UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K


(Mark One)

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

                  For the fiscal year ended: December 31, 2003

                                       OR

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

              For the transition period from:         to         .
                                              -------    -------

                           COMMISSION FILE NO. 1-12451

                           NEW YORK HEALTH CARE, INC.
             (Exact name of registrant as specified in its charter)

                New  York                              11-2636089
      (State or 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

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

      Indicate  by  check  mark whether the registrant (1) has filed all reports
required  to  be  filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  (the  "Act")  during  the  preceding


<PAGE>
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
              ---    ---

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

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was last sold, or the average bid and asked price of such common equity,
as of the last business day of the registrant's most recently completed second
fiscal quarter.  $52,174,860  (last sale as of 6/30/03).

                    (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

     Indicate  the number of shares outstanding of each of the issuer's class of
common  stock,  as  of  the latest practicable date: 24,939,776 (as of March 19,
2004)

                       DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the following documents if incorporated by reference and the
Part  of  the  Form 10-K into which the document is incorporated: (1) Any annual
report  to security holders; (2) Any proxy or information statement; and (3) Any
prospectus  filed  pursuant  to  Rule  424(b) or (c) under the Securities Act of
1933.    None.


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<PAGE>
                           FORWARD LOOKING STATEMENTS

     This Annual Report on Form 10-K of New York Health Care, Inc. and its
subsidiaries ("we" or the "Company") contains forward-looking statements.  All
statements, other than statements of historical fact, may be forward-looking
statements.  These include statements regarding the Company's future financial
results, operating results, business strategies, projected costs, health care
services, the therapeutic and commercial potential of technologies of the
Company's BioBalance subsidiary, competitive positions, and plans and objectives
of management for future operations.  Forward-looking statements may be
identified by use of words such as "may," "will," "should," "could,"
"expect,""plan," "anticipate," "believe," "estimate," "predict," "intend" and
"continue," or the negative of these terms, and include the assumptions that
underlie such statements.  The Company cautions investors that any
forward-looking statements it makes are not guarantees of future performance and
that actual results could differ materially from those expressed or implied in
these forward-looking statements as a result of various risks and uncertainties,
including those set forth in the section entitled "Item 7: Management's
Discussion and Analysis of Financial Condition and Results of Operations -Risks
and Uncertainties." All forward-looking statements in this report are based on
information available to the Company as of the date of this report and we assume
no obligation to update any such statements.

     The following information should be read in conjunction with the
Consolidated Financial Statements and notes thereto included in this Annual
Report. All references to fiscal year apply to the Company's fiscal year which
ends on December 31.

RECENT  DEVELOPMENTS

On  November  19,  2003,  the Company learned that Paul Stark, a director of the
Company  and the President of BioBalance Corp., a subsidiary of the Company, and
Yitzchok  Grossman,  a  consultant  to The BioBalance Corp., a subsidiary of the
Company,  had  been  indicted  by  the  United States Attorney' for the Southern
District  of  New  York.  A  press  release  received by Company relating to the
indictment  did  not  describe the charges against Messrs. Stark or Grossman. On
November  20,  at  the  Company's request, Mr. Stark resigned from all positions
with  the Company and BioBalance. On November 24, the Company obtained a copy of
the  indictment and, on November 25, the Company's board of directors authorized
an  independent internal investigation regarding the indictment of Messrs. Stark
and  Grossman.

The  indictment alleges that from February through April 2003, Messrs. Stark and
Grossman  conspired  to manipulate the price and demand for the Company's common
stock  by  offering  to  pay a bribe, consisting of warrants to purchase 500,000
shares  of  the Company's common stock, to an undercover FBI agent posing as the
manager  of  a  hedge  fund,  but  does not allege any actual manipulation.  The
indictment  alleges  that  Messrs.  Stark  and Mr. Grossman caused the Company's
board  of  directors  to  approve  issuance  of  the  warrants by disguising the
warrants  as  compensation  to  an  outside  consultant to be engaged to perform
financial  advisory  services  for  BioBalance.

On  November 25,the board also authorized suspension of the warrants referred to
in  the indictment and a stock option to purchase 100,000 shares of common stock
granted  to  Mr.  Stark  and  the  termination of a consulting agreement between
BioBalance and Emerald Asset Management, Inc., a company owned and controlled by
Mr.  Grossman,  and  appointed  Dennis  O'Donnell,  BioBalance's Chief Operating
Officer,  as  President  of  BioBalance,

On November 26, 2003, Listing Investigations, a division of the The Nasdaq Stock
Market,  Inc.("Nasdaq"),  requested  the  Company  to  furnish  documents  and
information  relating  to  the  indictment of Mr. Stark. Thereafter, independent
legal  counsel  engaged  by  the  Company  to conduct the internal investigation
contacted  Listing  Investigations  and  provided  documents  and  information
responsive  to  the  request.

In  January  2004,  Nasdaq notified the Company that the Listing Investigations'
staff  had  determined that the Company no longer qualified for inclusion in the
Nasdaq  Stock Market based on public interest concerns and the Company's failure
to  timely  hold  its  2002  annual  stockholders  in compliance with the Nasdaq
Marketplace  Rules.  The  Company  responded to the notification by requesting a
hearing  before  a  Nasdaq  Listing  Qualifications  Panel  to  review the staff
determination.  The  hearing  before the Nasdaq Listing Qualifications Panel was
held  on February 19, 2004 and the Company is awaiting the Panel's decision. See
Part  II,  Item  7, "Management's Discussion and Analysis of Financial Condition
and Results of Operation- Risks and Uncertainties- Our Failure to Satisfy Nasdaq
Listing  Standards  Could  Result  in  Reduced Liquidity and Lower Stock Price."

The  Company's  independent  internal  investigation  found no evidence that any
current  officer,  director  or employee of the Company or BioBalance knew of or
participated in any alleged attempt to manipulate the Company's common stock and
the  investigation  concluded  that  the  Company  responded  properly  to  the
indictment  based  upon  the  information available to the Company at that time.

In January 2004, in response to the recommendations of the Company's independent
counsel,  the  board  adopted  a  Code of Business Conduct and Ethics; a Code of
Ethics  for  Senior Financial Officers; Insider Trading Policies; Communications
and Whistle Blower Policies, a Corporate Governance/Nominating Committee Charter
and  amended the charters of its standing audit and compensation committees. The
board  also appointed four additional directors, including three new independent
directors,  set the agenda for and scheduled the fiscal 2002 annual stockholders
meeting,  and  nominated  a  slate  of  seven directors, including a majority of
independent  directors,  for election by the stockholders at the annual meeting.
The  Company  held its 2002 annual stockholders meeting on February 13, 2004, at
which  the stockholders elected the seven directors and ratified the appointment
of  the  Weiser LLP as the Company's auditors. The Company is currently treating
the  warrants  referenced in the indictment and the options granted to Mr. Stark
as  being  in  effect  in  accordance  with  their  terms.

                                     PART I

ITEM  1.  BUSINESS

GENERAL

     We  are  engaged in two industry segments, the delivery of home health care
services  (sometimes  referred  to  as  the  "home  health  care business") and,
following  our  acquisition  of  The BioBalance Corp. in a merger transaction in
January  2003  (accounted  for  as  a  reverse  acquisition  of  the  Company by
BioBalance),  the  development  and  planned  manufacturing  and  marketing  of
proprietary  biotherapeutic  agents  for  the  treatment  of  gastrointestinal
disorders  that  are  poorly  addressed  by  current  therapies  via accelerated
regulatory pathways. BioBalance is a wholly-owned subsidiary of the Company. See
Notes 1 and 2 of Notes to Consolidated Financial Statement included elsewhere in
this  report.

     For information as to the financial performance of our home health care and
BioBalance  business segments, see Part II, Item 7, "Management's Discussion and
Analysis  of Financial Condition and Results of Operations" and Note 14 of Notes
to  Consolidated  Financial  Statements  included  elsewhere  in  this  report.

     The  Company is a New York corporation incorporated in 1983.  Our principal
executive offices are located at 1850 McDonald Avenue, Brooklyn, New York 11223,
telephone  (718)  375-6700.


                                        3
<PAGE>
HISTORY,  DEVELOPMENT  AND  OVERVIEW  OF  THE  COMPANY

     The  Company  was initially organized to act as 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.

     Our  home  health  care  business 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.  Our home health care
business  also operates in Jersey City, Edison, Whiting, Toms River, East Orange
and  Paterson,  New  Jersey  under  the name Helping Hands Healthcare.  Our home
health  care services are supplied principally pursuant to contracts with health
care  institutions and governmental agencies, such as various county Departments
of Social Services, the New York City Human Resources Administration, New Jersey
Medicaid,  Beth  Abraham  Health  Services  in the Bronx and Westchester County,
Kingsbridge  Medical  Center,  Aetna US Healthcare, and Gentiva Health Services.

     Our  primary  objective,  in  our  health  care business, is to enhance our
position  in the home health care market by increasing the promotion of our full
service  and  specialty  health  care  capabilities to existing and new referral
sources;  expand  our  markets  and enter new markets by establishing additional
branch  offices  and acquiring other related health care businesses; and develop
complimentary home health care products and services, as well as maintaining our
regular training and testing programs, and recruitment activities.  See Item 1.
Business  -  "Home  Health  Care  Business."

     BioBalance  is  a  development  stage  specialty  pharmaceutical  company
incorporated  in  Delaware in May 2001. BioBalance is focused on the development
of  patented  biotherapeutic  agents  for  gastrointestinal  (GI) disorders with
significant  unmet  needs.  BioBalance  has  pioneered  the development of these
agents  based  on  what  BioBalance  believes  to  be  outstanding science and a
pharmaceutical  development  approach  (e.g.  randomized,  double  blind,
placebo-controlled  clinical  trials in FDA-approved centers). From inception to
completion  of  the  reverse merger in January 2003, BioBalance has raised gross
proceeds  of approximately $6.8 million from the private placement of securities
and  has not, to date, generated any revenues, other than income from short-term
investment  of  such  proceeds.

     We  believe  that products developed from BioBalance's core technology will
restore  the microbial balance in the GI tract by displacing pathogenic bacteria
and  preventing  their  re-colonization.  For  example,  recent clinical studies
independently  conducted  by Dr. Mark Pimentel at Cedars-Sinai Medical Center in
California  have linked the overgrowth of pathogenic bacteria to Irritable Bowel
Syndrome  (IBS)  symptoms.  The  Company believes that these studies support the
rationale for the Company's potential products to address a potential root cause
of  GI disease, while also providing symptom relief. As such, it could represent
a  major  shift  in  the  treatment  of  many  GI  disorders.

CORPORATE  STRATEGY

     In completing the merger of the Company and BioBalance, management seeks to
capitalize  on  the  operating  performance  of  the  Company's home health care
business  and  the  growth  potential of BioBalance's probiotics business, while
allowing  each  business  to


                                        4
<PAGE>
operate  as  an  autonomous  business  unit.

     The  Company's  home  health  care business, operating as a self-supporting
business unit, will continue to seek selective growth opportunities and maintain
exclusive  control  over  its  existing  financial  and  operating  resources.

     We  intend  to  actively  pursue  BioBalance's business plan of developing,
manufacturing  and  marketing  its  initial  product  PROBACTRIX(TM)  and  other
products  in  its pipeline. While BioBalance will not have significant access to
the  financial  or  operating  resources  of  the  home health care business, we
currently  expect  to  seek  additional  funding for BioBalance from the sale of
equity,  debt  or  convertible  securities  of  the  Company.

HOME HEALTH CARE BUSINESS

Industry  Background

     Rising  Health  Care Costs -  According to the Office of the Actuary at the
Centers  for  Medicare  &  Medicaid  Services,  national health expenditures are
projected to reach approximately $2.8 trillion in 2011, growing at a mean annual
rate  of  7.3%  during the forecast period of 2001-2011.  During this period, we
expect  health spending to grow 2.5% per year faster than nominal gross domestic
product  (GDP),  so  that by 2011 it will constitute approximately a 7.0% of GDP
compared  to  its  2000  level  of  13.2%.  This  projection  represents  a 0.9%
percentage  point  increase  in  GDP  share by 2010 compared with 2002 forecast.
(NationalHealth  Care  Expenditures  Projections:  2001-2011,
-------------------------------------------------------------
http://www.cms.hhs.gov/statistics/nhe/projections-2001/proj2001.pdf)
--------------------------------------------------------------------

     Aging  Population  -  Although  the  growth  of  the U.S. population slowed
somewhat during the 1990's because of the relatively small number of babies born
during  the  Great  Depression  of  the  1930's,  it  is expected that the older
population will burgeon between the years 2010 and 2030 when the post WWII "baby
boom"  generation  reaches  age 65.  By 2030, it is projected that there will be
approximately  70  million  older  persons,  more than twice the number in 2000.
People  65  and older, who represented 12.4% of the population in the year 2000,
are  expected  to  grow  to  approximately  20%  of  the  population  by  2030.
(Administration  on  Aging  -  A Profile of Older Americans: 2002 Future Growth,
--------------------------------------------------------------------------------
http://www.aoa.gov/aoa/stats/profile/2002/2002profile.pdf)
----------------------------------------------------------

     Cost  Effectiveness  of  Home  Health  Care  Service  -  Home  care  is  a
cost-effective  service,  not  only for individuals recuperating from a hospital
stay,  but  also for those who, because of a functional or cognitive disability,
find  that  they  are  unable  to  take  care  of  themselves.  More than 20,000
providers deliver home care services to some 7.6 million individuals who require
services  because  of  acute  illness,  long-term  health  conditions, permanent
disability  or  terminal illness.  Annual expenditures for home health care were
projected  to  have  been  $41.3  billion  in  2001.

     The  table  below  lists  some  examples  of  cost-effective  home  care by
comparing  the  average  Medicare  charges  on  a per-day basis for hospital and
skilled nursing facility to the average Medicare charge for a home health visit.
(2001  National  Association  of  Home  Care  Statistics,
---------------------------------------------------------
http://www.nahc.org/consumer/hcstats.html).
-------------------------------------------


                                        5
<PAGE>
Comparison  of  Hospital,  SNF,  and  Home  Health  Medicare  Charges, 1998-2000
--------------------------------------------------------------------------------

                                               1998         1999       2000(A)
                                            -----------  ----------  ----------
Hospital charges per day                    $     2,370  $    2,533  $    2,753
Skilled nursing facility charges per day    $       498  $      425  $      421
Home Health charges per visit.              $        93  $       93  $      100

SOURCES:  The  hospital  and  SNF  Medicare  charge  data  are  from  the Annual
Statistical  Supplement,  2000, to the Social Security Bulletin, Social Security
Administration (October 2001).  Home care information for 1998 from HCFA, Office
of  Information  Services.  Per  visit  charges for 1999 and 2000 are calculated
using  producer  price  index  data  from the Bureau of Labor Statistics website
(www.bls.gov,  September  2001).

NOTE  (A):  Hospital  and  skilled nursing facility charges per day are based on
preliminary  data.

     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 - During 2003, approximately 5 million people
became  infected with the human immunodeficiency virus (HIV), which causes AIDS.
The year also saw 3 million deaths from HIV/AIDS, a higher global total, despite
antiretroviral  therapy  which  reduced  AIDS  and  AIDS-related  deaths in more
affluent countries. Deaths among those already infected are expected to continue
to  increase for some years even if prevention programs manage to cut the number
of  new  infections  to  zero.  (AVERT.ORG,  Worldwide  HIV  &  AIDS  Epidemic
                                             ---------------------------------
Statisticshttp).  However, with  the HIV-positive population still expanding the
--------------
annual  number of AIDS deaths is expected to increase for many years. At the end
of  the  December  2002,  the  Center  for  Disease Control and Prevention (CDC)
reported  approximately  793,026  AIDS cases in the USA had been reported to the
Center  for  Disease  Control  and  Prevention. Of these, 79% were men, 21% were
women  and 1% were children less than 13 years of age. (United States HIV & AIDS
                                                        ------------------------
Statistics  Summary  Aids  Statistics,  http://www.avert.org.statsum.htm).
------------------------------------------------------------------------

     Cancer  is  the second leading cause of death in the U.S., exceeded only by
heart disease, with one of every four deaths occurring from cancer.  Since 1990,
approximately  16 million new cancer cases have been diagnosed and approximately
1,284,900  new  cancer cases are expected to be diagnosed in 2004, not including
carcinoma  in  situ  (noninvasive cancer) of any site except urinary bladder, or
basal  and  squamous  cell skin cancers.  More than 1 million cases of basal and
squamous cancers were expected to be diagnosed in 2002 and approximately 555,500
Americans are expected to die of cancer, more than 1,500 people a day. (American
                                                                       ---------
Cancer  Society,  Surveillance  Research  2002,  www.cancer.org).
-----------------------------------------------------------------

Services  Offered


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<PAGE>
     Overview  -  Through our staff of trained professionals, we provide 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.  Our  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.

     Infusion  Therapy  -  Among  the  specialty  services  offered,  we provide
infusion  therapy  service  to  patients  utilizing  pharmaceuticals provided by
licensed suppliers.  Management believes that the total market for home infusion
therapy  is  continuing  to  grow  and that increasing the provision of infusion
therapy  will  build on our strength in providing nursing services, because such
therapies  generally  require  administration by specialty nurses.  We 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 us.
However,  there  can  be  no  assurance that we will expand our infusion therapy
business  or,  if expanded, that we will conduct such a business on a profitable
basis.

     Professional  Care Resources - We also intend to expand our skilled nursing
programs  in order to meet the needs which management believes are being created
by  early discharge programs.  The existing referral base of 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..

Professional  Staff

     Overview  -  Our  services  are  provided  principally  by  our  staff  of
professionals and paraprofessionals, who provide personal care to patients, and,
to  a  lesser  extent,  by  our  staff  of  skilled  nurses, who provide various
therapies  employing  medical  supplies and equipment and infusion therapy.  Our
professional  staff  includes  paraprofessionals  and  nurses fluent in Spanish,
Mandarin and Cantonese Chinese, Creole, Yiddish and Russian as well as personnel
knowledgeable  in  the requirements and practices of kosher homes. 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
99%  of  our  home  health revenues in 2003 were attributable to services by our
paraprofessional  staff.

     Certified Paraprofessionals - Our 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  paraprofessional  aides are
certified  and work under the supervision of a licensed professional nurse. Some
of  our  aides have been specially trained 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.

     We are approved by New York State Department of Health for the training and
certification of Home Health Aides and Personal Care Aides.  In addition, we are
approved  by


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<PAGE>
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 may be responsible for reimbursement for
both  Home  Health  Aide  and Personal Care Aide Services. In order to provide a
qualified and reliable staff, we continuously recruit, train, provide continuing
education  for  and  offer benefits and other programs to encourage retention of
our 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
by the issuing agency. The Director of Nursing or designee in each of our 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,  all  paraprofessional  personnel  undergo  an
orientation  program  that  includes  material  regarding  HIV,  Hepatitis  B,
standard/universal  precautions, patient's rights and the Company's policies and
procedures.

      Licensed  Professional  Nurses  -  We  employ 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).  We  also  employ registered nurses who are responsible for training and
supervising our paraprofessional staff, as well as providing backup in the field
for  the  nursing  staff  that 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.

      All  nurses  hired  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.

      While  the  provision  of licensed professional nursing services accounted
for  less  than  1%  of  our  net revenues in 2003, we have expanded our nursing
operations  in  our  existing  markets  as  well  as  new  geographic  locations

Organization  and  Operations


                                        8
<PAGE>
      We  operate  24  hours  a day, seven days a week, to receive referrals and
coordinate services with physicians, case managers, patients and their families.
Services  are provided through 11 principal and branch offices and 2 recruitment
and  training  offices.  We  seek  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 an administrator/branch manager,
director  of nursing, nursing supervisor, home care coordinators, clerical staff
and  nursing  services  staff.

      Our  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. We use financial reporting
systems  through which we monitor data for each branch office, including patient
mix,  volume,  collections,  revenues  and  staffing.  Our  systems also provide
monthly  budget analysis, financial comparisons to prior periods and comparisons
among  our  branch  offices.

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. We seek to serve local market needs through
a  network  of 12 branch offices, six in New York and six located in New Jersey,
managed  by administrator/branch managers who are responsible for all aspects of
local  office  decision-making,  including  recruiting,  training, staffing, and
marketing.

     Our  branch  office  network  has been expanded through the years through a
combination  of  new  office  openings  and acquisitions of existing operations.
Substantially  all of the branch offices in New Jersey were acquired in a series
of  acquisitions  between  1997  and  2002.  We intend to open additional branch
offices  in  New  York,  subject to entering agreements with municipal or county
social  services agencies. In addition, we hope to expand further in New Jersey,
and  into  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 we deal, and to add additional organizations.
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. We cannot assure
you  that  we  will  be  able  to implement our expansion plans or that any such
expansion  will  be  profitable.

      Management  believes that the Company has successfully integrated all home
health  care  acquisitions,  with  minimum  interruptions to the Company's daily
operations.  This  has  been  facilitated  by  the  formation  of  a mergers and
acquisitions ("M&A") group, which includes our President/Chief Executive Officer
and  our  Chief  Operating/Financial  Officer.  We  have integrated our billing,
payroll  and clinical services to all new locations to ensure they meet our high
quality  standards.  We believe that the experience acquired during this process
will  allow us to continue a path of significant M&A activity in order to be one
of  the  leading  home  health  agencies  in  the  New  York  metropolitan area.


