shares Acquired                    Exercisable/     Exercisable/
Name              on Exercise       Value Realized   Unexercisable    Unexercisable
---------------  ----------------  ---------------  ----------------  ----------------
<S>              <C>               <C>              <C>               <C>
Jerry Braun                                          93,750/0 Shares  $
                                                     55,000/0 Shares  $
                                                     55,000/0 Shares  $          6,875
                                                     35,000/0 Shares  $         25,137
                                                     35,000/0 Shares  $         28,420
                                                     50,000/0 Shares  $         53,125
                                                     50,000/0 Shares  $         56,250
                                                    100,000/0 Shares  $         50,000
                                                    100,000/0 Shares  $         55,000
                                                    100,000/0 Shares  $         60,000
                                                    100,000/0 Shares  $         65,000


                                       36
<PAGE>
Jacob Rosenberg                                      55,000/0 Shares                 -
                                                     55,000/0 Shares  $          6,875
                                                     35,000/0 Shares  $         25,137
                                                     35,000/0 Shares  $         28,420
                                                     50,000/0 Shares  $         53,125
                                                     50,000/0 Shares  $         56,250
                                                    100,000/0 Shares  $         50,000
                                                    100,000/0 Shares  $         55,000
                                                    100,000/0 Shares  $         60,000
                                                    100,000/0 Shares  $         65,000
</TABLE>


     Other than the stock options described in the tables above, the Company has
not  issued  any  options  to  officers  and directors under the Option Plan, or
otherwise, except common stock purchase warrants issued to two outside directors
during  1999, 2000  and  2001.
     On  November  12,  1999, the Registrant issued warrants pursuant to warrant
agreements  with  each  of  H.  Gene  Berger  and  Charles J. Pendola, which are
directors  of  the  Registrant.  Each  warrant  provided  that  the holder could
purchase  up to an aggregate of 10,000 shares of the Registrant's $.01 par value
common  stock at an exercise price of $.625 per share at any time commencing May
12,  2000  up  until  November  12,  2004.
     On  December  18,  2000,  the  Company  issued warrants pursuant to warrant
agreements  with  each  of  H.  Gene Berger and Charles J. Pendola. Each warrant
provided  that  the holder could purchase up to an aggregate of 10,000 shares of
the Company's $.01 par value common stock at an exercise price of $.50 per share
at  any  time  commencing  June  18,  2001  up  until  December  18,  2005.
     On  January  2,  2001,  the  Company  issued  warrants  pursuant to warrant
agreements  with  each  of  H.  Gene Berger and Charles J. Pendola. Each warrant
provided  that  the holder could purchase up to an aggregate of 10,000 shares of
the Company's $.01 par value common stock at an exercise price of $.60 per share
at  any  time  commencing  July  2,  2001  up  until  January  2,  2006.

     The Company does not have any other existing stock option or other deferred
compensation  plans,  but  may  adopt  such  plans  in  the  future.



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

     The  following table sets forth certain information regarding shares of the
Common  Stock  beneficially  owned  as  of January 27, 2002 by (i) each person,
known  to  the  Company, who beneficially owns more than 5% of the Common Stock,
(ii)  each  of the Company's directors and (iii) all officers and directors as a
group:


                                       37
<PAGE>
<TABLE>
<CAPTION>
                              Shares         Percentage
Name and Address of           Beneficially   of Stock
Beneficial Owner              Owned(l)       Outstanding(l)
----------------------------  -------------  --------------
<S>                           <C>            <C>

Jerry Braun (2)(9)                1,800,639          42.11%
929 East 28th Street
Brooklyn, NY  11210


Jacob Rosenberg (3)(9)            1,140,096          26.67%
932 East 29th Street
Brooklyn, NY  11210

Samson Soroka(4)                    551,606          12.90%
1228 East 22nd Street
Brooklyn, NY  11210

Hirsch Chitrik(5)                   604,075          14.13%
1401 President Street
Brooklyn, NY  11213

Sid Borenstein(6)                   108,019           2.53%
1246 East 10th Street
Brooklyn, NY  11230

H. Gene Berger (7)                   41,100            .96%
11 Fenimore Drive
Scotch Plains, NJ 07076

Charles J. Pendola(8)                30,000            .70%
18 Guild Court
Plainview, NY 11803-3932