                                        9
<PAGE>
Work  Flow

      A  case  is  initiated  by one of our 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 days during
which  the  care  is  to  be provided. All of this information is simultaneously
received  by our corporate headquarters 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

      We  obtain 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  our  net revenues in 2003. We generally conduct business
with  most  of  our institutional referral sources under one-year contracts that
fix  the  rates and terms of all referrals but do not require that any referrals
be made. Under these contracts, the referral sources refer patients to us and we
bill  the  referral  sources  for services provided to patients. These contracts
also  generally designate the kinds of services to be provided by our employees,
liability  insurance  requirements, billing and record keeping responsibilities,
complaint  procedures,  compliance  with applicable laws, and rates for employee
hours  or  days depending on the services to be provided. Approximately 260 such
contracts  were  in  effect  as  of  December  31,  2003.

      One  or more referring institutions have accounted for more than 5% of our
net  revenues  during our last fiscal year, as set forth in the following table:

           Referring Institution               Percentage of Net Revenues 2003
---------------------------------------------  -------------------------------

New York City Medicaid (HRA)                               50.45%
New Jersey Medical Assistance Program                       9.87%
New York State Department of Social Services                5.81%

      Overall, our 10 largest referring institutions accounted for approximately
86.8%  of  net


                                       10
<PAGE>
revenues for 2003.


Billing  and  Collection

      We  screen  each new case to determine whether adequate reimbursement will
be  available  and  we  believe  that we have developed substantial expertise in
processing  claims.  We make a concerted effort to provide complete and accurate
claims  data  to  the  relevant  payer  sources  in  order  to  accelerate  the
collectibility  of  accounts  receivable.

      "Days  Sales  Outstanding"  ("DSO")  is a measure of the average number of
days  required  for  the Company to collect accounts receivable, calculated from
the date services are billed. For the year ended December 31, 2003 the Company's
DSO  were  62.

      We  license  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
our  offices,  with  the  ability  to  enter  all  relevant patient and employee
demographic  information.  The  payroll  is  processed  weekly  at our corporate
headquarters.  Our  corporate  headquarters is responsible for the processing of
data,  ensuring  the  availability of all required billing documentation and its
accuracy, and the issuance and distributing of payments. Once payroll processing
is  completed,  our  computer  system  generates  the  resulting  invoices
automatically.  The necessary documentation is attached to all invoices that are
mailed  to  clients.

     Our  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  our  staff  and  management  to locate negative trends or emerging
problems  that  would  require  immediate  attention.  All  unpaid  invoices are
reviewed  and  telephone contacts established for invoices over 90 days old. Our
experience  with  collection  of  accounts  receivable  has been favorable, with
uncollectible  accounts  within  the  allowances  provided.

      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, we accept assignment of the insurance and submit
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


                                       11
<PAGE>
      We  are reimbursed for 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 our largest reimbursement
sources, when including both direct Medicaid reimbursement and indirect Medicaid
payments  through  many  of  our  referring institutions. For 2003 payments from
referring  institutions that receive direct payments from Medicare and Medicaid,
together  with  direct  reimbursement  to  us  from  Medicaid,  accounted  for
approximately  98% of net revenues. Direct reimbursements from private insurers,
prepaid  health  plans,  patients  and  other  private  sources  accounted  for
approximately  2%  of  net  revenue  for  2003.

      The  New  York  State  Department  of  Health,  in  conjunction with local
Departments  of  Social  Services,  sets 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" rate) 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  that  are greater than the actual expenses incurred. We
have  filed  all  required  annual  cost reports for each of our offices provide
services  to Medicaid recipients. To date, our expenses have 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.

     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 programs are intended to
provide  elderly people with an alternative for long-term  nursing home care, at
less  than the cost of nursing home care. We negotiate contracts with CHHA's and
LTHHCP's  on  the basis of services to be provided, in connection with contracts
either  currently  in  effect  with us or with other agencies. Prevailing market
conditions  are  such  that,  despite  escalating  operating  expenses,  reduced
contract  rates  are  regularly  negotiated  as  a  result  of  internal  budget
restraints and reductions mandated by managed care contracts between our clients
and  HMO's  and  other third party administrators. While we anticipate that this
trend  is  likely  to  continue for the foreseeable future, we do not expect the
impact  on  the  Company  to  be  significant,  since  we  believe our rates are
competitive. Accordingly, we expect to be subject to only minor rate 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 by New York State Medicaid, would have
a  material  adverse  effect  upon  our  home  health  care  business.


                                       12
<PAGE>
Performance  Improvement

      We  believe that our reputation for quality patient care has been and will
continue  to  be  a  significant  factor  in  our  success. To this end, we have
established  a  performance  improvement  management  program,  including  a
performance  improvement  program  to  ensure  that  our  service  standards are
implemented  and  that  the  objectives  of  those  standards  are  met.

      We  believe  that we have developed and implemented service standards that
comply  with or exceed the service standards required by the Joint Commission on
Accreditation  of  Healthcare  Organizations ("JCAHO"). The Company has received
full  accreditation from the Joint Commission for 2003. We have not sought JCAHO
accreditation  for  our  New  Jersey  offices  because such accreditation is not
required  by  any  of  the  contracts in that state. An adverse determination by
JCAHO  regarding  our  home  health  care  operations or any branch office could
adversely  affect  our  reputation  and  competitive  position.

      Our  performance  improvement  program  includes  the  following:

      Professional  Advisory  Committee  -  We  maintain a Professional Advisory
Committee for each of our branch offices, which consists of a physician, nursing
professionals  and  representatives  of  branch  management.  The  Professional
Advisory Committee identifies problems and suggests ways to improve patient care
based  on  internal  quality compliance audits and clinical and personnel record
reviews.

      Internal Quality Compliance Review Process - Periodic internal reviews are
conducted  by  our  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
administrators/branch  managers  of  each of our branch offices. We believe that
the internal review process is an effective management tool. For the director of
nursing  and  administrators/  branch  managers.

      Case  Conferences - Staff professionals regularly hold case conferences to
review  problem  and  high  risk  cases,  the physician's treatment and 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, we
evaluate  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 Professional Advisory
Committee  for  recommendations.

Sales  and  Marketing

      Our  executive  officers,  Messrs.  Jerry  Braun  and Jacob Rosenberg, are
principally  responsible  for  the  marketing  of  our  services.  Each
administrator/branch  manager  is  also  responsible for sales activities in the
branch  office's  local  market  area. We attempt to cultivate strong, long-term
relationships  with  referral sources through high quality service and education


                                       13
<PAGE>
of local health care personnel about the appropriate role of home health care in
the  clinical  management  of  patients.

Government  Regulation

      The federal government and the States of New York and New Jersey, where we
operate,  regulate  various  aspects  of our business. Changes in the law or new
interpretations  of  existing  laws  can  have  a  material  adverse  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.

      We are licensed by New York State as a home care services agency. New York
State  law  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  prior  to  becoming  a  controlling person.

      We  are 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.

      Our  healthcare  operations  potentially  subject  us  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 our operations cannot be fully predicted
with  certainty.  We  cannot  assure  you  that  we  will be able to arrange our
acquisitions  or  business relationships so as to comply with these laws or that
our  present  or  future  operations  will  not  be  accused of violating, or be
determined  to  have  violated,  such  provisions.  Any  such  non-compliance or
violation  could  have  a  material adverse effect on home health care business.

      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


                                       14
<PAGE>
programs.  The future interpretation of these provisions and their applicability
to  our  operations  cannot  be  fully  predicted  with  certainty.

      New  York  and  New  Jersey also have statutes and regulations prohibiting
payments  for  patient  referrals and other types of financial arrangements with
health  care  providers  that,  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.

      We  believe  that  our  operations,  in  general,  comply  in all material
respects  with applicable federal and state anti-kickback laws, and that we will
be  able  to  arrange our 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
and  enforcement  activity,  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.  We  attempt to be
responsive  to  such  regulatory  climate.  However, we are unable to accurately
predict  the  effect,  if  any,  of  such  increased  regulatory  or enforcement
activities  on  our  future  results  of  operations.

      In  addition,  we  are  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)
and  federal and state securities laws, including the Sarbanes-Oxely Act of 2002
and  the  rules and regulations thereunder (relating to corporate governance and
the  quality of disclosure by public companies). To date, none of these laws and
regulations  has  had a material adverse effect on our home health care business
or  the  competitive  position  of  such  business  or  required  any  material
expenditures  by  us. We cannot assure that we will not be adversely effected by
such  laws  and  regulations  in  the  future.

      We  cannot  accurately predict what additional legislation, if any, may be
enacted  in  the  future  relating  to our business or the health care industry,
including  third-party  reimbursement,  or  what effect any such legislation may
have  on  us.

      We  have  never been denied any home health care license we have sought to
obtain.  We  believe  that  our  home  health  care  operations  are in material
compliance  with  all  applicable  state  and  federal regulations and licensing
requirements.

Competition

     The  home  health  care  market  is  highly  fragmented  and  significant
competitors are often localized in particular geographical markets.  Our largest
competitors  include Gentiva Health Services, Premier 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 so 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  we presently compete in home health care have substantially greater
financial and human resources than we


                                       15
<PAGE>
do.  We  also compete with many other small temporary medical staffing agencies.

      The  home infusion therapy market is highly competitive and we expect that
the  competition  will intensify. As we seek to expand our provision of infusion
therapy  services, we will compete with a large number of companies and programs
in  the  areas  in  which  our  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 and Coram
Health  Care  Corp,  that provide such services. In addition, certain hospitals,
clinics and physicians, who traditionally may have been referral sources for us,
have  entered  or  may  enter  the  market  with  their  own  programs.

      We  believe  that  the  principal  competitive factors in our 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.  We believe that our competitive
strengths  have  been  the  quality,  responsiveness, flexibility and breadth of
services and staff we offer, and to some extent our competitive pricing, as well
as  our  reputation  with  physicians,  referral  sources  and  patients.

      The  United  States  health  care  industry  generally faces a shortage of
qualified  personnel.  Accordingly, we experience intense competition from other
companies  in  recruiting  health  care  personnel  for  our  home  health  care
operations.  Our  success  to date has depended, to a significant degree, on our
ability  to  recruit  and  retain  qualified  health care personnel. Most of the
registered  and  licensed nurses and health care paraprofessionals who we employ
are  also  registered with, and may accept placements from time to time through,
our  competitors. We believe we are 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.  We cannot assure you, however, that we will be able
to  continue to attract and retain sufficient qualified personnel. The inability
to  either  attract  or  retain  such  qualified personnel would have a material
adverse  effect  on  our  business.

BIOBALANCE  BUSINESS

      OVERVIEW.  Our  BioBalance  subsidiary  is  focused on the development of
novel  treatments  and  dietary  products  for  various  gastrointestinal  (GI)
disorders  that  are  poorly  addressed  by  current  therapies.  These  include
irritable  bowel  syndrome (IBS), inflammatory bowel disease and diarrhea caused
by  antibiotics,  chemotherapy  or  AIDS.

     BioBalance's  product  pipeline is comprised of potential products intended
to  address GI diseases and conditions where current therapies are inadequate or
may  have  significant  side effects. Unlike conventional treatments, BioBalance
believes  that  development  of its core technology will result in products that
restore  the  microbial balance in the GI tract by attacking pathogenic bacteria
and preventing their re-colonization. Clinical trials conducted independently at
Cedars-Sinai  Medical  Center  in  California  have  linked  the  overgrowth  of
pathogenic  bacteria  to  IBS symptoms. As such, BioBalance's potential products
may  address  an  underlying  root  cause  of  many  GI disorders in addition to
providing  symptom  relief  with  no  side  effects.

     LEAD PRODUCT. BioBalance's initial potential product, PROBACTRIX(TM), is
formulated


                                       16
<PAGE>
from a proprietary strain of non-pathogenic ("healthy") E.coli M17 in a patented
liquid  formulation  that delivers live bacteria with excellent adherence to the
intestinal  mucosa.  The product has been approved as a pharmaceutical in Russia
and  as  a  food  supplement in Israel. Numerous clinical studies have confirmed
that  it  can  reduce  the  symptoms  of  various  GI  disorders and improve the
patient's  quality  of  life.

     BioBalance  is  currently  pursuing two accelerated regulatory pathways for
PROBACTRIX(TM).  The  first  approach  is  to  introduce  PROBACTRIX(TM)  as  a
non-prescription  medical  food  for the dietary management of IBS symptoms. The
medical  food  track  would  allow  the  company to make disease type claims for
products  used  under a physician's supervision while providing non-prescription
retail  convenience  to  patients.  BioBalance  is  currently  also  pursuing
prescription  development  of  a formulation of PROBACTRIX(TM) as a prescription
drug.  BioBalance plans to determine the most expedient pathway for prescription
drug  approval after discussing the clinical requirements with the U.S. Food and
Drug  Administration  (FDA)  in  the  first  half  of  2004.

     A  critical  milestone  in  marketing  a  medical food product is to attain
Generally  Recognized  as  Safe  (or  "GRAS")  status.  An  independent panel of
scientific  experts  and additional members with relevant expertise (including a
board  certified  gastroenterologist) reviewed the extensive safety and clinical
history  of  PROBACTRIX(TM)  and determined that PROBACTRIX(TM) meets or exceeds
the  requirements  for  GRAS  status. BioBalance announced the completion of the
GRAS  process  on  January  5,  2004. While BioBalance believes that the current
regulatory  statutes  allow it to begin marketing PROBACTRIX(TM) immediately, it
is  conducting  a  multi-center clinical trial for the IBS indication in 2004 to
develop  statistically  sufficient data to support marketing of its product as a
medical  food  to  the  medical community. BioBalance intends to conduct similar
trials  for  each  additional  indication  it  decides  to pursue, including the
prescription  drug  indication.

POTENTIAL  SHIFT  IN TREATING GI DISORDERS. PROBACTRIX(TM) works with the body's
immune system to eliminate the overgrowth of unhealthy bacteria in the GI tract,
addressing what scientists now believe could represent a potential root cause of
IBS.  BioBalance  believes  that  two  clinical  studies  recently  conducted
independently  at  Cedars-Sinai  Medical  Center  support  the  rationale  for
PROBACTRIX(TM)  in addressing IBS symptoms in this manner. The Cedars-Sinai team
identified the link between the overgrowth of unhealthy bacteria in the GI tract
to  IBS  symptoms.  The  studies also indicated that antibiotics can be used for
treatment,  but  resistance  poses  a  serious  public health risk. In addition,
antibiotics indiscriminately kill both pathogenic and healthy bacteria in the GI
tract  contributing  to  other  health  problems  such  as  overgrowth  of
non-susceptible  organisms  and  the  development of bacterial resistance to the
antibiotic.  BioBalance  believes  that PROBACTRIX(TM) does not cause resistance
and  works  in  a  safe  manner  with  no  systemic  absorption.

     ATTITUDINAL  SHIFT  WITHIN FDA. A number of recent FDA actions appear to be
supportive  of  the  overall  business strategy for BioBalance. The FDA recently
declined to issue more restrictive regulations governing the use of medical food
products.  Secondly,  the FDA continues to focus on reducing antibiotic usage to
curb  the  growth  of  bacteria  resistant, a pressing worldwide health problem.
Finally,  the  FDA  unveiled  new steps in June 2003 to overhaul the entire drug
application  process  for  shortening  the  time  for  new  drug  approvals.

     THERAPEUTIC  FOCUS. BioBalance currently intends to offer PROBACTRIX(TM) to
the  huge


                                       17
<PAGE>
but  underserved  IBS  market.  IBS,  a chronic, life-altering disorder, affects
approximately  40  million  Americans and can have a significant impact on daily
functioning  and overall well being. There is no known cure for IBS. For reasons
unknown, women account for two-thirds of IBS sufferers. Primary symptoms include
abdominal  pain,  gas and pressure usually accompanied by diarrhea, constipation
or both. Approximately one-third of suffers are defined as diarrhea-predominant,
one-third  are  constipation-predominant  and  the  balance  alternate  between
constipation  and  diarrhea.  Studies indicate that only 10-20% of IBS sufferers
seek  medical  attention.

     The  current addressable market for IBS products is estimated at $3 billion
by  RedChip  Research  (a  leading  research  firm). IBS is a large, underserved
market  with  sufferers  desperate for symptom relief, as evidenced by the rapid
uptake  of GlaxoSmithKline's Lotronex for diarrhea-predominant IBS and Novartis'
Zelnorm  for  constipation-dominant  IBS.  Both  prescription  products are only
indicated  for  short-term, symptomatic relief and limited to use by women only.
The  over  the  counter  (OTC)  market  for  products  that  treat  IBS symptoms
(primarily  laxatives,  anti-diarrheals  and  antispasmodics)  is  reported  by
Information  Resources  Inc.  (a  leading research firm) at $2 billion annually.

     BioBalance  also  plans to expand the label indication of PROBACTRIX(TM) to
include  the  prevention  or  treatment of antibiotic-associated diarrhea (AAD).
Approximately  150 million prescriptions are written for antibiotics annually in
the  U.S., with a large portion prescribed for children. The most common adverse
effect  of  antibiotics  is  diarrhea.  Recent  medical research  documents that
antibiotics significantly alter the intestinal microflora for up to three months
following  treatment.  All  antibiotics can trigger AAD, and in particular those
with  broad-spectrum  activity.  Studies  indicate  that  20-30% of all patients
treated  with  antibiotics  develop  some  degree  of  AAD.

     REGULATORY  STRATEGY.  BioBalance  is  currently pursuing both prescription
drug  and  non-prescription  medical  food  pathways  for  its  lead  product,
PROBACTRIX(TM).  BioBalance  plans  to  discuss  the  clinical  requirements and
potential  indication  for  prescription  drug  development  with  the  FDA.

     BioBalance  currently  intends  to  explore  partnering  with  a  larger
pharmaceutical  company  to  maximize the sales potential of PROBACTRIX(TM). Our
ultimate  regulatory  pathway for PROBACTRIX(TM) may include a prescription drug
pathway,  a  medical food pathway or both, depending on the partner selected and
the  partner's  regulatory  preference.  While  the  medical  food  track allows
BioBalance  a  speedier  path  to  market  compared  to a prescription drug, the
prescription  drug  route  is  vastly more attractive to investors due to higher
margins  and  the  likelihood  of  patient reimbursement by insurance companies.

     BioBalance  is  also  exploring  regulatory  approval  for  a  veterinary
formulation of PROBACTRIX(TM) as an animal feed additive to replace antibiotics.
The  issue  of  using  antibiotics  as  an  animal  feed  additive has generated
significant  attention  as  governments  and consumer groups have called for the
reduction  or  elimination  of  unnecessary  antibiotic  use  in  farm  animals.

     CLINICAL  SUMMARY.  PROBACTRIX(TM)  has  undergone  extensive  safety  and
efficacy  testing in Russia and Israel. BioBalance believes that the product has
shown  exceptional  results  during  use  by thousands of adults and children as
young as 6 months old. It has been effective in a broad range of GI diseases and
conditions,  including IBS, diarrhea due to bacterial infection, antibiotics, or


                                       18
<PAGE>
chemotherapy, Crohn's disease, ulcerative colitis and AIDS-related diarrhea with
no  reported  side  effects.  In  addition,  a high-dose safety trial in healthy
volunteers was completed in January 2004 to further support the excellent safety
profile  of  the  product.

     BioBalance  has  also  recently initiated a randomized, multi-center double
blind,  placebo-controlled  clinical  trial  in  210  IBS  patients  to  support
potential  medical  food  marketing.  Sites for this study include St. Michael's
Hospital in Toronto, Canada and Sourasky Medical Center in Tel Aviv, Israel. The
third  site, a major New York medical institution, is expected to begin in April
2004.  The  study  is  anticipated  to  be  completed by fourth quarter of 2004.

     MARKETING  STRATEGY.  BioBalance currently plans to explore partnering with
an  established  pharmaceutical  company  to  maximize  the  full  potential  of
PROBACTRIX(TM).  The  ideal  partner  would have ethical and consumer healthcare
divisions  to  support  both  prescription  and  medical  food  marketing.

     For  prescription  or  medical  food  marketing,  the  partner is likely to
utilize  an  ethical  promotional  strategy  consisting  of  professional  sales
representatives  to  educate  healthcare  professionals  (e.g.  physicians,
pharmacists  and  managed  care groups) and direct-to-consumer (DTC) advertising
targeted  primarily  to women, a key demographic for IBS as well as the family's
primary  gatekeeper  for  health-related products. The professional and consumer
efforts  are likely to be supported by an internationally recognized panel of GI
thought  leaders.

     Should  BioBalance  be  unable to find an appropriate marketing partner, it
would  need  to  consider the use of a contract sales organization for physician
detailing.  This  could  also  include  negotiation  with  GI firms that have an
underutilized  medical  sales  force. BioBalance would also likely utilize third
party  retail  broker  organizations  to  assist  in  the  retail  placement and
merchandising  of  its  products  in  pharmacies  within  drug,  food  and  mass
merchandiser  channels.

     Initial Product. PROBACTRIX(TM) is a non-pathogenic E. coli-based probiotic
microorganism.  PROBACTRIX(TM)  contains a live, single strain (M-17) of E. coli
in  a  liquid  suspension.  This  bacterium is a commonly represented species in
healthy  gastrointestinal microflora of man and animals. BioBalance believes the
PROBACTRIX(TM)  formulation  is  useful in the restoration of normal GI function
and may be utilized to maintain or reinstate normal gastrointestinal microflora.
It  may  also  aid  in  the  dietary  management  of  numerous  gastrointestinal
infections  or  disorders.  The  following  list  highlights  several  diseases,
infections,  and  disorders  for which BioBalance believes PROBACTRIX(TM) may be
effective:

      -  Irritable  Bowel  Syndrome
      -  Antibiotic-associated  diarrhea
      -  Diarrhea  resulting  from  radiotherapy  or  chemotherapy
      -  Other infectious diarrhea caused by Salmonella, Shigella, C. difficile,
          pathogenic E. coli, Campylobacter, Clostridium, and other bacteria and
          infectious agents
      -  Inflammatory  Bowel  Disease  (Crohn's  Disease  &  ulcerative colitis)
      -  Traveler's  diarrhea

     The  patented formulation used for PROBACTRIX(TM) consists of a proprietary
strain  of  non-pathogenic E. coli, derived from an organism that was originally
isolated  from  the  intestinal microflora of healthy volunteers, preserved in a
proprietary  vegetable  extract  formulation.  The


                                       19
<PAGE>
technology  and  the processes comprise conditions that preserve M-17 E. coli in
the  biologically active form with a shelf life of one year at room temperature.
Additional  patents  have  been  filed  by  BioBalance for technology that could
extend  the  product's  shelf  life  to  more  than  two  years.

     BioBalance  believes  that  PROBACTRIX(TM)  may  have  critical competitive
advantages  relative  to  other probiotics and to antibiotics. PROBACTRIX(TM) is
potentially  much more efficacious than Lactobacillus and other probiotics since
it  is  delivered  in  a  unique,  metabolically  active liquid preparation that
contains  large amounts of live bacteria with parameters to promote fimbriation.
These live bacteria begin to act immediately and multiply much faster than other
probiotics  with  excellent  adhere  to  the intestinal mucosa. This produces an
environment of stable, normalizing bacteria unique to PROBACTRIX(TM) and results
in  very  powerful  biological  activity.  In  contrast,  other  probiotics  are
primarily  delivered  in  dry  preparations  and  though  they  may contain live
bacteria  upon  packaging;  require  a period of time for recovery of biological
activity.  Since  diarrhea  results  in  the  accelerated  passage of intestinal
content, only a small portion of dried bacteria is then retained to multiply and
become  biologically active. Significantly, other probiotics are only active for
up  to  8  hours with no colonization. This results in a far less pronounced and
sustainable  biological  effect,  as  compared  with  PROBACTRIX(TM).  With
PROBACTRIX(TM),  temporary  colonization does occur in many patients, which is a
major  factor  in  lining  the  lumen  of  the  GI tract with friendly bacteria.
Importantly,  this  colonization by friendly bacteria inhibits the overgrowth of
abnormal  microbial  flora  that  could  lead  to  potentially  harmful clinical
disorders.  Unlike  antibiotics,  BioBalance  is  not  aware of any side effects
occurring  as a result of the use of PROBACTRIX(TM) and does not believe that it
promotes  antibiotic  resistance.

     Research  on  the unique liquid formulation of PROBACTRIX(TM) originated in
Russia  from  studies  by  Dr.  Nellie  Kelner-Padalka, a pediatrician and a key
medical advisor to BioBalance. Clinical studies conducted in Russia found liquid
food  supplements containing E. coli M-17 to be effective in treating intestinal
infections of various origins. However, shelf life was short and the product had
a  strong  odor  that  made  it  difficult  to  ingest  for  some  patients. Dr.
Kelner-Padalka  later  brought  her studies to Israel where several technologies
were  advanced  that  stabilized and prepared the product for commercialization.
Since  the original product formulation in Russia, the smell and taste have been
improved  and  the shelf life at room temperature has been expanded to one year.

     Clinical  studies  of  liquid  food  supplements  with  E.  coli  M-17 were
performed  in  the  former  Soviet  Union beginning in the late 1990's. In those
studies,  and  in  studies  conducted  in Israel, these biologically active food
supplements  were  found  efficient  in the treatment of intestine infections of
various  etiologies  and  showed  no  harmful  side  effects.

     The  PROBACTRIX(TM)  formula  was approved for use as an animal food by the
Ministry of Agriculture of Israel in September 1998. In August 2000, Tetra Pharm
(1997)  Ltd.,  an  Israeli biotechnology company, began supplying the formula to
pharmacies  in  Israel  and  continued manufacture and sale of the product until
July  2001  when Tetra Pharm agreed to cease manufacture and sale of the product
in  conjunction with its agreement to sell all rights relating to the product to
BioBalance.  The  product  was  approved  in  Russia  in November 1998 as an OTC
pharmaceutical for the treatment of a broad range of diarrheas and GI disorders.

     The formula has been extensively tested and used in many species of animals
as  well  as  on  a  number  of  human  volunteers  with  known gastrointestinal
disorders.  It  has  also  been  used  for


                                       20
<PAGE>
the  preparation  of  colibacterin,  Bificon  and  other  medicines  and  food
supplements  outside  the  United  States.

     Product Pipeline BioBalance seeks to obtain rights for other agents showing
promise  in  treating  various  GI  diseases.  For  example, BioBalance recently
acquired  the  GI  right  to several strains of Bacillus that have been shown to
exhibit  natural  anti-inflammatory,  anti-bacterial  and anti-viral properties,
which could prove extremely effective in treating GI diseases such as ulcerative
colitis.  BioBalance  believes  that  the  acquired  technology  has significant
potential  for  the treatment of acute enteric infections from both bacteria and
viruses.  Specifically,  BioBalance  believes  that  the  Bacillus  strains  are
therapeutically  effective  against rotavirus and Campylobacter pathogens, which
are  the  leading  causes  of  infectious  diarrhea  in  the  United States. See
"Intellectual  Property"  below.

     Moreover,  like  BioBalance's  other  biotherapeutic agent, PROBACTRIX(TM),
there  is  extensive  clinical  and  laboratory  data  on  the  Bacillus strains
acquired.  Also,  like  PROBACTRIX(TM)  ,  the  potential  new  product  has  a
predecessor  product,  Biosporin,  that  was  approved as a prescription drug in
Russia (the product was subsequently marketed in Russia and Ukraine). BioBalance
believes that the acquisition broadens and diversifies its product portfolio and
enhances  its  position  as  a  potential  leading player in the GI marketplace.

CLINICAL  HISTORY

     RUSSIAN STUDIES. Studies conducted in Russia of the original formulation of
the  PROBACTRIX(TM)  were  in the format of "open label" controlled studies. The
odor  of  the product at the time the Russian studies were conducted limited the
manufacture  of  an  appropriate  placebo,  and  the  product  itself was deemed
unpleasant  by  participants  in  the  studies.  However, in preparation for its
potential  marketing within the United States, the composition of PROBACTRIX(TM)
has  recently  been  significantly  improved to mask off flavors, permitting the
production  of  a  product  that  has been well-tolerated by users, as well as a
suitable  placebo  for  placebo-controlled  studies.

     ISRAELI  STUDIES.  A  number  of  clinical  studies  have  confirmed  that
PROBACTRIX(TM)  addresses  various  GI symptoms in both male and female patients
with  known  no  side  effects.  Patients typically report a marked reduction in
abdominal  symptoms  and  improvement  in overall well being. More recently, two
pilot  studies  have  been completed in Israel with the present formulation. The
first  consisted  of an open-label study in 63 patients with IBS unresponsive to
other  therapy  and 20 patients with Crohn's disease. After four to six weeks of
therapy,  52%  of  the  IBS  patients  had  an  excellent response with a marked
improvement  in  quality  of  life.  Of the Crohn's disease patients, 35% had an
excellent  response and 30% had a partial response. No adverse events were noted
by  the  lead  investigators  (Adler,  S.  and  Jacob,  H.,  2002).

     A  second  open-label  trial  examined  the impact of PROBACTRIX(TM) on six
patients  with Crohn's disease. Three of the patients had a significant clinical
response  with  marked  reduction  in abdominal symptoms and improvement in well
being;  two  of  the  patients  did  not  improve,  and  one  patient reported a
progression of symptoms. (Adler, S. et al., 2003). No adverse events were noted.

     A  randomized,  double  blind  pilot  study  conducted  in  2003 found that
PROBACTRIX(TM)  relieved  major symptoms of IBS with no side effects. This study
involved  20  patients experiencing severe symptoms of diarrhea and constipation
with  a  mean  duration  of eight years. Eight of the 10 patients in the placebo
group  dropped  out  due  to  lack of response. All 10 patients in the treatment
group completed the study and experienced significant improvement in IBS symptom
relief.  No  side  effects  were  reported.

     BioBalance  has  also  been  investigating  the  use  of  PROBACTRIX(TM) in
patients  who  are suffering from inflammation in the proximal area of the small
intestine.  This  newly  diagnosed  condition, that was recognized by scientific
collaborators,  may  potentially occur in many patients with IBS. BioBalance has
filed a patent application covering the use of PROBACTRIX(TM) in both preventing
and  treating  this  particular  type  of  GI  inflammation.

     CURRENT  STUDIES.  BioBalance  has  initiated  a multi-center double blind,
placebo controlled clinical trial among male and female IBS sufferers. The trial
includes  210  patients and is anticipated to be completed by the fourth quarter
of  2004.  In  addition,  an  extended  term,  high-dose safety trial in healthy
volunteers  is  being  fielded  to corroborate the safety results found in prior
studies.  The  safety  trial  is  anticipated  to  be  completed  by  mid  2004.


                                       21
<PAGE>
VETERINARY  APPLICATION.  BioBalance  or its predecessors has conducted numerous
clinical  studies  in  farm  animals  to  support the use of PROBACTRIX(TM) as a
veterinary feed additive to replace antibiotics. BioBalance believes that enough
safety  and  efficacy  data  may already be accumulated to present an attractive
case for licensing to appropriate corporate partners. BioBalance believes that a
new  and  potentially  safer  anti-diarrheal  veterinary  product,  such  as
PROBACTRIX(TM),  could  be  particularly  successful. Veterinary experts believe
that  repeated  applications  of antibiotics often leave animals weak and growth
retarded. BioBalance believes that PROBACTRIX(TM) has a particularly high safety
and  efficacy  profile  in  many  different kinds of animals. There are numerous
probiotic products in the veterinary market but lack of well-designed scientific
studies.  Significantly,  PROBACTRIX(TM)  has  been  studied  for  its  use  in
preventing bacterial diarrhea in piglets and as a replacement for gentamycin and
Advocin,  which  are  most  often  used  to  treat  diarrhea  in  these animals.

MANUFACTURING

     BioBalance  has  successfully  transferred  the  manufacturing  process  of
PROBACTRIX(TM)  from  Israel  to  the  University  of  Minnesota Biotech Center,
enabling  sufficient quantities of PROBACTRIX(TM) to be produced in the U.S. for
clinical  trials  under  contract  manufacture.  BioBalance has not yet selected
contract  manufacturers  for  production  of  commercial  quantities  of
PROBACTRIX(TM),  but  may  rely  on a marketing partner to oversee the product's
manufacture. The process for growing E. coli and formulating the bacteria into a
probiotic  agent  is  not  complicated  but  requires  specialized  fermentation
facilities  maintained  and  operated  under  FDA  laboratory  and manufacturing
requirements  for  food  or drug good manufacturing procedures ("GMP's") if this
pathway  is  pursued.

INTELLECTUAL PROPERTY

     BioBalance  uses  a combination of patents, trademarks and trade secrets to
protect its core technology, which is proprietary and protected by 26 patents in
the  U.S.  and  key  overseas  markets.  In  the  U.S.,  BioBalance  has  filed
applications  for  16  patents  covering applications of its core technology, of
which  14  have  been  issued.  It  has  also filed patent applications covering
application of its core technology in Japan, European, Korea, Canada, Australia,
Mexico,  Brazil, Poland, Russia and New Zealand. BioBalance is also aggressively
pursuing  additional patent applications relating to its core technology. It has
also  applied  to  register  PROBACTRIX(TM)  as a trademark in both the U.S. and
Israel.  BioBalance  is  also  looking to obtain rights for other agents showing
promise  in  treating  various  GI  diseases.

     In  August  2003,  BioBalance  acquired  the  GI  rights  to  a  line  of
biotherapeutic  agents  from  NexGen  Bacterium  Inc.  The purchase includes the
rights  to  two  patented strains of Bacillus (B. subtilis and B. licheniformis)
for  $3,600,000  which  included  a  one-time  cash  payment of $250,000 and one
million  shares  of  restricted  stock  of  the  Company  valued  at $3,350,000.

     The  acquired  strains  of  Bacillus  have  been  shown  to exhibit natural
anti-inflammatory,  anti-bacterial  and anti-viral properties, which could prove
extremely  effective  in  treating  GI  diseases  such  as  ulcerative  colitis.
BioBalance  believes  that the acquired technology has significant potential for
the  treatment  of  acute  enteric  infections  from  both bacteria and viruses.
Specifically,  BioBalance believes that the Bacillus strains are therapeutically
effective  against


                                       22
<PAGE>
rotavirus  and  Campylobacter  pathogens,  which  are  the  leading  causes  of
infectious  diarrhea  in  the  United  States.

     Moreover,  like  BioBalance's  other  biotherapeutic agent, PROBACTRIX(TM),
there  is  extensive  clinical  and  laboratory  data  on  the  Bacillus strains
acquired.  Also,  like  PROBACTRIX(TM),  the  product has a predecessor product,
Biosporin,  that  was approved as a prescription drug in Russia (the product was
subsequently  marketed  in  Russia  and  Ukraine).  BioBalance believes that the
acquisition  broadens  and  diversifies the Company's product portfolio. It also
enhances  the  Company's  position  as  a  potential  leading  player  in the GI
marketplace.

EMPLOYEES

      At February 1, 2004, our home health care business had 2,061 employees, of
whom  91  are  salaried,  including  two  executive  officers,  a controller, 10
administrators/branch  managers,  19  nurses,  12 accounting staff, six clerical
staff  and 44 field staff supervisors. The remaining 1,970 employees are paid on
an  hourly  basis  and  consist  of  professional  and  paraprofessional  staff.

      At  March  1,  2004, BioBalance had two full time employees and outsourced
most  of its clinical regulatory needs through consultants. While BioBalance has
no  definitive  plans  with  respect to the size of its workforce or persons who
will fill specific positions, BioBalance plans to evaluate its needs relative to
research  and  development,  product manufacturing and marketing and finance and
administration in light of then current alliances and partnerships and will seek
to  hire  personnel  based  on  that  evaluation.

      None  of  our employees are compensated on an independent contractor basis
or  represented  by  a  labor  union. We believe that our employee relations are
good.

ITEM  2.  DESCRIPTION  OF  PROPERTIES.

      All  of  our executive and branch offices are located in facilities leased
from  unaffiliated  persons.

     Our  corporate  headquarters  is  located  in  a  building  containing
approximately  6,000  square  feet  located  in Brooklyn, New York under a lease
expiring  in 2005, at a monthly rental of approximately $6,800 subject to annual
increases and rent escalations based on increases in real estate taxes. Our home
health  care  business  is  administered  from our corporate headquarters and 12
branch  and recruitment offices located in New York (six offices) and New Jersey
(six offices) under month to month tenancies and term leases expiring from April
2004  through February 2007 at annual rentals ranging from approximately $14,000
to  $55,000  and  additional  rent based upon increases in real estate taxes and
other  cost  escalations.

     BioBalance's executive office is located in the Borough of Manhattan , City
of  New  York  under  a  lease  expiring  in  May  2006  at  a monthly rental of
approximately  $6,200.


                                       23
<PAGE>
ITEM  3.  LEGAL  PROCEEDINGS.

      We are 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 our results of operations or financial position.

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

     Our  2002  annual meeting of stockholders was held on February 13, 2004. At
the meeting, the stockholders present in person and by proxy approved all of the
proposals  presented  to  the  meeting.

      The following persons were elected directors of the Company until the next
annual  meeting  and/or  until  their  successors  are  elected  and  qualify:

                                           VOTES
NAMES                  FOR                AGAINST          ABSTAIN
----------------------------------------------------------------------
Jerry Braun         14,640,206           2,829,422        4,478,526
----------------------------------------------------------------------
Jacob Rosenberg     14,640,206           2,829,422        4,478,526
----------------------------------------------------------------------
Dennis O'Donnell    16,315,216           2,829,422        2,803,516
----------------------------------------------------------------------
H. Gene Berger      16,315,216           2,829,422        2,803,516
----------------------------------------------------------------------
Fred E. Nussbaum    16,315,216           2,829,422        2,803,516
----------------------------------------------------------------------
Mark Gray           16,315,216           2,829,422        2,803,516
----------------------------------------------------------------------
Mordecai H. Dicker  16,315,216           2,829,422        2,803,516
----------------------------------------------------------------------

      The  proposal  submitted to the stockholders at the annual meeting seeking
ratification  of the selection of Weiser LLP by the audit committee of the board
of directors as our independent auditors for the fiscal year ending December 31,
2003  was  approved  and  adopted  by  the  following  vote:

Common  Stock  - For - the resolution - 18,206,442; Against - 127,705; Abstain -
1,803,982

                                     PART II

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

      Our  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 our


                                       24
<PAGE>
Common  Stock  for  the periods indicated. Quotations do not necessarily present
actual  transactions  and  do  not  reflect  related  mark-ups,  mark-downs  or
commissions:

Fiscal  2003       High      Low
------------       ----      ---

First Quarter      4.50     2.59
Second Quarter     3.20     2.13
Third Quarter      4.39     2.07
Fourth Quarter     4.19     1.96


Fiscal  2002       High      Low
------------       ----      ---

First Quarter      3.95     2.99
Second Quarter     3.90     3.25
Third Quarter      3.65     3.28
Fourth Quarter     3.68     3.17

HOLDERS

      At  March  19,  2004,  we  had  148 holders of record and 2,004 beneficial
holders  of  our  Common  Stock.

DIVIDENDS

      The  Company  has  not  paid  any  cash  dividends since its inception and
presently  anticipates  that  all  earnings,  if  any,  will  be  retained  for
development  of  the  Company's  business and that no dividends on the shares of
Common  Stock  will  be declared in the foreseeable future. Any future dividends
will  be  subject to the discretion of the Company's Board of Directors and will
depend  upon,  among  other things, future earnings, the operating and financial
condition  of the Company, its capital requirements, general business conditions
and  other  pertinent  facts.  Therefore,  there  can  be  no assurance that any
dividends  on  the  Common  Stock  will  be  paid  in  the  future.

SECURITIES  AUTHORIZED  FOR  ISSUANCE  UNDER  EQUITY  COMPENSATION  PLANS

            For  information  on  securities  authorized  for issuance under the
      Company's equity compensation plans, see Part III, Item 12 of this report,
      "Security  Ownership  of  Certain  Beneficial  Owners  and  Management."


                                       25
<PAGE>
ITEM  6:  SELECTED  FINANCIAL  DATA

              NEW YORK HEALTH CARE HISTORICAL FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                   AS OF AND FOR THE YEARS ENDED DECEMBER 31,
                                         -------------------------------------------------------
                                                                             Period May 21, 2001
                                                                             (Inception) Through
                                              2003               2002           DECEMBER 2001
                                         ---------------  ------------------  -----------------
<S>                                      <C>              <C>                 <C>
Total revenues                           $   45,060,449   $               -   $              -
Net income (loss)                           (22,052,170)         (1,399,057)          (452,169)
Basic earnings (loss) per share                   (0.91)              (0.07)             (0.03)
Diluted earnings (loss) per share                 (0.91)              (0.07)             (0.03)
Current assets                               14,543,209           3,051,720            906,926
Total assets                                 21,628,968           5,259,449          2,918,836
Current liabilities                          12,607,203             349,182            117,070
Long-term liabilities, net of
  current portion                                     -                   -                  -
Shareholders' equity                          9,021,765           4,910,267          2,801,766
Book value per share                                .36                 .23                .16

Dividends per share                                   -                   -                  -

Shares used in computing earnings
(loss) per common share:
     Basic                                   24,283,907          20,562,131         17,574,891
     Diluted                                 24,283,907          20,562,131         17,574,891
</TABLE>

ITEM  7:  MANAGEMENT'S  DISCUSSION  &  ANALYSIS  OF  FINANCIAL
CONDITION  AND  RESULTS  OF  OPERATION

RESULTS  OF  OPERATIONS - YEAR ENDED DECEMBER 31, 2003 COMPARED WITH YEARS ENDED
DECEMBER  31,  2002  AND  2001

      On  January  2,  2003,  the  Company  and  BioBalance completed a business
combination  (a  "reverse  merger"),  accounted for as "reverse acquisition," in
which  BioBalance  became  a  wholly-owned  subsidiary  of  the  Company and the
stockholders of BioBalance exchanged all of the outstanding shares of the common
stock  of  BioBalance  for  approximately  90%  of the outstanding shares of the
Company's  common stock. For accounting purposes, BioBalance is considered to be
the  "accounting  acquirer"  in  the  transaction.  As  a result, the historical
financial  information in this report is that of BioBalance, not of the Company.
Prior  reports  of  the  Company  filed with the SEC remain available on the SEC
website  at http://www.sec.gov. It is important to keep this in mind because the
operations  on  a  consolidated basis of the Company and BioBalance for the year
ended  December  31,  2003  are  being  compared  to  the  operations  solely of
BioBalance  for the years ended December 31, 2001 and 2002 without regard to the
Company's  operations  for  that  period.