All officers and directors
as a group (6 persons)(1)(2)
(3)(5)(6)(7)(8)                   4,275,535          80.30%

<FN>

(1)  The  shares  of  Common Stock owned by each person or by the group, and the
     shares  included in the total number of shares of Common Stock outstanding,
     have  been  adjusted  in  accordance  with  Rule 13d-3 under the Securities
     Exchange  Act  of  1934,  as  amended,  to  reflect the ownership of shares
     issuable  upon  exercise  of  outstanding options, warrants or other common
     stock equivalents which are exercisable within 60 days. As provided in such
     Rule,  such  shares  issuable  to any holder are deemed outstanding for the
     purpose of calculating such holder's beneficial ownership but not any other
     holder's  beneficial  ownership.

(2)  Includes  a  total  of  773,750  shares  of  Common Stock issuable upon the
     exercise  of stock options granted to Mr. Braun and 221,391 shares issuable
     upon  the  conversion  of  shares  of  Class A Convertible Preferred Stock.


                                       38
<PAGE>
(3)  Includes  a  total  of  680,000  shares  of  Common Stock issuable upon the
     exercise  of  stock  options  granted  to  Mr. Rosenberg and 110,695 shares
     issuable upon the conversion of his shares of Class A Convertible Preferred
     Stock.

(4)  Includes 110,695 shares of Common Stock issuable upon the conversion of Mr.
     Soroka's  shares  of  Class  A  Convertible  Preferred  Stock.

(5)  Includes 118,075 shares of Common Stock issuable upon the conversion of Mr.
     Chitrik's  shares  of  Class  A  Convertible  Preferred  Stock.

(6)  Includes  29,519 shares of Common Stock issuable upon the conversion of Mr.
     Borenstein's  shares  of  Class  A  Convertible  Preferred  Stock.

(7)  Includes 40,000 shares of Common Stock issuable upon the exercise of Common
     Stock  Purchase  Warrants  granted  to  Mr.  Berger.

(8)  Includes  30,000  shares  of  Common  Stock issuable upon the exercise of a
     common  stock  purchase  warrant  granted  to  Mr.  Pendola.
</TABLE>


ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

     Jerry  Braun,  Jacob  Rosenberg,  Samson  Soroka,  Hirsch  Chitrik  and Sid
Borenstein, who are directors of the Company, have been the sole stockholders of
a New Jersey corporation named Heart to Heart Health Care Services, Inc. ("Heart
to  Heart"),  which  began its home health care business in 1995 in northern New
Jersey,  but not in the State of New York, and sold its assets to the Company on
March 26, 1998.  Heart to Heart had net revenues of $1,950,890 in the year ended
December  31,  1997.  Since  its  inception,  Heart  to  Heart  utilized Company
personnel  for  its  administrative  functions  regarding  payroll,  benefits
management  and  data  processing.  The Company and Heart to Heart had a Service
Agreement  pursuant  to  which  the  Company  provided  administrative  services
relating  to  payroll,  benefits  management  and  data processing for which the
Company  was  reimbursed  for  all  expenses  attributable to such operations of
approximately  $15,000  per  year.

     On  March  26, 1998, Helping Hands Healthcare, a wholly-owned subsidiary of
the  Company,  purchased  Heart to Heart's home care business assets (other than
accounts receivable) for a purchase price consisting of a promissory note in the
principal  sum  of  $1,150,000  payable  in  24  equal  quarterly  installments
commencing  June  26,  1998,  which  has  been  paid  in  full.  As  part of the
acquisition transaction, Helping Hands Health Care assumed leasehold obligations
for  the  two  offices  located  in  East  Orange (expiring August 31, 2002) and
Hackensack,  New  Jersey (which expired in May 31, 1998) in the aggregate sum of
$1,815  per  month, together with various equipment leases for items of business
equipment.  Because certain of the directors are principal stockholders of Heart
to  Heart,  the  Company  obtained  an  independent  opinion  that the terms and
conditions  of  the  acquisition  agreement  with Heart to Heart were, under all
circumstances,  fair  to  the  Company.