      The  Company  operates  in  two  industry  segments;  the home health care
business,  which  business  has  a  15-year operating history, and the specialty
pharmaceutical  business  of BioBalance, which commenced in 2001 and is still in
its  development  stage.  All numerical amounts and percentages in the following
discussion  are  approximate.


                                       26
<PAGE>
RESULTS  OF  OPERATIONS

      Revenues in 2003 increased to $45,060,000 from no reported revenue for the
years  2002  and  2001.

      Cost  of  professional  care  of patients in 2003 increased to $36,107,000
from  no  reported  costs  for  the  years  2002  and  2001.

     Selling,  general and administrative expenses ("SG&A") in 2003 increased to
$11,249,000  from  $830,000  in 2002 and $261,000 in 2001, an increase of 1,255%
and  218% for the years 2002 and 2001 respectively. The increase in expenses for
these periods is the result of combining the selling, general and administrative
expenses  (SG&A)  of  two industry segments, as compared to the SG&A of only one
industry  segment.

      The loss of $22,052,000 for the year 2003 includes a charge of $17,869,000
for  the  impairment of goodwill, which resulted from the valuation of assets in
conjunction  with  the  merger  transaction  in  January  2003.

      As a result of the merger, the Company recognized goodwill associated with
the  Company's home health care business. The Company has determined, based upon
the opinion of a valuation expert engaged to determine the Company's fair market
value  as of the date of the merger, that goodwill was impaired to the extent of
$17,869,000.  The  Company determined that in the current market for home health
care  businesses, the value of the Company's home health care business would not
generate the amount of goodwill recorded in connection with the merger, assuming
the  business  had  been  sold  in  the open market, based on current sources of
revenue  and  limited  profit  margin  of  the business and potential regulatory
threats  to the business, which threats, if realized, could adversely affect the
economic  structure  of  its business. The valuation expert used the capitalized
cash flow and the guidelines companies methodologies in valuing the Company. The
impairment  charge  of $17,869,000 is non-cash in nature and does not affect the
Company's  liquidity.

     For  the  year  2003,  the  Company  suffered  a net loss of $22,052,000 as
compared  to  net losses of $1,399,000 and $452,000 for the years 2002 and 2001,
respectively.  The  net  loss  of  $22,052,000  for  the  year 2003 includes the
non-cash  impairment charge of $17,869,000, and also includes a non-cash expense
in  the  amount  of  $1,591,000, resulting from an increase in the fair value of
outstanding  stock  options  and  warrants  as  a  result of the merger, and the
issuance of warrants to consultants. The losses for the years 2002 and 2001 are,
in  part,  due  principally  to  the development of the product of BioBalance to
generate  any  revenue  for  these  periods.

RECENTLY  ISSUED  ACCOUNTING  PRONOUNCEMENTS

     In  November  2002,  the Financial Accounting Standards Board (FASB) issued
FASB  Interpretation No. 45, "Guarantor 's Accounting and Disclosure Requirement
for  Guarantees  of  Indebtedness  of  Others,"  which expands previously issued
accounting  guidance  and  disclosure  requirements for certain guarantees. This
Interpretation requires an entity to recognize an initial liability for the fair
value of an obligation assumed by issuing a guarantee. The provision for initial
recognition  and  measurement  of the liability will be applied on a prospective
basis  to  guarantees  issued  or  modified  after  December  31,  2002.  This
Interpretation  has  not  had  a  material  impact on our financial condition or
results  of  operation

     In  January  2003,  the FASB issued Interpretation No. 46 "Consolidation of
Variable  Interest  Entities",  which  clarifies  the  application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements." Interpretation 46
requires  certain  variable  interest entities to be consolidated by the primary
beneficiary  of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not provide sufficient
equity to support its activities. In December 2003, the FASB concluded to revise
certain elements of FIN 46. The FASB also modified the effective date of FIN 46.
FIN 46 is to be applied for registrants who file under Regulation S-X in periods
ending  after March 15, 2004. The Company is currently assessing the application
of  FIN  49  on  its  financial  statements.

     In May 2003, the FASB issued Statement of Financial Accounting Standard No.
150,  "Accounting for Certain Financial Instruments with Characteristics of both
Liabilities  and  Equity" (SFAS No. 150") SFAS No. 150 establishes standards for
how  an  issuer  classifies  and  measures  certain  financial  instruments with
characteristics  of liabilities and equity. SFAS No. 150 requires that an issuer
classify  an  instrument that is within its scope as a liability (or as an asset
in  certain  circumstances).  SFAS  150  is  effective for financial instruments
entered  into after or modified after May 31, 2003 and otherwise is effective at
the  beginning  of  the  first  interim  period  after June 15, 2003, except for
mandatory  redeemable  financial instruments of nonpublic entities. The adoption
of  SFAS  No. 150 has not had, and is not expected to have, a material impact on
the  Company's  financial  condition  or  results  of  operations.


LIQUIDITY  AND  CAPITAL  RESOURCES

The  sources of liquidity and capital resources for the home health care segment
are  internally  generated  funds,  cash  on  hand and amounts available under a
$4,000,000  revolving  credit  facility  relating exclusively to the home health
care  segment.  Currently  there  is  no  outstanding  indebtedness  under  this
facility.

     Loans  under this revolving credit loan facility, which expires in November
2004,  may  be


                                       27
<PAGE>
used  only  for  working  capital of the Company's home health care business and
other  costs  arising  in  the  ordinary  course of that business. The Company's
obligations  to pay the principal of, and interest on, loans advanced under this
facility  are  secured  by  substantially  all  the assets of the Company's home
health  care business, and not by any assets of BioBalance. Borrowings under the
facility  are  permitted  to  the  extent  of  a  borrowing base of up to 85% of
"qualified  accounts  receivable" of the Company's home health care business and
there  are no events of default under the relevant loan documents subject to the
lender's  right  to  reduce  the  borrowing  base by applying a liquidity factor
percentages  based upon a calculation relating to recent collection histories of
certain  classes of qualified accounts receivable. Currently, application of the
liquidity  factors  that formula results in 97% of qualified accounts receivable
being  part of the borrowing base. At December 31, 2003 the amount available for
borrowing  under  this  facility, based on the borrowing base on the formula was
$4,000,000.  The  agreement contains various restrictive convenants, which among
other things, require that the Company have a minimum tangible net worth greater
than $500,000. The Company utilizes the line of credit from time to time, and at
the present time there is no balance outstanding.

     The Company has amended its loan agreement to allow it to lend money to its
subsidiary BioBalance if there is no loan outstanding loan under this agreement.
It  has also been amended to allow the Company to invest money in the subsidiary
BioBalance.

      The  principal  amount of loans borrowed under this facility bear interest
at  a  variable annual rate equal to the prime rate charged from time to time by
CitiBank,  N.A.  plus  1.5%  (currently,  4%  per  annum) and the loan agreement
creating  this  facility  provides  for  monthly  payments  of  interest  on the
outstanding  loan balance on the basis of the actual number of days elapsed over
a year of 360 days.

<TABLE>
<CAPTION>

                                                          Payments  due,  by  period

Contractual Obligations                 Total    Less than 1 year   1-3 years   3-5 years   More than 5 years
                                       --------  -----------------  ----------  ----------  -----------------
<S>                                    <C>       <C>                <C>         <C>         <C>
Long-Term Debt                              -0-                 --          --          --                 --
Capital Lease Obligations                   -0-                 --         - -          --                 --
Operating Lease Obligations*           $829,000  $         386,000  $  439,000  $    4,000                 --
Purchase Obligations                        -0-                 --          --          --                 --
Other Long-Term Liabilities Reflected
on the Registrant's Balance Sheet
GAAP                                       --0-                 --          --          --                 --
                                       ========  =================  ==========  ==========  =================
Total                                  $829,000  $         386,000  $  439,000  $    4,000                -0-
<FN>

*  These  leases  generally  contain  provisions  allowing  rental  obligations  to  be  accelerated  upon
   default  in  the  payment  of  rent  or the performance of other lease obligations. These leases generally
   contain  provisions  for  additional  rent  based  upon  increases  in  real  estate  taxes and other cost
   escalations.
</TABLE>

      Net  cash  used by operating activities for the year 2003 was $374,000, as
compared  to  deficits  of  $959,000  and  $194,000 for the years 2002 and 2001,
respectively.  The  change in net cash used by operating activities from 2003 to
2002  is  due  mainly  to comparing the two segments which showed an increase in
accounts  payable,  an  increase  in  due  to HRA, an increase in due to related
parties,  an  increase  in  non-cash  compensation, offset by a net loss for the
period,  as  compared  to  only one segment which only showed a net loss for the
period. The change in cash used by operating activities from 2002 as compared to
2001  is  due  mainly  to  an  increase  in  the  net  loss  for  the  period.

      Net  cash  provided  by  investing  activities  for  the year 2003 totaled
$3,034,000,  as compared to deficits of $510,000 and $597,000 for the years 2002
and 2001, respectively. The increase in 2003 is due mainly to cash acquired from
the  acquisition  of  the  BioBalance  subsidiary.

      Net  cash  provided by financing activities for the year December 31, 2003
totaled  approximately  $1,304,000, as compared to $3,198,000 and $1,688,000 for
the  years  ended  December  31, 2002 and 2001 respectively. The decrease is due
mainly  from  a  decrease  in  the  issuance  of  common  stock.

      As of December 31, 2003, approximately $6,577,000 (approximately 30.4%) of
the  Company's total assets consisted of accounts receivable from clients. As of
December  31,  2002  and  2001,  BioBalance  had  no  accounts  receivable.


                                       28
<PAGE>
      Days  Sales Outstanding ("DSO") is a measure of the average number of days
required  for the Company to collect its account receivable, calculated from the
date services are billed. For the year ended December 31, 2003 the Company's DSO
were  62.  For  the  years  ended  December 31, 2002 and 2001, BioBalance had no
accounts  receivable.

BioBalance Segment

      Since  its  inception  in  2001,  BioBalance  has received aggregate gross
proceeds  of  $6,889,000  from  sales of its common stock in a series of private
placements.  As  of  December  31,  2003,  BioBalance  had  cash  on  hand  of
approximately  $1,100,000,  all  of  which  was  available  to  fund operations.
BioBalance  estimates  that  its  capital  requirements  for  2004  will  be
approximately  $4,700,000,  which  it  plans to fund via sale of equity, debt or
convertible  securities  of  the  Company.

OFF-BALANCE  SHEET  ARRANGEMENTS

     The  Company  has  not  entered  into  any transactions with unconsolidated
entities  whereby  the  Company  has financial guarantees, subordinated retained
interests,  derivative  instruments or other contingent arrangements that expose
the  Company  to material continuing risks, contingent liabilities, or any other
obligation  under  a variable interest in an unconsolidated entity that provides
financing,  liquidity,  market  risk  or  credit  risk  support  to the Company.

Lease  Commitments

     As  of  December 31, 2003, the Company had total outstanding commitments on
noncancelable  operating  leases  for  office  space  of approximately $829,000.
Remaining terms on the Company's existing operating leases range from April 2004
through  February  2007.

POTENTIAL  REGULATORY  CHANGES

Home  Health  Care  Regulation

      There have been reports concerning budget negotiations regarding potential
changes  in  the way the federal and state 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,  some  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.  See  Item 1, "Business-Home Health Care Business-Reimbursement and
Governmental  Regulation,"  for  information  on  state  regulatory  activities.

CRITICAL  ACCOUNTING  POLICIES

     The  preparation  of financial statements in conformity with U.S. generally
accepted  accounting  principles  requires  that we make estimates and judgments
that  affect  the amounts reported of assets, liabilities, revenues and expenses
and the related disclosure of contingent assets and liabilities. Note 1 of Notes
to  Consolidated  Financial  Statements  describes  the  significant  accounting
policies  used  in  the preparation of the consolidated financial statements. We
base  our estimates on historical experience and on various other assumptions we
believe  to  be  applicable  and reasonable under the current circumstances, the
results  of  which form the basis for making judgments about the carrying values
of  assets  and  liabilities  that  are not readily apparent from other sources.
Actual  results  may  differ from these estimates under different assumptions or
conditions.

     In  addition, we are periodically faced with uncertainties, the outcomes of
which  are not within our control and will not be known for prolonged periods of
time.  Some  of  these  uncertainties  are  discussed  below  under  "Risks  and
Uncertainties."

     We believe the following to be critical accounting policies that affect the
most  significant  estimates  and  judgments  used  in  the  preparation  of our
consolidated  financial  statements:


REVENUE  RECOGNITION

     The  Company  recognizes  patient  service revenue on the date services are
rendered. Unbilled services represent amounts due for services rendered that had
not  been  billed  at  the end of each period because authorization had not been
received  from  referral  source.

ACCOUNTS  RECEIVABLE

     Accounts  receivable  of  our  home  health  care business consist of trade
receivables  recorded  at  original invoice amounts, less an estimated allowance
for  uncollectible  accounts.  We  generally extend trade credit on a short-term
basis.  Accordingly, our trade receivables do not bear interest, although we may
apply  a  finance  charge  to  receivables  that  are  past due. We periodically
evaluate  accounts  receivables for collectibility, based on past credit history
of  customers and the current financial condition of those customers. Changes in
the estimated collectibility of accounts receivables are recorded in the results
of  operations  for the fiscal period in which the estimate is revised. Accounts
receivables  we  judge  to be uncollectible are offset against the allowance for
uncollectible  accounts.  Generally, we do not require account debtors to secure
the  payment  of  accounts  payable.

GOODWILL  AND  OTHER  INTANGIBLE  ASSETS

     Prior to fiscal 2002, the Company amortized good will and intangible assets
using  the  straight-line  method  over  periods of up to 10 years. Statement of
Financial  Accounting  Standards  No.142  requires that good will and intangible
assets  having  indefinite  lives  not  be  amortized, but instead be tested for
impairment  at  least  annually.  Intangible  assets determined to have definite
lives  are  amortized  over  their  remaining  useful  lives.


LONG-LIVED  ASSETS

     We  evaluate  long-lived  assets,  such as intangible assets, equipment and
leasehold  improvements,  for impairment when events or changes in circumstances
indicate  that the carrying amounts of the assets may not be recoverable through
estimated  undiscounted  cash  flows  from  the  use  of  these  assets, When an
impairment  exists,  the  related  assets  are  written  down  to  fair  value.

RISKS RELATING TO THE BIOBALANCE BUSINESS

BIOBALANCE IS A DEVELOPMENT STAGE COMPANY, HAS GENERATED NO REVENUES TO DATE AND
HAS MINIMAL OPERATING HISTORY UPON WHICH IT MAY BE EVALUATED

BioBalance  was  incorporated  in  May  2001, and has generated no revenues from
operations  or  meaningful  assets, other than its intellectual property rights.
BioBalance  faces  all  of  the risks inherent in a new business and those risks
specifically  inherent in the business of developing, manufacturing, introducing
and  selling  a new drug or new product to the market with all of the unforeseen
costs,  expenses, problems, and difficulties to which such ventures are subject.
In  July  2001 BioBalance acquired the intellectual property rights with respect
to  certain  probiotic  agents  from  Israeli companies engaged in the research,
development,  marketing  or sales of probiotic bacteria and other technology. We
cannot  assure that BioBalance will be able to generate revenues or profits from
operation of its business or that BioBalance will be able to generate or sustain
profitability  in  the  future.

FAILURE TO SECURE ADDITIONAL FINANCING COULD RESULT IN IMPAIRED GROWTH AND
INABILITY TO OPERATE PROFITABLY

BioBalance  will be required to expend substantial amounts of working capital in
order  to develop its proposed product and establish the necessary relationships
to  implement  its  business  plan.  BioBalance  believes that the proceeds from
private  placements,  together  with available funds,


                                       29
<PAGE>
will be sufficient to meet the currently anticipated working capital and capital
expenditure requirements for at least the next 18-24 months. If BioBalance fails
to  obtain  adequate  financing,  BioBalance's  expansion plans would need to be
scaled  back.  BioBalance  has no agreements or arrangements with respect to any
such  financing  and  there  can  be  no assurance that any needed funds will be
available  to  BioBalance  on  acceptable  terms  or  at  all.

THE LOSS OF KEY EXECUTIVES OR CONSULTANTS OR THE FAILURE TO HIRE QUALIFIED
EMPLOYEES WOULD DAMAGE BIOBALANCE'S BUSINESS

Because  of  the  highly  technical  nature  of its business, BioBalance depends
greatly  on attracting and retaining experienced management and highly qualified
and  trained  scientific  personnel.  BioBalance's future success will depend on
the  continued services of its key scientific and management personnel with whom
it  has  entered into various agreements.  BioBalance's management team has only
recently  been  assembled, with the retention during 2003 of Dennis O'Donnell as
President  and  Chief Operating Officer, Dr. Robert Hoerr as Director of Medical
and  Regulatory  Affairs  and  Dr.  Eileen  Bostwick as Director of Research and
Development.  BioBalance  has  also retained the services of Dr. Nellie Kellner,
the  original  inventor of PROBRACTRIX, and has entered into agreements with Dr.
Harold  Jacobs  and  Dr.Kursheed Jeejeebhoy, each of whom serves on BioBalance's
Medical  Advisory  Board.  BioBalance competes intensely for these professionals
with  other  companies  in its industry. If BioBalance cannot retain or hire and
effectively  integrate  a  sufficient  number  of  qualified  scientists  and
experienced  professionals,  such inability would have a material adverse effect
on  its  capacity  to  grow  its  business  and develop its products through the
clinical  trial  process.  BioBalance  does  not  presently  maintain key person
insurance  for  any  of  its  key  personnel.

BIOBALANCE'S PRODUCTS ARE IN DEVELOPMENT AND MAY NOT SATISFY REGULATORY
REQUIREMENTS OR BECOME COMMERCIALLY VIABLE

The  product  that  BioBalance  is  currently developing will require additional
development,  testing,  and investment in order to market it as an ethical drug.
BioBalance cannot be sure that its product research and development efforts will
be  successful, that candidates will enter clinical studies as anticipated, that
BioBalance  will  satisfy  medical food or ethical drug requirements or that any
required  regulatory approvals will be expeditiously applied for or obtained, or
that  any  products,  if introduced, will be commercially successful. BioBalance
has  conducted  anecdotal  and  pre-clinical trials and has recently commenced a
clinical  trial  for  its  initial  product  and has established GRAS (Generally
Recognized As Safe) (investigational new drug) approvals to date. The results of
these  pre-clinical  and  anecdotal trials on products under development are not
necessarily  predictive  of  results  that  will  be  obtained  from large scale
clinical testing. BioBalance cannot be sure that clinical trials of the products
under  development  will demonstrate the safety and efficacy of such products or
will result in a marketable product. In addition, the administration alone or in
combination  with  drugs  of  any  product  developed  by BioBalance may produce
undesirable  side  effects  in humans. The failure to demonstrate adequately the
safety  and  efficacy  of  a  medical  food  or  therapeutic  drug product under
development  could  delay  or  prevent  regulatory approval, where required, and
delay  or  prevent  commercial  sale  of  the product, any of which could have a
material adverse effect on BioBalance. In addition, the FDA may contest the GRAS
status  of  the  ingredients  in  PROBACTRIX(TM),  or  contest  the  status  of
PROBACTRIX(TM) as a medical food. Commercial formulation has yet to be developed
for  PROBACTRIX(TM).  BioBalance  may  encounter  difficulties  in manufacturing
process  development  and  formulation  activities  that


                                       30
<PAGE>
could  result  in  delays in clinical trials, regulatory submissions, regulatory
approvals, and commercialization of its product, or cause negative financial and
competitive  consequences.

THE  VALIDITY OF PATENTS COVERING PHARMACEUTICAL AND BIOTECHNOLOGICAL INVENTIONS
AND  THE SCOPE OF CLAIMS MADE UNDER SUCH PATENTS IS UNCERTAIN; FAILURE TO SECURE
NECESSARY  PATENTS  COULD  IMPAIR BIOBALANCE'S ABILITY TO PRODUCE AND MARKET ITS
PRODUCTS

There  is  no  consistent  policy  regarding  the  breadth  of claims allowed in
specialty  pharma/medical  foods  patents.  In  addition,  patents may have been
granted,  or may be granted, to others covering products or processes BioBalance
needs  for developing its product. If BioBalance's product or processes infringe
upon  the  patents, or otherwise impermissibly utilize the intellectual property
of  others,  BioBalance  might  be  unable  to  develop,  manufacture,  or  sell
its  product.  In such event, BioBalance may be required to obtain licenses from
third  parties.  BioBalance  cannot  be sure that it will be able to obtain such
licenses  on  acceptable  terms,  or  at  all.