                                       39
<PAGE>
     On  June  2, 1998, the Company issued stock options pursuant to Option Plan
to  each  of Jerry  Braun,  Jacob  Rosenberg and David  Grossman.  Mr. Braun was
granted  an  Incentive  Stock  Option  to purchase up to an aggregate  of 55,000
shares  of the Company's  Common Stock at an exercise price of $1.7875 per share
at any time up until June 2, 2003 and a  Non-Qualified  Stock Option to purchase
up to an aggregate of 55,000 shares of the Company's Common Stock at an exercise
price  of $1.625 per share at any time up until June 2, 2008.  Mr. Rosenberg was
granted  an  Incentive  Stock  Option  to  purchase up to an aggregate of 55,000
shares of the Company's  Common Stock at an exercise  price of $1.7875 per share
at any time up until June 2, 2003 and a  Non-Qualified  Stock Option to purchase
up to an aggregate of 55,000 shares of the Company's Common Stock at an exercise
price of $1.625  per share at any time up until June 2, 2008.  Mr. Grossman  was
granted an Incentive Stock Option to purchase up to an aggregate of 7,500 shares
of the  Company's  Common Stock at an exercise  price of $1.625 per share at any
time  up  until  June  2,  2008.

     On June 2, 1998, the Company issued warrants pursuant to warrant agreements
with  each  of H. Gene Berger and Charles J. Pendola. Each warrant provided that
the  holder  could purchase up to an aggregate of 10,000 shares of the Company's
$.01 par value common stock at an exercise price of $1.625 per share at any time
up  until  June 1, 2008. On June 10, 1998, Mr. Pendola exercised his warrant and
purchased 10,000 shares of the $.01 par value common stock of the Company for an
aggregate  purchase  price  of  $16,250.

     On  August  6,  1998, Heart to Heart Health Care Services, Inc.  ("Heart to
Heart") which was the holder of the Company's promissory note in the face amount
of  $1,150,000  bearing interest at the rate of 9% per annum, converted $600,000
of  the  principal  amount  of  that  promissory note into 480,000 shares of the
Company's  newly  authorized Class A Convertible Preferred Stock at a conversion
price  of  $1.25  per share, each share of which is convertible at any time into
shares  of  the Company's Common Stock.  Heart to Heart is owned by Jerry Braun,
Jacob  Rosenberg,  Samson  Soroka,  Hirsch  Chitrik,  and  Sid  Borenstein  (the
"Affiliated  Shareholders")  Mr.  Braun  received  180,000  shares,  Messrs.
Rosenberg and Soroka each received 90,000 shares and Mr. Chitrik received 96,000
shares  and Mr.  Borenstein  received  24,000  shares of such  preferred  stock.
Messrs.  Braun,  Rosenberg,  Chitrik and Borenstein are officers or directors of
the Company and, together with Mr. Soroka, were all principal shareholders.  The
Company  obtained  an independent opinion that the consideration received by the
Company  in  the transaction was, under the circumstances, fair from a financial
point  of  view  to  the  Company,  not  including, the Affiliated Shareholders.

     On  December  23,  1998,  the  Company issued stock options pursuant to the
Option  Plan  to  each  of  Jerry Braun, Jacob Rosenberg and David Grossman, Mr.
Braun  was  granted  an Incentive Stock Option to purchase up to an aggregate of
35,000  shares of the Company's Common Stock at an exercise price of $1.0318 per
share at any time up until December 23, 2003 and a Non-Qualified Stock Option to
purchase up to an aggregate of 35,000 shares of the Company's Common Stock at an
exercise  price  of  $.938 per share at any time up until December 23, 2008. Mr.


                                       40
<PAGE>
Rosenberg  was  granted an Incentive Stock Option to purchase up to an aggregate
of  35,000  shares of the Company's Common Stock at an exercise price of $1.0318
per  share  at  any  time  up  until December 23, 2003 and a Non-Qualified Stock
Option  to  purchase up to an aggregate of 35,000 shares of the Company's Common
Stock  at  an  exercise  price of $.938 per share any time up until December 23,
2008.  Mr.  Grossman  was granted an Incentive Stock Option to purchase up to an
aggregate of 10,000 shares of the Company's Common Stock at an exercise price of
$.938  per  share  at  any  time  up  until  December  23,  2008.