FAILURE TO ASSEMBLE OR CONTRACT WITH AN ADEQUATE SALES ORGANIZATION COULD RESULT
IN  A  LACK  OF  FUTURE  REVENUES

To  market  any  of  its  products  directly, BioBalance would have to develop a
substantial  marketing  and  sales  force.  Alternatively,  BioBalance  may, for
certain products, attempt to obtain the assistance of companies with established
distributions  systems  and direct sales forces.  BioBalance does not know if it
will  be  able to establish sales and distribution capabilities or if it will be
able  to  enter into licensing or other agreements with established companies to
sell  its  product.

BIOBALANCE  OWNS  NO  MANUFACTURING  FACILITIES  AND  WILL BE DEPENDENT ON THIRD
PARTIES  TO  MAKE  ITS  PRODUCT

BioBalance  owns  no  manufacturing  facilities  or  equipment,  and  employs no
manufacturing personnel.  BioBalance expects to use third parties to manufacture
certain  of  its  products  on  a contract basis.  BioBalance may not be able to
obtain  contract-manufacturing  services  on  reasonable  terms  or  at all.  If
BioBalance  is  not able to contract manufacturing services, it will not be able
to  make  its  products.

IF WE OR ANY OF OUR POTENTIAL  PARTNERS FAIL TO OBTAIN REGULATORY APPROVAL FOR
OUR PRODUCTS, WE WILL NOT BE ABLE TO SELL THEM

If  we  determine  to pursue the IND regulatory pathway for our products, we and
any  pharmaceutical  companies  with  who  we  may  partner  must  conduct
time-consuming,  extensive  and  costly  clinical  trials to show the safety and
efficacy of each of our drug candidates, before a drug candidate can be approved
for  sale.  We  must conduct these trials in compliance with FDA regulations and
with comparable regulations in other countries. If the FDA or another regulatory
agency  believes  that we or our partners have not sufficiently demonstrated the
safety  or  efficacy  of  our  drug candidates, it will not approve them or will
require  additional studies, which can be time consuming and expensive and which
will delay commercialization of a drug candidate. We and any partners may not be
able  to obtain necessary regulatory approvals on a timely basis, if at all, for
any of our drug candidates. Failure to receive these approvals or delays in such
receipt  could  prevent  or delay commercial introduction of a product and, as a
result,  could  negatively  impact  our ability to generate revenue from product
sales.  In addition, following approval of a drug candidate, we and our partners
must  comply  with  comprehensive  government  regulations  regarding  how  we
manufacture,  market  and  distribute  products. If we fail to comply with these
regulations,  regulators  could  force  us to withdraw a drug candidate from the
market  or  impose  other  penalties  or  requirements that could have a similar
negative  impact.

We  cannot guarantee that any of our drug candidates will be safe and effective,
will  be  approved  for  commercialization  or  that  our  partners  or  we  can
successfully  commercialize  these  drug  candidates.

If  the  results  of  clinical  testing  indicate  that  any  of our drugs under
development  are  not  suitable  for commercial use, or if additional testing is
required  to demonstrate such suitability, we may need to abandon one or more of
our  drug  development  programs.

BIOBALANCE'S  PRODUCT  MAY  BE  DENIED  MEDICAL  FOOD  STATUS

BioBalance's  regulatory  strategy  with its initial product is to establish its
initial  product  as  a  medical  food.  The  advantage  of this is that it is a
relatively rapid and relatively inexpensive way to reach the market.  A "medical
food"  is  defined  as a food which is formulated to be consumed or administered
under  the  supervision  of  a  physician and which is intended for the specific
dietary  management  of a disease or condition for which instinctive nutritional
requirements,  based  on  recognized  scientific  principles, are established by
medical  evaluation.  Perhaps  most  importantly, FDA's policies on medical food
products  have  long  been  in  a state of flux and are not the subject of final
regulations.  In the future, it is possible that FDA policies in this area could
be  adopted  that would prevent or severely limit BioBalance's ability to market
the  PROBACTRIX(TM)  product  as a medical food.  Overall, we cannot assure that
BioBalance will


                                       31
<PAGE>
satisfy  the regulatory requirements applicable to medical foods. Such a failure
would  result in BioBalance having to market the product as a dietary supplement
under  the  Dietary  Supplement  Health Education Act (DSHEA) or as a drug which
would  have to enter the new drug regulatory pathway at either Phase I, or Phase
II,  which  could  result in the need to raise large sums of money. In addition,
such  a determination would result in a significant delay in introduction of the
product  to  the  market.

POTENTIAL  FAILURE  OF  PLANNED  CLINICAL  TRIALS  TO  PRODUCE  STATISTICALLY
SIGNIFICANT  DATA  COULD  IMPAIR BIOBALANCE'S ABILITY TO SUCCESSFULLY MARKET ITS
PRODUCT

Even  if  BioBalance  is  successful  in establishing medical food status, there
still  is substantial risk that the extensive clinical trials that BioBalance is
planning will not yield sufficient statistically significant data to make strong
marketing  claims.  This could adversely affect marketing efforts to the medical
community,  which  is traditionally resistant to new treatments even if approved
by  the  FDA  unless  also  supported  by  statistically significant data before
recommending  it to patients.  This could severely limit BioBalance's ability to
successfully  market  its  product.

POTENTIAL SIDE EFFECTS OF BIOBALANCE'S PRODUCT COULD IMPAIR BIOBALANCE'S ABILITY
TO  SUCCESSFULLY  MARKET  ITS  PRODUCT

Although  no  side  effects  of  BioBalance's  product have been reported, it is
possible that any time during clinical trials or patient usage, side effects may
be  encountered.  If  they  are  common enough or significant enough, this could
result  in  BioBalance's  product  being  withdrawn  from  the  market.

BIOBALANCE'S  PRODUCT  MAY  NOT BE ACCEPTED BY PHYSICIANS, INSURERS, OR PATIENTS

Patients,  doctors,  and  insurers must accept BioBalance's product as medically
useful  and  cost-effective  for BioBalance to be successful.  Market acceptance
will require substantial education about the benefits of the product.  We cannot
assure that patients, doctors or insurers will accept BioBalance's product, even
if  approved  for  marketing,  on  a  timely  basis.  If  patients,  the medical
community,  and  insurers do not accept BioBalance's product or acceptance takes
longer  than  anticipated,  profits  would  be  reduced.

GOVERNMENT AND PRIVATE INSURANCE PLANS MAY NOT PAY FOR BIOBALANCE'S PRODUCT

The  success  of BioBalance's product in the United States and other significant
markets  will  depend, in part, upon the extent to which a consumer will be able
to  obtain  reimbursement  for  the  cost  of  such  product  from  governmental
authorities,  third-party  payors  and  other  organizations.  BioBalance cannot
determine  in  advance  the  reimbursement  status of newly approved therapeutic
products.  Even  if  a  product  is approved for marketing, BioBalance cannot be
sure that adequate reimbursement will be available.  Also, future legislation or
regulation, or related announcements or developments, concerning the health care
industry or third party or governmental coverage and reimbursement may adversely
affect BioBalance's business.  In particular, legislation or regulation limiting
consumers'  reimbursement  rights  could  have  a  material  adverse  effect  on
BioBalance's  revenues.


                                       32
<PAGE>
BIOBALANCE  MAY LOSE ANY TECHNOLOGICAL ADVANTAGE BECAUSE PHARMACEUTICAL RESEARCH
TECHNOLOGIES CHANGE RAPIDLY

The  pharmaceutical  research  field  is  characterized  by  rapid technological
progress  and  intense  competition. As a result, BioBalance may not realize the
expected  benefits  of its business strategy. Businesses, academic institutions,
governmental  agencies,  and other public and private research organizations are
conducting  research  to  develop  technologies  that  may compete with those of
BioBalance.  It  is  possible  that  competitors  could  acquire  or  develop
technologies  that  would  render  BioBalance's  technology  obsolete  or
noncompetitive.  BioBalance cannot be certain that it will be able to access the
same  technologies  at  an  acceptable  price,  or  at  all.

POSSIBLE PRODUCT LIABILITY LOSSES AND ADVERSE PRODUCT PUBLICITY

BioBalance,  like any other wholesaler, retailer or distributor of products that
are  designed  to  be  ingested,  faces  an inherent risk of exposure to product
liability claims and negative publicity in the event that the use of its product
results  in  injury.  BioBalance  faces  the  risk  that  materials  used in the
manufacture  of  the  final product may be contaminated with substances that may
cause sickness or injury to persons who have used the products, or that sickness
or  injury  to  persons  may  occur  if the product distributed by BioBalance is
ingested  in  dosages  which exceed the dosage recommended on the product label.
In  the  event  that  insurance  coverage  or contractual indemnification is not
adequate,  product  liability  claims  could  have  a material adverse effect on
BioBalance.  The  successful  assertion  or settlement of any uninsured claim, a
significant  number of insured claims, or a claim exceeding any future insurance
coverage,  could  have  a  material adverse effect on BioBalance.  Additionally,
BioBalance  is  highly  dependent  upon  consumers' perception of the safety and
quality  of  its  product  as  well  as  similar  products  distributed by other
companies.  Thus,  the  mere  publication  of  reports  and  negative  publicity
asserting that such products may be harmful could have a material adverse effect
on  BioBalance, regardless of whether such reports are scientifically supported,
regardless  of  whether  the  harmful  effects  would  be present at the dosages
recommended  for  such products, and regardless of  whether such adverse effects
resulted  from  failure  to  consume  the  product  as  directed.

INTENSE COMPETITION MAY RESULT IN AN INABILITY TO GENERATE SUFFICIENT REVENUES
TO OPERATE PROFITABLY

The  pharmaceutical  industry is highly competitive. Numerous companies, many of
which  are  significantly  larger than BioBalance, which have greater financial,
personnel,  distribution  and  other resources than BioBalance and may be better
able  to  withstand  volatile market conditions, will compete with BioBalance in
the  development,  manufacture  and marketing of probiotics for the treatment of
IBS. There can be no assurance that national or international companies will not
seek  to  enter,  or increase their presence in the industry. In addition, large
nationally  known  companies  (such  as  Novartis  and  GlaxoSmithKline)  are in
competition  with  BioBalance  in  this  industry, since they have already spent
millions  of  dollars to develop treatments for IBS. Increased competition could
have  a  material  adverse effect on BioBalance, as our competitors may have far
greater  financial  and  other resources available to them and possess extensive
manufacturing, distribution and marketing capabilities far greater than those of
BioBalance.


                                       33
<PAGE>
BIOBALANCE IS DEPENDENT ON NEW PRODUCTS AND CONTINUED INNOVATION

The pharmaceutical industry in general, including the market for IBS treatments,
is  characterized  by  rapid  innovation and advances.  These advances result in
frequent  product  introductions and short product life cycles, requiring a high
level  of  expenditures for research and development and the timely introduction
of  new  products.  BioBalance  believes  its  ability  to  grow  and succeed is
partially  dependent  upon  its ability to introduce new and innovative products
into  such  markets.  BioBalance  currently  has  plans  to introduce additional
products  in its existing markets such as treatments for travelers' diarrhea and
Crohn's  disease.  We  cannot  assure  that BioBalance will be successful in its
plans  to  introduce  additional  products  to  the  market.

INTELLECTUAL PROPERTY RIGHTS MAY NOT PROTECT THE BIOBALANCE BUSINESS.

BioBalance  has  adopted  an  aggressive  patent  policy  on  current and future
products.  It  uses  a  combination  of patents, trademarks and trade secrets to
protect  its  proprietary  position  on  PROBACTRIX(TM).

We  cannot  assure  that  BioBalance's  pending  or  future patent and trademark
registration  applications  will  result  in  issued  patents  and  registered
trademarks,  or  that,  if  issued,  BioBalance's applications will be upheld if
challenged.  Further,  even  if granted, we cannot assure that these patents and
trademarks  will  provide  BioBalance  with any protection from competitors, or,
that if they do provide any meaningful level of protection, that BioBalance will
have  the  financial  resources  necessary  to  enforce its patent and trademark
rights. In addition, we cannot assure that others will not independently develop
technologies  similar to those covered by BioBalance's pending patents and trade
secrets,  or  design  around  the  pending patents. If others are able to design
around  BioBalance's  patents,  its  results  of  operations could be materially
adversely  affected.  Further,  BioBalance  will  have  very  limited,  if  any,
protection  of  its  proprietary  rights in those jurisdictions where it has not
effected any filings or where it fails to obtain protection through its filings.

We  cannot  assure  that  third  parties  will  not assert intellectual property
infringement  claims against BioBalance in the future with respect to current or
future  products.  BioBalance  is  responsible  for defending against charges of
infringement of third party intellectual property rights by BioBalance's actions
and  products and such assertion may require BioBalance to refrain from the sale
of  its product, enter into royalty arrangements or undertake costly litigation.
Further,  challenges  may  be  instituted  by  third parties as to the validity,
enforceability  and  infringement  of  BioBalance's  patents.

BioBalance's  adherence  to  industry  standards with respect to its product may
limit  its opportunities to provide proprietary features which may be protected.
In  addition, the laws of various countries in which BioBalance's product may be
sold  may  not  protect BioBalance's product and intellectual property rights to
the  same extent as the laws of the United States.  As a consequence, BioBalance
requires  all  of  its  personnel  to  execute  confidentiality  agreements  and
assignment  of  intellectual  property  agreements  in  its
favor.


                                       34
<PAGE>
THE  BUSINESS  COMBINATION  EFFECTED  BY  US  AND BIOBALANCE MAY NOT ACHIEVE THE
ANTICIPATED  BENEFITS,  IN  WHICH  CASE  THE  BUSINESS,  FINANCIAL CONDITION AND
OPERATING  RESULTS  OF  THE  COMBINED  COMPANY  COULD  BE  ADVERSELY  EFFECTED

We  must  overcome  significant  issues  in  order  to  realize  any benefits or
synergies  from  the  merger  transaction,  including  the timely, efficient and
successful execution of a number of post-transaction events. Key events include:

     -    Managing  the  disparate operations of two companies doing business in
          very  different  sectors  of  the  health  care  market;

     -    Retaining,  recruiting,  and  assimilating  key  personnel  for  each
          company;

     -    Obtaining  financing  needed to fund BioBalance's product development,
          regulatory  compliance,  manufacturing  and  marketing activities; and

     -    Maintaining good working relationships between the management's of the
          Company  and  BioBalance,  as  well  as  uniform  standards, controls,
          procedures  and  policies.

The  execution  of  these  tasks  will involve considerable risks and may not be
successful.  These  risks  include:

     -    The  potential  disruption of the combined companies' ongoing business
          and  distraction  of  their  respective  management's;

     -    Unanticipated  expenses  related  to  product  development, regulatory
          compliance,  manufacturing  and  marketing;

     -    The  impairment  of  relationships  with  employees and customers as a
          result  of  any  integration  of  new  management  personnel;  and

     -    Potential  unknown liabilities associated with the probiotic business.

We  may  not succeed in addressing these risks or any other problems encountered
in connection with the transaction. We cannot assure that we will realize any of
the  anticipated  benefits  of  the  transaction. If we are unable to adequately
address  any  of  the  risks relating to integration of the companies, we may be
required  to  substantially  alter, or possibly divest, the operations of either
our  home  health  care  business  or  probiotic  business.

Risk Relating to Home Health Care Business

OUR  INDIRECT DEPENDENCY UPON REIMBURSEMENT BY THIRD-PARTY PAYORS; HEALTH CARE
REFORM COULD REDUCE REVENUEs

More  than 30% of our revenues of are paid by Certified Home Health Agencies and
Long-Term  Home Health Care Programs, as well as other clients who receive their
payments  from  "third-


                                       35
<PAGE>
party  payors,"  such as private insurance companies, self-insured employers and
HMOs.  Our  revenues  and  profitability,  like  those of other home health care
companies,  are  affected  by  the  continuing  efforts of third-party payors to
contain  or reduce the costs of health care by lowering reimbursement or payment
rates,  increasing  case  management  review of services and negotiating reduced
contract pricing. Because home care is generally less costly than hospital-based
care,  home nursing and home care providers have benefited from cost containment
initiatives  aimed  at  reducing  the  costs  of  medical  care.  However,  as
expenditures  in  the home health care market continue to grow, cost containment
initiatives  aimed  at reducing the costs of delivering services at non-hospital
sites  are  likely  to  increase. A significant reduction in coverage or payment
rates  of  public  or  private  third-party  payors would reduce New York Health
Care's  revenues  and  profit margins. While we are not aware of any substantive
changes  in  the Medicare or Medicaid reimbursement systems for home health care
which are about to be implemented, revised budget plans of New York State or the
federal  government could result in limitation or reduction in the reimbursement
of  home  care  costs  and  in the imposition of limitations on the provision of
services  which  will  be reimbursed. Moreover, third party payors, particularly
private  insurance companies, may negotiate fee discounts and reimbursement caps
for  services  we  provide.

SLOW  PAYMENTS  AND  POSSIBLE  BAD DEBTS MAY CAUSE WORKING CAPITAL SHORTAGES AND
OPERATING LOSSES.

We  generally  collect  payments from our contractors within one to three months
after  services  are  rendered, but pay our obligations on a current basis. This
timing  delay  may  cause working capital shortages from time to time. We have a
secured  revolving  credit  facility,  which  may  be  available  to cover these
periodic  shortages.  Borrowings  or  other  methods  of  financing  may  not be
available  when  needed  or, if available, may not be on terms acceptable to us.
Although  we have established a bad debt reserve for uncollectible accounts, any
significant  increase  in  bad  debts  would  damage  our  profitability.

PROFESSIONAL  LIABILITY  INSURANCE  MAY  BECOME  INADEQUATE,  UNAVAILABLE OR TOO
COSTLY

The  administration  of  home care and the provision of nursing services entails
certain  liability  risks. We maintain professional liability insurance coverage
with  limits  of  $1,000,000  per claim and $3,000,000 annual aggregate, with an
umbrella  policy  providing  an  additional  $5,000,000 of coverage. Although we
believe that the insurance we maintain is sufficient for its present operations,
professional  liability  insurance  is  increasingly  expensive  and  sometimes
difficult  to obtain. A successful claim against us in excess of, or not covered
by,  our  insurance could adversely affect our business and financial condition.
Claims  against  us,  regardless  of their merit or eventual outcome, could also
adversely  effect  our  reputation  and  home  health  care  business.

CHANGES IN FEDERAL AND STATE REGULATION COULD INCREASE COSTS AND REDUCE REVENUES

Our  home health care business is subject to substantial regulation at the state
level  and also under the federal Medicare and Medicaid laws.  In particular, we
are  subject  to  state  laws  regulating  home  care,  nursing services, health
planning  and  professional  ethics, as well as state and federal laws regarding
fraud and abuse in government funded health programs.  Changes in the law or new
interpretations  for  existing  laws  can  increase  the relative costs of doing
business  and  reduce


                                       36
<PAGE>
the  amount  of  reimbursement  by  government  and  private third-party payors.
Although  we  have  not  experienced  any  difficulties  to  date complying with
applicable  laws, rules or regulations, our failure to obtain, renew or maintain
any  required  regulatory approvals or licenses could have a material adverse on
us  and could prevent us from offering our existing services to patients or from
further  expansion.

Pending  legislation  in  both  the  States  of  New  York  and New Jersey could
substantially  impact  the  conduct  of  our  home  health  care  business  and
potentially adversely affect the cost of operations and available reimbursement.
Under  the  pending  legislation  in New Jersey, home health care aides would be
required to register with various State-funded home care councils; the home care
councils  would  have  the  ability to employ home health care aides and provide
referrals to consumers seeking the services of home health care aides; the State
could assess and collect fees from home health care agencies to pay the costs of
operating the home care councils, and the State could fix minimum wages for home
health care aides, as well as place caps on permissible administrative expenses.
Under  the  pending  legislation in New York, certain reporting requirements, as
well  as  caps on permissible administrative expenses, would be imposed.  If the
pending  legislation  becomes  law  its current form, costs of operations of our
home  health  care  business  in  both  New  York  and  New Jersey are likely to
increase,  and  we would not be able to conduct our home health care business in
New  Jersey  on  a  profitable  basis.

INTENSE COMPETITION COULD RESULT IN LOSS OF CLIENTS, LOSS OF PERSONNEL, REDUCED
REVENUES AND INABILITY TO OPERATE PROFITABLY

The  home  health  care  industry  is  marked  by  low entry costs and is highly
fragmented and competitive.  We compete for personnel with hospitals and nursing
homes,  and we also compete for both personnel and business with other companies
that  provide  home  health  care  services, most of which are large established
companies  with  significantly  greater resources, access to capital and greater
name  recognition  than  we  have.  Our  principal  business competitors include
Gentiva  Health  Services,  Premiere Health Services, National Home Health Care,
Patient  Care, Inc., and Personal Touch Home Care Services, Inc. We also compete
with  many  other  small  temporary  medical  staffing agencies. Competition for
qualified  paraprofessional  personnel  in  the  New  York  Metropolitan area is
intense.  New  York  Health  Care  believes  that, given the increasing level of
demand  for nursing services, significant additional competition can be expected
to  develop  in  the  future.