     On  July  29,  1999,  the  Registrant's  Board  of  Directors authorized an
increase  in  the  authorized  shares  of  the  Registrant's Class A Convertible
Preferred Stock (the "Class A Preferred") from 480,000 shares to 590,375 shares.
Immediately  following that authorization, the Company entered an agreement with
Heart  to  Heart  Health  Care  Services,  Inc. ("Heart to Heart"), which is the
holder  of  the  Registrant's  promissory  note (the "Note") in the current face
amount  of  $550,000 currently bearing interest at the rate of 9% per annum, for
the  conversion  of  $100,000  of the principal amount of that Note into 110,375
shares  of  the Registrant's Class A Convertible Preferred Stock at a conversion
price  of  $.906  per share, each share of which is convertible at any time into
shares of the Registrant's $.01 par value common stock.  Heart to Heart is owned
by  Jerry  Braun,  Jacob  Rosenberg,  Samson  Soroka,  Hirsch  Chitrik  and  Sid
Borenstein  (the "Affiliated Shareholders").  Messers. Braun, Rosenberg, Chitrik
and  Borenstien  are  officers or directors of the Registrant and, together with
Mr.  Soroka,  are  all principal shareholders.  The conversion transaction is on
substantially  the same terms as that Registrant and Heart to Heart agreed-to on
August  6,  1998 in which $600,000 of the Note was converted into 480,000 shares
of  the  Class  A Preferred.  The Registrant had obtained an independent opinion
that  the  consideration  received by the Company in that transaction was, under
the  circumstances,  fair  from a financial point of view to the Registrant, not
including  the  Affiliated  Shareholders.

     On  November  12,  1999, the Company entered into new employment agreements
with Jerry Braun and Jacob Rosenberg.  See "Management - Employment Agreements."

     On  November  12,  1999,  the Company granted a warrant for each of H. Gene
Berger and Charles J. Pendola to purchase up to an aggregate of 10,000 shares of
the  Company's  $.01  par  value  common stock at an exercise price of $.625 per
share  at  any  time  commencing  May  12,  2000  up  until  November  11, 2004.

     On  November  12,  1999,  the  Company issued stock options pursuant to the
Option  Plan to each of Jerry Braun and Jacob Rosenberg.  They were each granted
an Incentive Stock Option to purchase up to an aggregate of 50,000 shares of the
Company's  Common  Stock at an exercise price of $.6875 per share at any time up
until  May  11,  2004,  and  a  Non-Qualified  Stock Option to purchase up to an
aggregate of 50,000 shares of the Company's Common Stock at an exercise price of
$.625  per  share  at  any  time  up  until  May  11,  2008.

     On  July  10, 2000, the Company issued stock options pursuant to the Option
Plan  to  Jerry  Braun  and Jacob Rosenberg. They were each granted an Incentive
Stock  Option  to purchase up to an aggregate of 400,000 shares of the Company's
Common  Stock  at  exercised  prices  ranging  from  $.50 to $.55 per share. The
options  expire  in 5-10 years. The exercise price of these options was not less
than  the  fair  market  price  of  the  Common  Stock  as of the date of grant.


                                       41
<PAGE>
     On  December  18,  2000,  the  Company granted a warrant to each of H. Gene
Berger and Charles J. Pendola to purchase up to an aggregate of 10,000 shares of
the Company's $.01 par value common stock at an exercise price of $.50 per share
at  any  time  commencing  June  18,  2001  up  until  December  18,  2005.

     On January 2, 2001, the Company issued stock options pursuant to the Option
Plan  to  Jerry  Braun and Jacob Rosenberg.  They were each granted an Incentive
Stock  Option  to purchase up to an aggregate of 400,000 shares of the Company's
Common  Stock  at  exercised  prices  ranging from  $.59 to $.65 per share.  The
options  expire in 5-10 years.  The exercise price of these options was not less
than  the  fair  market  price  of  the  Common  Stock  as of the date of grant.

     On January 2, 2001, the Company granted a warrant to each of H. Gene Berger
and  Charles  J.  Pendola to purchase up to an aggregate of 10,000 shares of the
Company's  $.01 par value common stock at an exercise price of $.60 per share at
any  time  commencing  July  2,  2001  up  until  January  2,  2006.

     The  transactions described above involve actual or potential  conflicts of
interest  between the Company and its officers or directors.  In order to reduce
the potential for conflicts of interest between the Company and its officers and
directors,  prior to entering into any transaction in which a potential material
conflict  of  interest  might  exist,  the  Company's  policy  has been and will
continue  to be that the Company does not enter into transactions with officers,
directors  or other  affiliates unless the terms of the transaction are at least
as  favorable  to the Company as those which would have been  obtainable from an
unaffiliated  source.  The  Company  has  no  plans to enter into any additional
transactions which involve actual or potential conflicts of interest between the
Company  and  its  officers  or  directors  and  will  not  enter  into any such
transactions  in  the future without first obtaining an independent opinion with
regard  to  the  fairness to the Company of the terms and conditions of any such
transaction.


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

(a)  Exhibits

Number                   Description  of  Exhibit
------                   ------------------------------------
1.1                      Form  of  Underwriting Agreement.(1)

2.1                      Purchase  and  Sale  Agreement  dated  December 7, 1997
                         among  NYHC  Newco  Paxxon,  Inc.  and Metro Healthcare
                         Services,  Inc.(2)

2.2                      Purchase  and  Sale  Agreement  dated  February 8, 1998
                         among  NYHC  Newco  Paxxon,  Inc.  and Metro Healthcare
                         Services,  Inc.(3)

2.3                      Purchase  and  Sale  Agreement  dated February 25, 1998
                         among  NYHC  Newco  Paxxon,  Inc.  and  Heart  to Heart
                         Healthcare  Services,  Inc.(3)

3.1                      Certificate  of  Incorporation  of  the  Company.(1)

3.2                      Restated  Certificate  of  Incorporation  of  the
                         Company.(1)

3.3                      Certificate  of  Correction  of Restated Certificate of
                         Incorporation  of  New  York  Health  Care,  Inc.(1)

3.4                      Amendment  to  the  Certificate  of Incorporation filed
                         October  17,  1996.(1)

3.5                      By-laws  of  the  Company.(1)

3.6                      Amendment  to  the  Certificate of Incorporation of the
                         Company  filed  December  4,  1996.(1)

3.7                      Certificate  of Designations, Rights and Preferences of
                         New  York  Health  Care,  Inc.  Class  A  Convertible
                         Preferred  Stock.(5)

4.1                      Form  of  certificate  evidencing  shares  of  Common
                         Stock.(1)

4.2                      Underwriter's  Warrant  Agreement  and  Form  of
                         Underwriter's  Warrant.(1)

10.1                     Purchase and Sale Agreement by and between the Company,
                         National  Medical  Homecare,  Inc., Jerry Braun and Sam
                         Soroka  dated  March  18,  1988.(1)


10.2                     Lease for 105 Stevens Avenue, White Plains, New York by
                         and  between  the Company and Vincent Rippa as receiver
                         dated  October  30,  1992.(1)


10.3                     Lease for 175 Fulton Avenue, Suite 30IA, Hempstead, New
                         York  by  and  between  and  the  Company and Hempstead
                         Associates  Limited  Partnership dated July 2, 1993.(1)


                                       42
<PAGE>
10.4                     Deed  for 1667 Flatbush Avenue, Brooklyn, New York from
                         Tiara  Realty  Co.  to  the  Company  dated  April  22,
                         1994.(1)

10.5                     Agreement  between Jerry Braun, Jacob Rosenberg, Samson
                         Soroka,  Hirsch Chitrik, Sid Borenstein and the Company
                         dated  March  31,  1988.(1)

10.6                     Lease for 49 South Main Street, Spring Valley, New York
                         by  and  between the Company and Joffe Management dated
                         November  1,  1994.(1)

10.7                     Agreement  for  Provisions  of  Home  Health  Aide  and
                         Personal  Care  Worker  Services  by  and  between  the
                         Company  and Kingsbridge Heights Health Facilities Long
                         Term  Home  Health  Care  Program  dated  November  2,
                         1994.(1)

10.8                     State of New York Department of Health Office of Health
                         Systems Management Home Care Service Agency License for
                         the Company doing business in Rockland, Westchester and
                         Bronx  Counties  dated  May  8,  1995.(1)

10.9                     State of New York Department of Health Office of Health
                         Systems Management Home Care Service Agency License for
                         the Company doing business in Dutchess, Orange, Putnam,
                         Sullivan  and  Ulster  Counties  dated  May 8, 1995.(1)

10.10                    State of New York Department of Health Office of Health
                         Systems Management Home Care Service Agency License for
                         the  Company  doing  business  in  Nassau,  Suffolk and
                         Queens  Counties  dated  May  8,  1995.(1)

10.11                    State of New York Department of Health Office of Health
                         Systems Management Home Care Service Agency License for
                         the  Company  doing  business  in  Orange  and Rockland
                         Counties  dated  July  1.  1995.(1)