DEPENDENCE ON MAJOR CUSTOMERS AND REFERRAL SOURCES MAY RESULT IN SUBSTANTIAL
DECLINES IN REVENUES IF CUSTOMERS ARE LOST.

The  development and growth of our home care and nursing businesses depends to a
significant  extent on our ability to establish close working relationships with
hospitals,  clinics, nursing homes, physician groups, HMO's, governmental health
care  agencies  and  other  health  care  providers.  Many  of  our  contractual
arrangements  with customers are renewable annually.  Existing relationships may
not  be  successfully  maintained  and  additional  relationships  may  not  be
successfully  developed  and  maintained in existing and future markets.  Our 10
largest customers accounted for approximately 86.8% of gross revenues during the
year  ended December 31, 2003.  One referral source, New York City Medicaid, was
responsible  for  approximately  50.45% of our gross revenues for the year ended
December  31,  2003.  The  loss  of, or a significant reduction in, referrals by
these  sources, as  well  as  certain other key sources,


                                       37
<PAGE>
would have a material adverse effect on results of operations of our home health
care  business.

LOSS OF KEY PERSONNEL MAY RESULT IN IMPAIRMENT OF THE ABILITY TO DELIVER
SERVICES OR MANAGE OPERATIONS

Our  success in the home health care business to a large extent depends upon the
continued  services of Jerry Braun, our President / Chief Executive Officer, and
Jacob  Rosenberg, our Vice President, Chief Operating / Chief Financial Officer.
The  BioBalance  merger  resulted  in  a  change  in  control, which reduced the
percentage  of  voting  shares held by Messrs. Braun and Rosenberg and triggered
provisions  in  their respective employment agreements which provide significant
monetary  and  other  benefits  to  them.  Although the Company has entered into
employment agreements with Messrs. Braun and Rosenberg which expire in 2009, and
the  Company  is  the  sole  beneficiary  of  a $5,000,000 life insurance policy
covering  Mr.  Braun  and  a  $3,000,000  life  insurance  policy  covering  Mr.
Rosenberg,  the  loss  of the services of either of these executive officers for
any  reason,  including,  but  not  limited,  to a violation of their employment
agreements,  would  damage us. The success of our home health business will also
depend, in part, upon our ability in the future to attract and retain additional
qualified  licensed  health  care, operating, marketing and financial personnel.
Competition  in  the  home  health care industry for such qualified personnel is
often  intense and we may not be able to retain or hire the necessary personnel.

OUR INABILITY TO IDENTIFY SUITABLE LOCATIONS OR PERSONNEL OR TO SECURE FINANCING
MAY IMPAIR FUTURE GROWTH

Our  ability  to  expand  our  home  health care business depends on a number of
factors,  including  the  availability  of  desirable  locations  and  qualified
personnel, the availability of acquisition candidates and our ability to finance
such  expansion.  Our  establishment of additional branch offices and any future
acquisitions  by us may involve the use of cash, debt or equity securities, or a
combination  thereof.  We  may  be  required  to  obtain additional financing to
achieve such objectives.  That financing may not be available, or, if available,
may  be  on unacceptable terms. We are  not experienced in operating health care
businesses  unrelated  to  its  current  businesses  and  we  may  be  unable to
successfully  operate  any  such  unrelated  health  care  business.

RISKS RELATING TO OUR COMMON STOCK

POSSIBLE VOLATILITY OF COMMON STOCK MAY RESULT IN LOSSES TO SHAREHOLDERS

The  trading  price  of  our  common  stock  has  been  subject  to  significant
fluctuations  and,  since  the Merger in January 2003, has ranged from a high of
$4.50  to  a low of $1.96 for the year of 2003. The price of our common stock is
likely  to continue to be affected by various factors, including but not limited
to  the  financial  results  of  the  BioBalance  merger, and the results of our
development  efforts  of  PROBACTRIX(TM)  and  other  products,  variations  in
quarterly  results  of operations, announcements of new contracts or services or
acquisitions  by the Company or its competitors, governmental regulatory action,
general  trends  in  the  industry  and other factors, such as extreme price and
volume  fluctuations  which have been experienced by the securities markets from
time  to  time  in  recent  years.


                                       38
<PAGE>
OUR FAILURE TO SATISFY NASDAQ LISTING STANDARDS COULD RESULT IN REDUCED
LIQUIDITY AND LOWER STOCK PRICE

Our  common  stock  is  listed for trading on the NASDAQ SmallCap Market and the
Boston  Stock  Exchange. In order to qualify for continued listing on the NASDAQ
SmallCap  Market,  we,  among other things, must have $2,500,000 of shareholders
equity  and  a  minimum  bid  price  of  $1.00 per share and comply with certain
non-quantitative criteria established by Nasdaq. If we are unable to satisfy the
requirements  for  quotation  on NASDAQ, it is anticipated that our common stock
would be quoted in the over-the-counter market National Quotation Bureau ("NQB")
"pink  sheets"  or  on  the NASD OTC Electronic Bulletin Board. As a result, the
liquidity  of  the  common  stock  could  be impaired, not only in the number of
shares  which could be bought and sold, but also through delays in the timing of
transactions,  reduction  in  security  analysts'  and news media's coverage and
lower prices for our common stock than might otherwise be attained. In addition,
if  the  common  stock  is  delisted  from  NASDAQ  it  might  be subject to the
low-priced  security  or  so-called  "penny  stock" rules that impose additional
sales  practice requirements on broker-dealers who sell such securities. For any
transaction  involving  a penny stock the rules require, among other things, the
delivery, prior to the transaction, of a disclosure schedule required by the SEC
relating  to  the  penny  stock market. The broker-dealer also must disclose the
commissions  payable to both the broker-dealer and the registered representative
and  current  quotations for the securities. Finally, monthly statements must be
sent  disclosing  recent  price  information  for  the  penny stocks held in the
customer's  account.

In  the  event  our  common  stock were subsequently to be classified as a penny
stock, the market liquidity for the common stock could be severely affected.  In
such  an event, the regulations relating to penny stocks could limit the ability
of  broker  dealers  to  sell  the  common  stock  and,  thus,  the  ability  of
shareholders  to  sell  their  shares  in  the  market.

ISSUANCE  OF  PREFERRED  STOCK  COULD REDUCE THE VALUE OF COMMON STOCK AND COULD
HAVE  ANTI-TAKEOVER  EFFECTS

We  are authorized by our certificate of incorporation to up to 5,000,000 shares
of  preferred stock value, on terms which may be fixed by our board of directors
without  further  shareholder  action.  There are now 590,375 shares of Series A
convertible  preferred  stock  currently  issued  and  outstanding  which can be
converted,  on  a  1-for-2/3rds basis, into shares of common stock. The terms of
any  new  series of preferred stock, which may include priority claims to assets
and  dividends  and  special voting rights, could adversely affect the rights of
holders  of  the common stock. The issuance of an additional series of preferred
stock,  depending upon the rights and preferences of such series, could make the
possible takeover of the Company or the removal of management of New York Health
Care more difficult, discourage hostile bids for control of New York Health Care
in  which shareholders may receive premiums for their shares of common stock, or
otherwise  dilute  the rights of holders of common stock and the market price of
the  common  stock.


ITEM  7A:  QUANTATIVE  AND  QUALITATIVE  DISCLOSURE  ABOUT  MARKET  RISK

       Not applicable.

ITEM  8.   FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

      The  consolidated  financial  statements of the Company, together with the
independent  accountants  report  thereon of Weiser LLP, for the year ended 2003
and  from  Holtz  Rubenstein  for period ending December 31, 2001 and year ended
December 31, 2002 appears herein. See Index to Financial Statements appearing on
page  77.


                                       39
<PAGE>
ITEM  9.   CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON
           ACCOUNTING  AND  FINANCIAL  DISCLOSURE

       None.

ITEM  9A.     CONTROLS  AND  PROCEDURES

As  required  by  Rule  13a-15(b) under the Securities Exchange Act of 1934 (the
"Exchange  Act"),  the  Company's  management,  with  the  participation  of the
Company's  Chief  Executive Officer ("CEO") and Chief Financial Officer ("CFO"),
evaluated  the effectiveness of the Company's disclosure controls and procedures
as  of  the  end  of  the period covered by this report in reaching a reasonable
level  of assurance that the information required to be disclosed by the Company
in  the  reports  that  it  files with the Securities and Exchange Commission is
recorded, processed, summarized and reported within the time period specified in
the  Securities  and  Exchange  Commission's  rules  and  forms. Based upon that
evaluation, the CEO and CFO concluded that the Company's disclosure controls and
procedures  were  effective  as of the end of the period covered by this report.
As  required by Exchange Act Rule 13a-15(d), the Company's management, including
the  Chief  Executive  Officer  and  Chief  Financial Officer, also conducted an
evaluation  of  the  Company's  internal  control  over  financial  reporting to
determine  whether  any  changes  occurred during the fourth fiscal quarter that
have  materially  affected,  or  are reasonably likely to materially affect, the
Company's  internal  control over financial reporting.  Based on that evaluation
the  Company  refined the use of BioBalance's accounting software system to more
accurately reflect the allocation of expenses to individual accounts.  Moreover,
as  a  result  of the evaluation and after taking into account the indictment of
a  former  member  of  management  of,  the  Company's  wholly-owned  subsidiary
BioBalance  during  the fourth fiscal quarter of 2003, authorization for payment
of  BioBalance  invoices  was  transferred to specified officers of the Company.
There  were  no  other  changes  during  the  fourth  fiscal  quarter  of  2003.

     Please  note  that  any  system  of  controls,  however  well  designed and
operated,  can  provide  only  reasonable,  and not absolute, assurance that the
objectives  of  the  system  will be met. In addition, the design of any control
system  is based in part upon certain assumptions about the likelihood of future
events.


                                    PART III

ITEM  10.     DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

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

Name                    Age         Position
-----                   ---         --------

Jerry Braun             46     President, Chief Executive Officer and a Director

Jacob Rosenberg         45     Vice President, Chief Operating Officer,
                               Chief Financial and Accounting Officer,
                               Secretary and a Director

Dennis O'Donnell        48     Director and President and Chief Operating
                               Officer of The BioBalance Corp.

H.  Gene  Berger        63     Director

Fred E. Nussbaum        56     Director


                                       40
<PAGE>
Mordecai H. Dicker      43     Director

Mark Gray               45     Director

      Jerry  Braun  has  been  the  President  and Chief Executive Officer and a
director  of  the  Company  since  its inception in 1983 and was Chief Operating
Officer  of  the  Company  from  1983  to  1995.

      Jacob  Rosenberg,  has  been Secretary and a director of the Company since
its inception in 1983, Vice President and Chief Operating Officer of the Company
since  1995  and  Chief  Financial  Officer  of  the Company since January 2000.

     Dennis  O'Donnell  has  been  a director of the Company since January 2004,
Chief  Operating  Officer  of the Company's BioBalance subsidiary since May 2003
and  President of BioBalance since November 2003. Mr. O'Donnell has more than 20
years  of  general  management, marketing and business development experience in
the  pharmaceutical, consumer healthcare and nutritional industries, principally
with  Wyeth  (formerly  American  Home Products) from 1983 to 2002, including as
manager  of the Wyeth's Respiratory and GI/Topicals Divisions from 1994 to 1996;
Senior  Vice  President  of Global Business Development & Strategic Planning for
Wyeth's  OTC Drug Division from 1996 to 1998 (where he identified drugs, devices
and  medical  foods for potential acquisition); and Executive Vice President and
General  Manager  of  Wyeth's Solgar division, a manufacturer of premium dietary
supplements,  probiotics  and specialty nutritional products. From February 2002
to April 2003, he was a consultant to the pharmaceutical and consumer healthcare
industries.  Mr.  O'Donnell  is a registered pharmacist, with a B.S. in Pharmacy
from  St.  John's  University  and  an  MBA in Marketing & Finance from New York
University's  Stern  School  of  Business.

      H.  Gene Berger has been a director of the Company since 1998. Since 1981,
Mr.  Berger  has been the president of Jay Isle Associates, a consulting firm to
the  health  care  industry.  During  the  period  1969  to 1981, Mr. Berger was
employed  by  Pfizer,  Inc.  Pharmaceutical  Division,  in  various senior level
management  positions.  From 1991 to 1997, Mr. Berger was employed by Transworld
Health  Care,  Inc., a public company, which is a regional provider of alternate
site  health  care services and products, in a number of capacities including as
Executive Vice President, President, Chief Operating Officer and Chief Executive
Officer.  Additionally,  Mr.  Berger  has  been  CEO  and President of six other
companies  in  the  health  care  industry.

      Fred  E.  Nussbaum  has been a director of the Company since January 2004.
Mr.  Nussbaum  is licensed as a certified public accountant in New York and has,
for  more than the past five years, provided accounting and auditing services to
individuals,  partnerships,  corporations  and  not-for-profit  and  charitable
organizations. From 1997 to 1999 Mr. Nussbaum was the Chief Financial Officer of
DEB-EL Foods Corporation, a large producer of eggs and egg-based products in the
Northeast.  Mr.  Nussbaum  is  a  member  of the American Institute of Certified
Public  Accountants  as  well  as the New York State Society of Certified Public
Accountants.  He  has  a  BBA  from  the  Bernard  M. Baruch College of the City
University  of  New  York.

     Mordecai  H.  Dicker has been a director of the Company since January 2004.
From  1998  to  1999, Mr. Dicker was the Company's Program Director, responsible
for payroll, billing,


                                       41
<PAGE>
accounts  receivable  and  cash  receipts.  From  2000  to  2003, Mr. Dicker was
Administrator  of the Sayreville Senior Living Center, Inc., a 230-bed long-term
care  facility.  Since  2003, he has been the Administrator of the Franklin Care
Center,  a  180-bed  long-term  care  facility.


      Mark Gray has been a director of the Company since January 2004. From 1985
to  2000,  Mr.  Gray  was  an independent computer consultant serving insurance,
banking,  technology  and  consumer  goods  corporations  in the development and
management of various computer systems and software. From 2000 to 2003, Mr. Gray
was  the  Director  of  Clinical  Services  for  CATECG  Medical Services, PC, a
provider of mobile diagnostic cardiology and neurology services to hospitals and
other  medical care facilities in the New York metropolitan area. Since 2003, he
has  been  Executive  Vice  President  of  ESF  Marks,  LLC, a computer software
company.  Mr.  Gray has a B.A. in Medical Computer Science from Brooklyn College
of  the  City  University  of  New  York.

     Directors hold office until the next annual meeting of the stockholders and
until  their  successors  have  been duly elected and qualified, or until death,
resignation or removal. Executive officers are elected by the Board of Directors
on  an  annual  basis  and  serve  at  the  discretion  of the Board. All of the
Company's  executive  officers  devote  approximately  90%  of their time to the
business  affairs of the Company. There is no family relationship between any of
the  Company's  directors  or  executive  officers.

AUDIT  COMMITTEE

     The  Board  of  Director has a standing Audit Committee. The members of the
Audit  Committee  are H. Gene Berger, Mordecai Dicker and Fred E. Nussbaum. Fred
E.  Nussbaum  will  serve  as  Chairman  of the Audit Committee and as the audit
committee  financial  expert.  The  Board has determined that each member of the
Audit  Committee,  including the Company's audit committee financial expert , is
"independent,"  as  that  term  is  defined  in  the  applicable  NASDAQ listing
standards  and  SEC  rules.

SECTION  16(A)  COMPLIANCE  REPORTING

      Section  16(a)  of  the  Exchange Act requires the Company's directors and
executive officers and holders of more than 10% of the Company's common stock to
file  reports  with  the  SEC  about  their  ownership of common stock and other
securities  of  the  Company. These persons are required by SEC rules to furnish
the  Company  with  copies  of all Section 16(a) forms they file. The Company is
required  to  identify  anyone  who  filed  a  required report late during 2003.

      Based  solely  on  our  review  of  forms  we  received  and  written
representations  from  reporting  persons stating that they were not required to
file  these  forms,  the  Company  believes, that during 2003, all Section 16(a)
filing  requirements  were  satisfied  on  a  timely  basis.

CODE  OF  ETHICS

     The  Company  has  adopted  a  Code of Ethics for Senior Financial Officers
which  applies


                                       42
<PAGE>
to  the  Company's  Chief  Executive  Officer  and Chief Financial and Principal
Accounting  Officer.  A  copy  of this Code is filed with this report as Exhibit
14.1.



ITEM 11.     EXECUTIVE COMPENSATION

The  following  table  sets forth, for the fiscal years ended December 31, 2001,
2002  and  2003,  the  cash compensation paid by the Company, as well as certain
other  compensation  paid  with  respect to those fiscal years, to the Company's
Chief  Executive  Officer and to each of the three other most highly compensated
executive  officers  of  the  Company and its BioBalance subsidiary, and to Paul
Stark,  who  served  as  President  of BioBalance until November 2003, and whose
total  salary  and  bonuses for the fiscal year 2003, in all capacities in which
served,  was  $100,000  or  more  (collectively,  the  "Named  Officers"):


<TABLE>
<CAPTION>
                                        ANNUAL
                                      COMPENSATION                    LONG-TERM COMPENSATION
                                      ------------                    ----------------------
NAME AND
PRINCIPAL                                                             AWARDS      SECURITIES  PAYOUTS
POSITION                                              OTHER ANNUAL   RESTRICTED  UNDERLYING   LTIP     ALL OTHER
                             YEAR   SALARY     BONUS  COMPENSATION     STOCK     OPTIONS/SARS PAYOUTS  COMPENSATION
                             ($)      ($)       ($)      ($)          AWARDS($)                 (#)        ($)
                           ----------------------------------------------------------------------------------------
<S>                         <C>    <C>        <C>       <C>          <C>               <C>
Jerry Braun (1)
  President and Chief
  Executive Officer          2003  $ 333,872  $ 35,000  $44,085 (1)              200,000 Shares        $412,500 (3)
-------------------------------------------------------------------------------------------------------------------
Jacob Rosenberg (2)
  Chief Operating Officer
  and Chief Financial        2003  $ 257,557  $ 30,000  $46,447 (2)              200,000 Shares        $337,500 (3)
  Officer
-------------------------------------------------------------------------------------------------------------------
Dennis O'Donnell (4)(5)
 President and Chief         2002  $       0  $      0  $     0                                        $      0
Operating Officer of         2003  $ 126,923  $      0  $12,198 (4)              200,000 Shares        $      0
BioBalance
-------------------------------------------------------------------------------------------------------------------
Paul Stark (6)(7)
  President  of              2002  $ 100,000  $      0  $16,267 (6)                                    $      0
  BioBalance                 2003  $ 101,450  $      0  $18,536 (6)              100,000 Shares        $      0
-------------------------------------------------------------------------------------------------------------------
<FN>
(1)   Includes  $31,081  of  medical  insurance  premiums paid on behalf of such
      individual,  $3,004 for automobile and automobile-related costs, including
      insurance,  incurred  on  behalf of such individual and $10,000 in expense
      allowance  for  the  year  ended  2003.

(2)   Includes  $31,081  of  medical  insurance  premiums paid on behalf of such
      individual,  $5,366 for automobile and automobile-related costs, including
      insurance,  incurred  on  behalf of such individual and $10,000 in expense
      allowance for the year ended 2003.

(3)   Change  in  control  payment.  This  change in control took place with the
      merging  of  the  Company  and  BioBalance  on  January  2,  2003.

(4)   Includes  $12,198  of  medical  insurance  premiums paid on behalf of such
      individual  for  the  fiscal  year  2003.

(5)   Dennis  O'Donnell  became  President  of  BioBalance on November 26, 2003.

(6)   Includes  $18,536 and $16,267 of medical insurance premiums paid on behalf
      of  such  individuals  for  the  fiscal  years  2003  and  2002.


                                       43
<PAGE>
(7)   Paul  Stark  resigned as  President  of  BioBalance  on November 20, 2003.
</TABLE>


<TABLE>
<CAPTION>
OPTION/SAR  GRANTS  IN  2003

The  following  table provides certain information with respect to stock options
granted  to  the  Named  Officers.

                                    Individual Grants

----------------------------------------------------------------------------------------

                  Number of      % of Total
                  Securities     Options/SARs
                  Underlying     Granted to
                  Options/SARs   Employees in     Exercise Price       Expiration    Grant Date
Name              Granted        Fiscal Year (1)  Per Share ($/sh)     Date          Present Value(2)
----------------  -------------  ---------------  -------------------  -----------   ----------------
<S>               <C>            <C>              <C>                  <C>            <C>
Jerry Braun       200,000          23.6 %             3.14              03/07/13        $496,000
                   40,000           4.72              3.77              09/26/13        $ 68,800

Jacob Rosenberg   200,000          23.6               3.14              03/07/13        $496,000
                   40,000           4.72              3.77              09/26/13        $ 68,800

Dennis O'Donnell  200,000          23.5               2.48              06/02/13        $ 82,230

Paul Stark(3)     100,000          11.8               3.14              03/07/13        $248,000
----------------------------------------------------------------------------------------
<FN>

(1)  Based  on  a  total of options granted to employees of the Company in 2003,
     including  the  Named  Officers.