10.12                    Lease  Renewal  for 45 Grand Street, Newburgh, New York
                         by  and  between  the  Company  and  Educational  and
                         Charitable  Foundation  of  Eastern Orange County, Inc.
                         dated  July  12,  1995.(1)

10.13                    Lease for 91-31 Queens Boulevard, Elmhurst, New York by
                         and  between  the Company and Expressway Realty Company
                         dated  September  15,  1995.(1)

10.14                    Settlement Agreement and General Release by and between
                         the  Company  and  Samson  Soroka  dated  September 28,
                         1995.(1)

10.15                    Personal Care Aide Agreement by and between the Company
                         and  Nassau  County Department of Social Services dated
                         October  18,  1995.(1)

10.16                    Lease  for  1667 Flatbush Avenue, Brooklyn, New York by
                         and  between  the  Company and 1667 Flatbush Avenue LLC
                         dated  November  1,  1995.(1)


                                       43
<PAGE>
10.17                    State of New York Department of Health Office of Health
                         Systems Management Home Care Service Agency License for
                         the  Company  doing business in Bronx, Kings, New York,
                         Queens  and  Richmond  Counties  dated  December  29,
                         1995.(1)

10.18                    Home Health Agency Agreement by and between the Company
                         and  the  Center  for  Nursing and Rehabilitation dated
                         January  1,  1996.(1)

10.19                    Homemaker  and  Personal Care Agreements by and between
                         the  Company  and  the County of Rockland Department of
                         Social  Services  dated  January  1,  1996.(1)

10.20                    Home  Health  Aide/  Personal  Care  Worker  Services
                         Agreement  by  and between the Company and Beth Abraham
                         Hospital  dated  January  12,  1996.(1)

10.21                    Homemaker Services Agreement by and between the Company
                         and  the  Orange  County  Department of Social Services
                         dated  February  16,  1996.(1)

10.22                    Personal  Care  Service  Agreement  by  and between the
                         Company  and  the  Orange  County  Department of Social
                         Services  dated  February  16,  1996.(1)

10.23                    Certified  Home  Health Agency Agreement by and between
                         the  Company  and  New  York  Methodist  Hospital dated
                         February  28,  1996.(1)

10.24                    Employment  Agreement  by  and  between the Company and
                         Jacob  Rosenberg  dated  March  26,  1996.(1)

10.25                    Employment  Agreement  by  and  between the Company and
                         Jerry  Braun  dated  March  26,  1996.(1)

10.26                    Stock  Option  Agreement by and between the Company and
                         Jerry  Braun  dated  March  26,  1996.(1)

10.27                    Home Health Agency Agreement by and between the Company
                         and  the  Mount Sinai Hospital Home Health Agency dated
                         April  1,  1996.(1)

10.28                    Absolute,  Unconditional,  Irrevocable  and  Limited
                         Continuing  Guaranty  of  Payment  by and between Jacob
                         Rosenberg  and  United  Mizrahi  Bank and Trust Company
                         dated  May  9,  1996.(1)

10.29                    Absolute,  Unconditional,  Irrevocable  and  Limited
                         Continuing  Guaranty  of  Payment  by and between Jerry
                         Braun  and  United Mizrahi Bank and Trust Company dated
                         May  9,  1996.(1)

10.30                    Continuing  General  Security  Agreement by and between
                         the  Company  and United Mizrahi Bank and Trust Company
                         dated  May  9,  1996.(1)


<PAGE>
10.31                    Agreement  for  the  Purchase  of  Accounts  Receivable
                         between  the Company and 1667 Flatbush Avenue LLC dated
                         July  8,  1996.(1)

10.32                    401  (k)  Plan  for  the  Company.(1)

10.33                    Performance  Incentive  Plan  for  the  Company.(1)

10.34                    Services  Agreement  between  the  Company and Heart to
                         Heart  Health  Care  Services,  Inc.,  dated January 1,
                         1996.(1)

10.35                    Employment  Agreement  by  and  between the Company and
                         Gilbert  Barnett  dated  August  27,  1996.(1)

10.36                    Assignment  of lease dated October 8, 1996, lease dated
                         March  31,  1995  and sublease dated May 1995 among the
                         Company,  as tenant, Prime Contracting Design Corp., as
                         assignor,  Bellox  Realty  Corp.,  as  landlord  and
                         Nutriplus  Corp.,  as  subtenant.(1)

10.37                    Lease  for  6  Gramatan Avenue, Mount Vernon, New York,
                         10550  by and between the Company and 6 Gramatan Avenue
                         Corp.  dated  December  1,  1996.(1)

10.38                    Form of Financial Consulting Agreement with H.J. Meyers
                         &  Co.,  Inc.(1)

10.39                    Forms  of  Merger  &  Acquisition  Agreement  and
                         Indemnification  with  H.J.  Meyers  &  Co.,  Inc.(1)

10.40                    Consulting  Agreement by and between the Company and H.
                         Gene  Berger  dated  July  30,  1997.(4)

10.41                    Agreement between the Company and Heart to Heart Health
                         Care  Services,  Inc.  dated  August  6,  1998.(5)

10.42                    Agreement between the Company and Heart to Heart Health
                         Care  Services,  Inc.  dated  July  29,  1999.  (6)

10.43                    Employment  Agreement  by  and  between the Company and
                         Jerry  Braun  dated  November  12,  1999.  (7)

10.44                    Employment  Agreement  by  and  between the company and
                         Jacob  Rosenberg  dated  November  12,  1999.  (7)

10.45                    Loan  and  Security  Agreement  by  and  among New York
                         Health  Care,  Inc., NYHC Newco Paxxon, Inc. and Heller
                         Healthcare  Finance,  Inc. dated November 28, 2000. (8)

10.46                    Revolving  Credit Note dated November 28, 2000 from New
                         York  Health  Care, Inc. and NYHC Newco Paxxon, Inc. as
                         Borrowers  to  the  order of Heller Healthcare Finance,
                         Inc.  as  Lender.  (8)

10.47                    Stock  For Stock Exchange Agreement between the Company
                         and The Bio Balance Corp. dated October 11, 2001.(9)

__________________________

(1)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's  Registration  Statement on Form SB-2 under S.E.C.
                    File No. 333-08152, which was declared effective on December
                    20,  1996.

(2)                 Incorporated  by  reference  to Exhibit filed as part of the
                    Company's  Form 8-K report with an event date of December 8,
                    1997.

(3)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's  Form 8-K report with an event date of February 8,
                    1998.

(4)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's Form 10-KSB report for the year ended December 31,
                    1997.

(5)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's  Form 10-QSB report for the quarter ended June 30,
                    1998.

(6)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's  Form 10-QSB Report for the quarter ended June 30,
                    1999.

(7)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's Form 10-QSB Report for the quarter ended September
                    30,  1999.

(8)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's  Form  8-K  Report  Filed  December  8,  2000.

(9)                 Incorporated  by  reference to Exhibits filed as part of the
                    Company's Form 8-K Report Filed November 6, 2001.

New York Health Care, Inc. will furnish a copy of any exhibit described above to
any  beneficial  holder  of  its  securities  upon receipt of a written request,
provided that the holder pays to New York  Healthcare,  Inc.  a fee compensating
it  for  its  reasonable   expenses  in  furnishing  the  exhibits  requested.

(b)  Reports  on  Form  8-K/A.
     The  company  filed  a  report  on  Form  8-K/A  on  November  6,  2001.


                                       48
<PAGE>
SIGNATURES

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

February  4, 2002
                                           NEW YORK HEALTH CARE, INC.


                                           By:  /s/  Jerry  Braun
                                           -------------------------------------
                                           Jerry  Braun
                                           President and Chief Executive Officer


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

<TABLE>
<CAPTION>
<S>                     <C>                                      <C>
/s/ Jerry Braun         President, Chief Executive               February  4, 2002
----------------------  Officer and Director
Jerry Braun


/s/ Jacob Rosenberg     Vice President, Chief Operating          February  4, 2002
----------------------  Officer, Chief Financial and Accounting
Jacob Rosenberg         Officer, Secretary, Director


/s/ Hirsch Chitrik      Director                                 February  4, 2002
----------------------
Hirsch Chitrik


/s/ Sid Borenstein      Director                                 February  4, 2002
----------------------
Sid Borenstein


/s/ H. Gene Berger      Director                                 February  4, 2002
----------------------
H. Gene Berger


/s/ Charles J. Pendola  Director                                 February  4, 2002
----------------------
Charles J. Pendola
</TABLE>


                                       49
<PAGE>