(2)  Estimated  fair  value  of  each  option  grant  on  the  date of grant was
     determined  by  use  of  the  Black-Scholes  option  pricing  model.

(3)  The  right  to exercise this option has terminated pursuant to the terms of
     the  Company's  Incentive  Performance  Plan.
</TABLE>


                                       44
<PAGE>
STOCK  OPTION  EXERCISES  AND  YEAR  END  VALUES

The  following  table  sets  forth, for the Named Officers, the number of shares
covered  by  stock  options  as  of  December  31,  2003,  and  the  value  of
"in-the-money"  stock  options, which represents the positive spread between the
exercise  price  of a stock option and the market price of the shares subject to
such  option  on  December  31,  2003.  No  options  were exercised by the Named
Officers  in  2003.

<TABLE>
<CAPTION>
                                                   Number  of
                                                   Securities              Value  of
                                                   Underlying              Unexercised
                                                   Unexercised             In-the-Money
                                                   Options/SARs at         Options/SARs at
                   Shares                          Fiscal Year-End         Fiscal Year-End
                   Acquired                        Exercisable/            Exercisable/
Name               on Exercise   Value Realized    Unexercisable           Unexercisable
----------------  -------------  --------------  ------------------    -------------------------
<S>               <C>            <C>             <C>                   <C>
Jerry Braun                                       62,500/0      Shs    $                    0
                                                  36,666/0      Shs                     7,700
                                                  23,333/0      Shs                    29,400
                                                  33,333/0      Shs                    59,333
                                                  33,333/0      Shs                    56,333
                                                  66,666/0      Shs                   133,999
                                                  66,666/0      Shs                   128,665
                                                  66,666/0      Shs                   124,665
                                                  66,666/0      Shs                   118,665
                                                 200,000/0      Shs                         0
                                                  40,000/0      Shs                         0


Jacob Rosenberg                                   36,666/0      Shs                     7,700
                                                  23,333/0      Shs                    29,400
                                                  33,333/0      Shs                    59,333
                                                  33,333/0      Shs                    56,333
                                                  66,666/0      Shs                   133,999
                                                  66,666/0      Shs                   128,665
                                                  66,666/0      Shs                   124,665
                                                  66,666/0      Shs                   118,665
                                                 200,000/0      Shs                         0
                                                  40,000/0      Shs                         0

Dennis O'Donnell                                 33,333/166,667 Shs              9,333/46,666

Paul Stark                                       100,000/0      Shs                         0
</TABLE>

COMPENSATION  OF  DIRECTORS

     Directors  who are employees of the Company or its BioBalance subsidiary do
not  receive  any additional compensation for their services as directors.  Each
non-employee  director  of  the  Company is paid a fee of $2,000 per month, plus
$1,000  for  each Board meeting attended and $500 for attendance at each meeting
of  a  committee  of  the Board of Directors of which such director is a member.
The  Company  also  reimburses  each director for all expenses of attending such
meetings.

     No  additional  compensation  of  any nature is paid to employee directors.

     The  Company  also  issues  common  stock purchase warrants to non-employee
directors  from  time  to  time  in  recognition  of  their  services.

EMPLOYMENT  AGREEMENTS;  CHANGE  IN  CONTROL  ARRANGEMENTS

      The  Company entered into amended employment agreements with Messrs. Jerry
Braun and Jacob Rosenberg for employment terms that expire on December 26, 2009.

      Mr.  Braun's  amended  agreement provides for his service as President and
Chief Executive Officer in consideration of (i) initial annual base compensation
of  $233,000  and annual salary increases of 10%; (ii) reimbursement of business
expenses;  (iii)  participation  in the


                                       45
<PAGE>
Company's  bonus,  401(k) and stock option plans; (iv) $750 per month automobile
leasing cost allowance and reimbursement of automobile insurance and maintenance
costs;  (v) $10,000 per year allowance for the cost of insurance and other items
(which  has  been in effect since January 2002); and (vi) 48 days of compensated
absences  per  year.

      Mr.  Rosenberg's  employment  agreement  has  the  same  general terms and
conditions  as  Mr.  Braun's, except that he serves as Vice President, Secretary
and  Chief  Operating  Officer,  and  his  initial  annual  base compensation is
approximately  $186,000.


      Each  employment  agreements  provide that if the executive's service as a
member of the Board of Directors of the Company terminates for any reason, other
than  death,  the  executive  and  the  Company  will  enter  into  a consulting
agreement,  commencing  on  the  date of termination, whereby the executive will
agree  to provide consulting services to the Company on an as-needed basis for a
period  of  not  less  than  five years. As compensation for those services, the
executive  will  be  granted an option for 10 years to acquire 500,000 shares of
the  Company's  common  stock at a price per share equal to the closing price of
the Company's common stock on the date of termination. This consulting agreement
also  provides  that  the  Company  will  register  the  shares  of common stock
underlying  the  option  for  sale in public markets no later than 90 days after
termination.

      These  employment agreements also provide additional benefits if a "change
of  control"  of  the  Company  occurs.  A  "change  of control" is deem to have
occurred  if:

      -  the  Company  enters  into an agreement for its merger or consolidation
with  another  corporation  or  for the sale of all or substantially all of it's
assets,  followed by termination of the executive's employment within 12 months;

     -   persons, other than the Company's then current shareholders, acquire
(1)  a  majority  in  book  value of the Company's assets, (2) a majority of its
common  stock,  (3)  the power to designate a majority of the Company's Board of
Directors,  or  (4)  otherwise  acquire  the  ability  to  control the Company's
management  ;  or

      -  any  other  event (or series of events) occurs which, in the opinion of
the  Company's board of directors, will, or is likely to, if carried out, result
in  a  change  of  control  of  the  Company.

      In  the  event  of  a  change  of  control,

      -  the  unexercised  stock options of each executive will immediately vest
and  be  exercisable  in  full;

      -  the  Company  will  pay each executive 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 cost of either maintaining the lease or transferring ownership of
the  automobile  for which the Company had been paying the leasing costs for the
executive,  and

      -  to  the  extent  any payments received by an executive from the Company
subjects  the


                                       46
<PAGE>
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 the executive's
net  after-tax  compensation  is  not  reduced  by  the  excise  tax.

All "change of control" compensation is limited by each employment agreement, to
the  extent  the compensation 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. This change of control took place on
January  2,  2003  when  the  Company  merged  with  BioBalance.

      Messrs.  Braun  and  Rosenberg  also  participate, together with all other
salaried  employees  of the Company's home health care business, in a bonus plan
pursuant  to  which  10%  of the annual pre-tax net income of the Company's home
health  care  business  income  is  contributed  to  a  bonus  pool  which  is
distributable  to  these  employees  in  amounts  determined  by  the  Company's
Compensation  Committee.

Savings  and  Equity  Compensation  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.


                                       47
<PAGE>
Equity  Compensation  Plans

      The  following table summarizes with respect to options and warrants under
the  Company's  equity  compensation  plans  at  December  31,  2003:

<TABLE>
<CAPTION>
                                                                  Number of securities
                      Number of securities  Weighted-average    remaining available for
                       to be issued upon    exercise price of    future issuance under
                          exercise of          outstanding     equity compensation plans
                      outstanding options,  options, warrants    (excluding securities
Plan category         warrants and rights      and rights       reflected in column (a))
--------------------  --------------------  -----------------  --------------------------
<S>                   <C>                   <C>                <C>
Equity compensation              1,515,000               1.93                   3,144,500
plans approved by
security holders(1)

Equity compensation              1.665,651               2.57
plans not approved
by security
holders(2)

Total                            3,180,651
</TABLE>


(1)   Represents  shares  of the Company's common stock issuable pursuant to the
      Company's  Performance  Incentive  Plan,  amended  (the  "Option  Plan").

The  Company's  board  of  directors  and  stockholders approved and adopted the
Option  Plan  in  March 1996.  The Company's stockholders approved amendments to
the  Option  Plan  (previously adopted by the board of directors) in 1998, 1999,
2000  and  2002.  The  Option  Plan is administered by the standing compensation
committee  (the  "Committee") of the board of


                                       48
<PAGE>
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. Options become exercisable in whole or in
part  from  time  to  time as determined by the Committee, but in no event may a
stock  option be exercisable prior to the expiration of six months from the date
of  grant,  unless  the grantee dies or becomes disabled prior to the end of the
period.  Stock  options  have a maximum term of 10 years from the date of grant,
except  that  the  maximum  term  of  an  incentive  stock options granted to an
employee  who,  at  the  date  of  grant,  is  a  holder of more than 10% of the
outstanding  common  stock  (a  "10% holder") may not exceed five years from the
date  of  the  grant.  The  exercise  price  of  an  incentive  stock  option or
nonqualified  option  granted under the Option Plan may not be less than 100% of
the fair market value per share of the common stock at the date of grant, except
that  the  exercise  price of an incentive stock options granted to a 10% holder
may  not  be  less  than  110%  of  the fair market value. The exercise price of
options  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 exercise date.

(2)   Includes  62,500  shares  of  common  stock  issuable  upon  exercise of a
      non-plan  option granted to an executive officer of the Company in 1996 at
      an exercise  price of $4.50 per share which expires in 2006, 67,500 shares
      of common stock issuable upon exercise of warrants granted to non-employee
      directors  at  exercise prices not less than 100% of the fair market value
      per  share  of  the  common  stock  at  the  respective dates of grant and
      generally  expiring  three  to  10  years  from the date of grant, 949,200
      shares  of  common  stock  issuable  upon  exercise  of warrants issued to
      consultants  in  consideration  for  services  performed  or to be for the
      Company  or  BioBalance  at exercise prices not less than 100% of the fair
      market  value  per  share  of  the common stock at the respective dates of
      grant;  and  586,452  shares  of  common  stock  issuable upon exercise of
      non-plan  options  and  warrants  issued  by  the  Company in exchange for
      non-plan  options and warrants issued by BioBalance in connection with the
      Company's  acquisition  of  BioBalance.  Some  of  these  warrants  vest
      immediately  and  some  warrants  vest  monthly.

ITEM 12.  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 March 14, 2003 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:


<TABLE>
<CAPTION>
                              Shares         Percentage
Name and Address of           Beneficially   of Stock
Beneficial Owner              Owned(l)       Outstanding(l)
----------------------------  -------------  ---------------
<S>                           <C>            <C>
Jerry Braun (2)                  1,303,759            5.06%
929 East 28th Street
Brooklyn, NY  11210

Jacob Rosenberg (3)                867,130            3.38%
932 East 29th Street
Brooklyn, NY  11210


                                       49
<PAGE>
Dennis O'Donnell (4)               279,175               *
66 South Stone Hedge Drive
Basking Ridge, NJ 07920

H. Gene Berger (5)                  47,500               *
11 Fenimore Drive
Scotch Plains, NJ 07076

Fred E. Nussbaum                                         *
960 East 27 Street
Brooklyn, NY 11210

Mark Gray                                                *
872 East 27 Street
Brooklyn, NY 11210

Mordecai Dicker                                          *
2923 Bailey Court
Far Rockaway, NY 11691

Pinchas Stefansky (6)            2,024,000            8.11%
Hershey Holdings
Leon House
Secretary's Lane
P.O. Box 450, Gibraltar

Douglas Andrew Ryan (7)          1,800,000            7.21%
Birizma Associates
c/o Tallhurst Ltd.
P.O. Box 795, Gibraltar

Bernard Korolnick (8)            1,729,208            6.93%
KPT Partners
c/o Alton Management
Splelhof 14A, Postach 536
8750 Glarus, Switzerland

Rivvi Rose (9)                   1,950,000            7.81%
Nekavim Investors
1/1 Library Run
P.O. Box 317, Gibraltar

All officers and directors
as a group (7 persons)(1)(2)
(3)(4)(5)                        2,625,289           10.53%
</TABLE>

----------------
*  Less  than  one  percent  (1%).


                                       50
<PAGE>
(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  655,833 shares issuable upon the exercise of stock
      options  granted  to  Mr.  Braun  and  147,594  Shares  issuable  upon the
      conversion  of  shares  of  Class  A  Convertible  Preferred  Stock.

(3)   Includes  a  total  of  593,333 shares issuable upon the exercise of stock
      options  granted  to  Mr.  Rosenberg  and  73,797 Shares issuable upon the
      conversion  of  his  shares  of  Class  A  Convertible  Preferred  Stock.

(4)   Includes  a  total  of  200,000 shares issuable upon the exercise of stock
      options  granted  to  Mr.  O'Donnell.

(5)   Includes 47,500 shares issuable upon the exercise of common stock purchase
      warrants  granted  to  Mr.  Berger.

(6)   All shares are owned of record by Hershey Holdings, of which Mr. Stefansky
      holds  sole  voting  and  investment  power.

(7)   All  shares  are  owned of record by Birizma Associates, of which Mr. Ryan
      holds  sole  voting  and  investment  power.

(8)   All  shares  are  owned  of record by KPT Partners, of which Mr. Korolnick
      holds  sole  voting  and  investment  power.

(9)   All  shares  are  owned  of record by Nekavim Investors, of which Ms. Rose
      holds  sole  voting  and  investment  power.


                                       51
<PAGE>
Transfer  Agent

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


                                       52
<PAGE>
ITEM  13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS.

       None.



ITEM  14.  PRINCIPAL  ACCOUNTING  FEES  AND  SERVICES

The following table presents fees for professional audit services rendered by
Weiser LLP for the audit of the Company's annual financial statements for the
years ended December 31, 2003 and


                                       53
<PAGE>
December  31,  2002  and  fees  billed for other services rendered by Weiser LLP
during  those  periods:

                                              FISCAL 2003  FISCAL 2002
                                             ------------  ------------

          Audit Fees(1)                      $    165,000  $     97,000
          Audit-Related Fees(2)                    95,000        36,000
          Tax  Service Fees(3)                     35,000         6,000
          All Other Fees(4)

----------------

(1)  Audit  Fees  consist  of fees billed for professional services rendered for
     the  audit  of  the  Company's consolidated annual financial statements and
     review  of  the  interim  consolidated  financial  statements  included  in
     quarterly  reports and services that are normally provided by Weiser LLP in
     connection  with  statutory  and  regulatory  filings  or  engagements.

(2)  Audit-Related  Fees  consist  of  fees  billed  for  assurance  and related
     services  that  are  reasonably  related to the performance of the audit or
     review  of  the  Company's  consolidated  financial  statements and are not
     reported  under  "Audit  Fees."

(3)  Tax  Fees consist of fees billed for professional services rendered for tax
     compliance,  tax  advisory  and  tax  planning.  These  services  include
     assistance  regarding  federal,  state  and  local  tax  compliance and tax
     planning.

(4)  No  other fees for professional services rendered to the Company during the
     fiscal  2003  and  2002  were billed by Weiser LLP, other than the services
     reported  above.

  Policy on Audit  Committee  Pre-Approval  of  Audit  and Permissible Non-Audit
Services  of  Independent  Auditor.  The  Audit  Committee has not yet adopted a
formal pre-approval policy for audit and non-audit services. The Audit Committee
pre-approves all audit, audit-related, tax and other services provided by Weiser
LLP  prior  to  the  engagement  of Weiser LLP to provide to these services. The
Chairman  of  the  Audit  Committee  has  been  delegated authority by the Audit
Committee  to  pre-approve  the  engagement  of Weiser LLP when the entire Audit
Committee is unable to do so. The Chairman must report all such pre-approvals to
the  entire  Audit  Committee  at  the  next  committee  meeting.

                                     PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)  The following documents are filed as a part of this report:

     (1)  Consolidated  Financial  Statements: See Index to Financial Statements
          on  page  54 of this report for financial statements and supplementary
          data  filed  as  part  of  this  report.

     (2)  Financial  Statement  Schedules


                                       54
<PAGE>
     Schedule II - Valuation and Qualifying Accounts for each of the years ended
     December  31,  2003,  2002  and  2001.

     (3)  Exhibits:

          The exhibits listed in the accompanying Index to Exhibits are filed or
     incorporated  by  reference  as  part  of  this  report.

(b)  Reports on Form 8-K.

      On  November  20,  2003,  the  Company  filed  a  report on Form 8-K dated
November  20,  2003  that  furnished,  under  Items  7 and 12, the press release
announcing  the  Company's  financial  results  for  the  fiscal  quarter  ended
September  30,  2003,  the Company's consolidated condensed balance sheets as at
December  31,  2002  and  September  30,  2003  and  the  Company's consolidated
condensed  statements  of  operations  for  the three months and the nine months
ended  September  30,  2002  and  2003.

      On  November  21,  2003,  the  Company  filed  a  report on Form 8-K dated
November 20, 2003 that disclosed, under Item 6, the resignation of Paul Stark as
a  director  of  the  Company,  and  furnished  under  Item 7, the press release
announcing  that  resignation.

      On  December  11,  2003,  the  Company  filed  a  report on Form 8-K dated
November  26,  2003  that  furnished,  under  Items  5  and  7,  a press release
disclosing  the  appointment  of  Dennis O'Donnell as president of the Company's
BioBalance  subsidiary;  the  indictment  of  Paul  Stark,  a  former officer of
BioBalance and a former director of the Company, and Yitzchok Grossman, a former
consultant  to  BioBalance, for allegedly conspiring to manipulate the price and
demand  for  the  Company's  common  stock;  and  the Company's initiation of an
independent  internal  investigation.


                                       55
<PAGE>



                           NEW YORK HEALTH CARE, INC.
                                 AND SUBSIDIARIES

                        CONSOLIDATED FINANCIAL STATEMENTS

                               FOR THE YEARS ENDED
                        DECEMBER 31, 2003, 2002 AND 2001



                                       56
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



NEW YORK HEALTH CARE, INC.:


Consolidated Financial Statements:

     Independent Auditors' Report for year ended December 31, 2003         F-1

     Independent Auditors' Report for year and period ended
     December 31, 2002 and 2001                                            F-2

     Consolidated Balance Sheets at December 31, 2003 and 2002             F-3

     Consolidated Statements of Operations for years ended
       December 31, 2003 and 2002 and for the period
       May 21, 2001 (Inception) through December 31, 2001                  F-4

     Consolidated Statements of Shareholders' Equity for the years ended
       December 31, 2003, 2002 and for the period
       May 21, 2001 (Inception) through December 31, 2001                  F-5

     Consolidated Statements of Cash Flows for the years ended
       December 31, 2003, 2002 and for the period
       May 21, 2001 (Inception) through December 31, 2001                  F-6

     Notes to Consolidated Financial Statements                       F-7 F-30

     Financial Statement Schedule:
       Schedule II - Valuation and Qualifying Accounts                    F-31


<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  Subsidiaries  (the "Company") as of December 31, 2003, and the
related  consolidated  statements  of  operations,  equity  and  cash flows, and
consolidated financial statement Schedule II (Valuation and Qualifying Accounts)
for  the  year  then  ended.  These financial statements and financial statement
schedule are the responsibility of the Company's management.  Our responsibility
is  to  express an opinion on these financial statements and financial statement
schedule  based  on  our  audit.

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

In  our  opinion,  the financial statements referred to above present fairly, in
all  material  respects,  the consolidated financial position of New York Health
Care,  Inc.  and  Subsidiaries  as  of  December  31, 2003, and the consolidated
results  of  their  operations  and their cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.  In addition, in our opinion, the financial statement schedule referred
to above, when considered in relation to the basic financial statements taken as
a  whole, presents fairly, in all material respects, the information required to
be  included  therein.

See  Note  2  "Recent  Developments"  for  information  concerning  actions  by
regulatory  authorities.



                                       Weiser  LLP
                                       Certified  Public  Accountants



New  York,  NY
March  8, 2004, except for Note 2 "Recent Developments"
  and the third paragraph of Note 6, which are as of
  March  29,  2004


                                      F-1
<PAGE>
                          Independent Auditors' Report
                          ----------------------------


Board of Directors and Stockholders
New York Health Care, Inc.


We  have  audited  the  accompanying balance sheet of New York Health Care, Inc.
(formerly  The  BioBalance Corporation) as of December 31, 2002, and the related
statements  of  operations,  stockholders'  equity and cash flows, and financial
statement  Schedule  II  (Valuation  and Qualifying Accounts) for the year ended
December  31,  2002 and the period May 21, 2001 (inception) through December 31,
2001.  These  financial  statements  and  financial  statement  schedule are the
responsibility of the Company's management.  Our responsibility is to express an
opinion  on these financial statements and financial statement schedule 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.
(formerly  The  BioBalance Corporation) as of December 31, 2002, and the results
of  its  operations  and its cash flows for the year ended December 31, 2002 and
the  period  May  21,  2001 (inception) through December 31, 2001, in conformity
with  accounting  principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule referred to above,
when  considered in relation to the basic financial statements taken as a whole,
presents  fairly,  in  all  material  respects,  the  information required to be
included  therein.





HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
March 4, 2003


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                        NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                                CONSOLIDATED BALANCE SHEETS
                                          ASSETS


                                                                       DECEMBER 31,
                                                               ---------------------------
                                                                   2003           2002
                                                               -------------  ------------
<S>                                                            <C>            <C>
Current assets:
   Cash and cash equivalents                                   $  7,337,896   $ 2,625,378
   Restricted cash                                                        -       100,000
   Due from lending institution                                     208,721             -
   Accounts receivable, net of allowance for uncollectible        6,577,283             -
      amounts of $397,000
   Subscriptions receivable                                               -       290,000
   Unbilled services                                                100,114             -
   Prepaid expenses and other current assets                        319,195        36,342
                                                               -------------  ------------
            Total current assets                                 14,543,209     3,051,720

   Property and equipment, net                                      145,898             -
   Goodwill, net                                                    900,587             -
   Other intangible assets, net                                   5,971,622     1,936,033
   Deferred merger costs                                                  -       248,363
   Other assets                                                      67,652        23,333
                                                               -------------  ------------
            Total assets                                       $ 21,628,968   $ 5,259,449
                                                               =============  ============


                            LIABILITIES AND SHAREHOLDERS' EQUITY

   Current liabilities:
      Accrued payroll                                          $  1,786,044   $   120,000
      Accounts payable and accrued expenses                       5,849,732       229,182
      Due to HRA                                                  3,756,507             -
      Due to related parties                                      1,190,526             -
      Income taxes payable                                           24,394             -
                                                               -------------  ------------
            Total current liabilities                            12,607,203       349,182
                                                               -------------  ------------

   Commitment and contingencies

   Shareholders' equity:
      Preferred stock, $.01 par value, 5,000,000 shares
        authorized; Class A Preferred, 590,375 authorized,
        issued and outstanding                                        5,904             -
      Common stock, $.01 par value, 100,000,000 shares
        authorized; 24,943,821 shares issued and 24,939,776
        outstanding as of December 31, 2003; 50,000,000 shares
        authorized; 21,116,494 shares issued and outstanding
        as of December 31, 2002                                     249,438       211,165
      Additional paid-in capital                                 32,679,292     6,550,328
      Accumulated Deficit                                       (23,903,396)   (1,851,226)
      Less: Treasury stock (4,045 common shares at cost)             (9,473)            -
                                                               -------------  ------------
            Total shareholders' equity                            9,021,765     4,910,267
                                                               -------------  ------------
            Total liabilities and shareholders' equity         $ 21,628,968   $ 5,259,449
                                                               =============  ============
</TABLE>

  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
                                  STATEMENTS.
THE ABOVE STATEMENTS GIVE RETROACTIVE EFFECT TO CHANGE IN PAR VALUE FROM $.0001
                        TO $.01, DUE TO REVERSE MERGER.


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                       NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                             Period
                                                                           May 21, 2001
                                                                           (Inception)
                                            Year Ended      Year Ended       Through
                                           December 31,    December 31,    December 31,
                                               2003            2002            2001
                                          --------------  --------------  --------------
<S>                                       <C>             <C>             <C>
Net patient service revenue               $  45,060,449   $           -   $           -
                                          --------------  --------------  --------------

Expenses:
   Professional care of patients             36,106,721               -               -
                                          --------------  --------------  --------------

   Organization costs                                 -               -          32,500
                                          --------------  --------------  --------------
   General and administrative
      (excluding noncash compensation)        9,941,923         810,427         197,046
   Noncash compensation                       1,307,119          19,414          64,332
                                          --------------  --------------  --------------

      Total general and
      administrative expenses                11,249,042         829,841         261,378
                                          --------------  --------------  --------------

   Product development (excluding
    Noncash compensation)                       956,262         354,616          71,291
   Noncash compensation                         284,340               -               -
                                          --------------  --------------  --------------

      Total product development               1,240,602               -               -
                                          --------------  --------------  --------------

   Goodwill impairment                       17,869,339               -               -
   Bad debts expense                             50,250               -               -
   Depreciation and amortization                606,747         214,600          87,000
                                          --------------  --------------  --------------

      Total operating expenses               67,122,701       1,399,057         452,169
                                          --------------  --------------  --------------


   Loss from operations                     (22,062,252)     (1,399,057)       (452,169)
                                          --------------  --------------  --------------

   Non-operating income (expenses)
      Interest income                            51,255               -               -
      Interest expense                           (2,173)              -               -
                                          --------------  --------------  --------------
   Non-operating income (expenses), net          49,082               -               -
                                          --------------  --------------  --------------

Loss before provision for
   income taxes                             (22,013,170)     (1,399,057)       (452,169)
                                          --------------  --------------  --------------

Provision for income taxes:
   Current                                       39,000               -               -
   Deferred                                           -               -               -
                                          --------------  --------------  --------------


Net loss                                  $ (22,052,170)  $  (1,399,057)  $    (452,169)
                                          ==============  ==============  ==============


Basic and diluted loss per share          $       (0.91)  $       (0.07)  $       (0.03)
                                          --------------  --------------  --------------


Weighted and diluted average
shares outstanding                           24,283,907      20,562,131      17,574,891
                                          ==============  ==============  ==============
</TABLE>

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


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                        NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                   FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001

                                                   Common Stock       Preferred Stock    Additional      Treasury Stock
                                                ---------------------  ----------------  ------------  -------------------
                                                                                          Paid-in
                                                  Shares     Amount    Shares   Amount     Capital      Shares    Amount
                                                ----------  ---------  -------  -------  ------------  --------  ---------
<S>                                             <C>         <C>        <C>      <C>      <C>           <C>       <C>

Balance at May 21, 2001                                  -  $       -        -  $     -  $         -         -   $      -

Common stock issued to founders
and investors for cash                          18,120,667    181,207        -        -    1,506,896         -          -

Common stock issued for services                   590,000      5,900        -        -       70,600         -          -

Common stock issued for
asset acquisition                                  990,000      9,900        -        -    1,475,100         -          -

Amortization of unearned compensation                    -          -        -        -        4,332         -          -

Net loss                                                 -          -        -        -            -         -          -
                                                ----------  ---------  -------  -------  ------------  --------  ---------

BALANCE AT DECEMBER 31, 2001                    19,700,667    197,007        -        -    3,056,928         -          -

Common stock issued for cash                     1,415,827     14,158        -        -    3,473,986         -          -

Amortization of unearned compensation                    -          -        -        -       19,414         -          -

Net loss                                                 -          -        -        -            -         -          -
                                                ----------  ---------  -------  -------  ------------  --------  ---------

BALANCE AT DECEMBER 31, 2002                    21,116,494    211,165        -        -    6,550,328         -          -

Common stock issued for cash, net                  327,327      3,273        -        -    1,010,535         -          -

Reverse acquisition on January 2, 2003           2,500,000     25,000  590,375    5,904   19,940,579    24,846    (31,483)

Revaluation of options/warrants
as part of reverse acquisition                           -          -        -        -      721,100         -          -

Common stock issued for the purchase of
intangible assets on August 20, 2003             1,000,000     10,000        -        -    3,590,000         -          -

Issuance of treasury stock (during Sept. 2003)
pursuant to the exercise of options at an
average exercise price of $.86                           -          -        -        -       (3,969)  (20,001)    21,170

Issuance of treasury stock (during Oct. 2003)
pursuant to the exercise of options at an
average price of $1.50                                   -          -        -        -          360      (800)       840

Warrants earned for service                              -          -        -        -      870,359         -          -

Net loss                                                 -          -        -        -            -         -          -
                                                ----------  ---------  -------  -------  ------------  --------  ---------
BALANCE AT DECEMBER 31, 2003                    24,943,821  $ 249,438  590,375  $ 5,904  $32,679,292     4,045   $ (9,473)
                                                ==========  =========  =======  =======  ============  ========  =========


                                                                  Total
                                                 Accumulated   Shareholders'
                                                   Deficit        Equity
                                                -------------  -------------
<S>                                             <C>            <C>
Balance at May 21, 2001                         $          -   $          -

Common stock issued to founders
and investors for cash                                     -      1,688,103

Common stock issued for services                           -         76,500

Common stock issued for
asset acquisition                                          -      1,485,000

Amortization of unearned compensation                      -          4,332

Net loss                                            (452,169)      (452,169)
                                                -------------  -------------

BALANCE AT DECEMBER 31, 2001                        (452,169)     2,801,766

Common stock issued for cash                               -      3,488,144

Amortization of unearned compensation                      -         19,414

Net loss                                          (1,399,057)    (1,399,057)
                                                -------------  -------------

BALANCE AT DECEMBER 31, 2002                      (1,851,226)     4,910,267

Common stock issued for cash, net                          -      1,013,808

Reverse acquisition on January 2, 2003                     -     19,940,000

Revaluation of options/warrants
as part of reverse acquisition                             -        721,100

Common stock issued for the purchase of
intangibles assets on August 20, 2003                      -      3,600,000

Issuance of treasury stock (during Sept. 2003)
pursuant to the exercise of options at an
average exercise price of $.86                             -         17,201

Issuance of treasury stock (during Oct. 2003)
pursuant to the exercise of options at an
average price of $1.50                                     -          1,200

Warrants earned for service                                -        870,359

Net loss                                         (22,052,170)   (22,052,170)
                                                -------------  -------------
BALANCE AT DECEMBER 31, 2003                    $(23,903,396)  $  9,021,765
                                                =============  =============
</TABLE>

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

THE ABOVE STATEMENTS GIVE RETROACTIVE EFFECT TO CHANGE IN PAR VALUE FROM $.0001
                        TO $.01, DUE TO REVERSE MERGER.


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                  NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                                     CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                                                    Period
                                                                                                  May 21, 2001
                                                                                                  (Inception)
                                                                   Year Ended      Year Ended       Through
                                                                  December 31,    December 31,    December 31,
                                                                      2003            2002            2001
                                                                 --------------  --------------  --------------
<S>                                                              <C>             <C>             <C>
Cash flows from operating activities:
   Net loss                                                      $ (22,052,170)  $  (1,399,057)  $    (452,169)
   Adjustments to reconcile net loss to net cash
       provided by (used in) operating activities:
         Goodwill impairment                                        17,869,339               -               -
         Noncash compensation                                        1,591,459          19,414          64,332
         Depreciation and amortization                                 606,747         214,600          87,000
         Bad debts expense                                              50,250               -               -
         Changes in operating assets and liabilities
         net of effects of purchase of subsidiary:
            Increase in accounts receivable and unbilled
             Services                                               (1,352,003)              -               -
            Increase in prepaid expenses and other current
             Assets                                                    (98,231)        (25,842)        (10,500)
            Increase in due from lending institution                   (55,896)              -               -
            Decrease in other assets                                     8,927               -               -
            Increase in accrued payroll                                588,269         120,000               -
            Increase in accounts payable and accrued expenses        1,977,474         112,112         117,070
            Increase in due to HRA                                   1,824,710               -               -
            Decrease in due to related parties                       (750,000)               -               -
            Increase in income tax payable                              24,394               -               -
                                                                 --------------  --------------  --------------
               Net cash provided by (used in)
                       operating activities                            233,269        (958,773)       (194,267)
                                                                 --------------  --------------  --------------

Cash flows from investing activities:
         Net cash acquired from purchase of subsidiary               3,548,658               -               -
         Acquisition of property and equipment                         (50,724)              -               -
         Acquisition of intangible assets                             (422,613)       (148,723)       (587,410)
         Increase in other assets                                            -         (13,333)        (10,000)
         Decrease (increase) in restricted cash                        100,000        (100,000)              -
         Increase in deferred merger cost                                    -        (248,363)              -
                                                                 --------------  --------------  --------------
   Net cash provided by (used in) investing activities               3,175,321        (510,419)       (597,410)
                                                                 --------------  --------------  --------------

Cash flows from financing activities:
         Exercise of options                                            18,401               -               -
         Payments on lease obligation payable                          (18,281)              -               -
         Proceeds of issuance of common stock                        1,013,808       3,488,144       1,688,103
         Decrease (increase) in subscription receivable                290,000        (290,000)              -
                                                                 --------------  --------------  --------------
  Net cash provided by financing activities                          1,303,928       3,198,144       1,688,103
                                                                 --------------  --------------  --------------

  Net increase in cash and cash equivalents                          4,712,518       1,728,952         896,426

  Cash and cash equivalents at beginning of period                   2,625,378         896,426               -
                                                                 --------------  --------------  --------------

  Cash and cash equivalents at end of period                     $   7,337,896   $   2,625,378   $     896,426
                                                                 ==============  ==============  ==============
</TABLE>

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


                                      F-6
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  1  -  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

ORGANIZATION  AND  BASIS  OF  CONSOLIDATION:

New  York  Health  Care,  Inc.  ("New York Health Care") was initially organized
under  the laws of the State of New York in 1983.  New York Health Care provides
services  of  registered nurses and paraprofessionals to patients throughout New
York  and  New  Jersey.  The  BioBalance  Corporation, ("BioBalance") a Delaware
Corporation,  was  formed in May 2001.  BioBalance is a specialty pharmaceutical
company  focused  on  the  development  of proprietary biotherapeutic agents for
various  gastrointestinal  diseases  that  are  poorly  addressed  by  current
therapies.  BioBalance  has  completed  the tests and panel review necessary for
its  product  to  be  established  as  generally regarded as safe ("GRAS") and a
medical  food  under  regulations  of  the Food and Drug Administration ("FDA").
However,  there  is  no  assurance  that  the  FDA  will not contest the status.
BioBalance  is  also  exploring  a  formulation of its product as a prescription
drug.  There can be no assurance that BioBalance will be successful in marketing
any  such  products.  The  consolidated  entity, collectively referred to as the
"Company",  includes  BioBalance  and  New York Health Care, Inc. and its wholly
owned  subsidiary  NYHC  Newco  Paxxon,  Inc.  D/B/A  Helping  Hands  Healthcare
("Helping  Hands").  All significant intercompany balances and transactions have
been  eliminated.

On  January  2,  2003, BioBalance acquired New York Health Care in a transaction
accounted  for  as  a  reverse  acquisition  (See  Note  2).  The  accompanying
consolidated  financial statements of the Company reflect the historical results
of  the  predecessor  entity,  BioBalance,  prior  to  January  2,  2003 and the
consolidated  results of operations of the Company subsequent to the acquisition
date  of  January  2,  2003.

The  common  stock  and  per  share  information  in  the consolidated financial
statements  and related notes have been retroactively adjusted to give effect to
the  reverse  acquisition  on  January  2,  2003.

In January 2003, the Company amended its certificate of incorporation to provide
for an increase in the Company's number of authorized common stock and preferred
stock. The authorized number of common stock increased from 50,000,000 shares to
a  total  of  100,000,000  shares.  The  authorized  number  of  preferred stock
increased  from  2,000,000 shares to a total of 5,000,000 shares.

RECENT  DEVELOPMENTS

On  November  19,  2003,  the Company learned that Paul Stark, a director of the
Company and the president of Bio Balance, and Yitzchok Grossman, a consultant to
The  BioBalance  Corp.,  a  subsidiary  of the Company, had been indicted by the
United  States  Attorney' for the Southern District of New York. A press release
received  by  Company  relating  to  the indictment did not describe the charges
against Messrs. Stark or Grossman. On November 20, at the Company's request, Mr.
Stark  resigned  from all positions with the Company and BioBalance. On November
24,  the  Company  obtained  a  copy  of the indictment and, on November 25, the
Company's  board  of  directors authorized an independent internal investigation
regarding  the  indictment  of  Messrs.  Stark  and  Grossman.


                                      F-7
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The  indictment alleges that from February through April 2003, Messrs. Stark and
Grossman  conspired  to manipulate the price and demand for the Company's common
stock  by  offering  to  pay a bribe, consisting of warrants to purchase 500,000
shares  of  the Company's common stock, to an undercover FBI agent posing as the
manager  of  a  hedge  fund,  but  does not allege any actual manipulation.  The
indictment  alleges  that  Messrs.  Stark  and Mr. Grossman caused the Company's
board  of  directors  to  approve  issuance  of  the  warrants by disguising the
warrants  as  compensation  to  an  outside  consultant to be engaged to perform
financial  advisory  services  for  BioBalance.

On  November 25,the board also authorized suspension of the warrants referred to
in  the indictment and a stock option to purchase 100,000 shares of common stock
granted  to  Mr.  Stark  and  the  termination of a consulting agreement between
BioBalance and Emerald Asset Management, Inc., a company owned and controlled by
Mr.  Grossman,  and  appointed  Dennis  O'Donnell,  BioBalance's Chief Operating
Officer,  as  President  of  BioBalance.

On November 26, 2003, Listing Investigations, a division of the The Nasdaq Stock
Market,  Inc.("Nasdaq"),  requested  the  Company  to  furnish  documents  and
information  relating  to  the indictment of Mr. Stark.  Thereafter, independent
legal  counsel  engaged  by  the  Company  to conduct the internal investigation
contacted  Listing  Investigations  and  provided  documents  and  information
responsive  to  the  request.

In  January  2004,  Nasdaq notified the Company that the Listing Investigations'
staff  had  determined that the Company no longer qualified for inclusion in the
Nasdaq  Stock Market based on public interest concerns and the Company's failure
to  timely  hold  its  2002  annual  stockholders  in compliance with the Nasdaq
Marketplace  Rules.  The  Company  responded to the notification by requesting a
hearing  before  a  Nasdaq  Listing  Qualifications  Panel  to  review the staff
determination.  The  hearing  before the Nasdaq Listing Qualifications Panel was
held  on February 19, 2004 and, as of March 29, 2004 the Company is awaiting the
Panel's  decision. See Part II, Item 7, "Management's Discussion and Analysis of
Financial  Condition  and  Results  of  Operation-  Risks and Uncertainties- Our
Failure  to  Satisfy  Nasdaq Listing Standards Could Result in Reduced Liquidity
and  Lower  Stock  Price."

The  Company's  independent  internal  investigation  found no evidence that any
current  officer,  director  or employee of the Company or BioBalance knew of or
participated in any alleged attempt to manipulate the Company's common stock and
the  investigation  concluded  that  the  Company  responded  properly  to  the
indictment  based  upon  the  information available to the Company at that time.

In January 2004, in response to the recommendations of the Company's independent
counsel,  the  board  adopted  a  Code of Business Conduct and Ethics; a Code of
Ethics  for  Senior Financial Officers; Insider Trading Policies; Communications
and Whistle Blower Policies, a Corporate Governance/Nominating Committee Charter
and  amended the charters of its standing audit and compensation committees. The
board  also appointed four additional directors, including three new independent
directors,  set the agenda for the Shareholder meeting, and scheduled the fiscal
2002  annual  stockholders  meeting,  and  nominated a slate of seven directors,
including  a majority of independent directors, for election at the meeting, and
nominated  a  slate  of  seven  directors,  including  a majority of independent
directors  for  election  by the stockholders at the annual meeting. The Company
held  its  2002  annual  stockholders meeting on February 13, 2004, at which the
stockholders  elected  the  seven  directors and ratified the appointment of the
Weiser  LLP  as  the  Company's  auditors.

The  Company  is currently treating the warrants referenced to in the indictment
as  being  in  effect  in  accordance  with  their  terms.


                                      F-8
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

ACCOUNTS  RECEIVABLE:

Accounts  receivable  consist  of trade receivables recorded at original invoice
amount,  less an estimated allowance for uncollectible accounts. Trade credit is
generally  extended  on  a  short-term basis; thus trade receivables do not bear
interest,  although a finance charge may be applied to receivables that are past
due.  Trade  receivables  are periodically evaluated for collectibility based on
past  credit  history  with  customers  and  their  current financial condition.
Changes in the estimated collectibility of trade receivables are recorded in the
results  of  operations  for  the period in which the estimate is revised. Trade
receivables  that  are deemed uncollectible are offset against the allowance for
uncollectible  accounts.  The  Company generally does not require collateral for
trade  receivables.

REVENUE  RECOGNITION:

The  Company  recognizes  patient  service  revenue  on  the  date  services are
rendered. Unbilled services represent amounts due for services rendered that had
not  been  billed  at  the end of each period because authorization had not been
received  from  the  referral  source.

PROPERTY AND EQUIPMENT:

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

     Machinery and equipment               3-5 years
     Furniture and fixtures                5-7 years
     Leasehold improvements                Life of lease


GOODWILL AND OTHER INTANGIBLE ASSETS:

Prior  to  January 1, 2002, the Company amortized goodwill and intangible assets
using  the  straight-line  method  over  periods of up to 10 years. Statement of
Financial Accounting Standards (SFAS 142) "Goodwill and other Intangible Assets"
requires  that  goodwill  and  intangible  assets having indefinite lives not be
amortized,  but  instead  be tested for impairment at least annually. Intangible
assets  determined  to  have  definite  lives are amortized over their remaining
useful  lives.


                                      F-9
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INCOME TAXES:

The Company used 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.

Long-Lived Assets:

Long-lived assets, such as intangible assets, furniture, equipment and leasehold
improvements,  are  evaluated  for  impairment  when  events  or  changes  in
circumstances  indicate  that  the  carrying  amount  of  the  assets may not be
recoverable  through  estimated  undiscounted  future cash flows from the use of
these  assets.  When  any  such  impairment  exists,  the related assets will be
written  down  to  fair  value.

CASH EQUIVALENTS:

The Company considers all highly liquid investments with maturities of three
months or less when purchased to be cash equivalents.

STOCK BASED COMPENSATION:

The Company uses the intrinsic-value method of accounting for stock-based awards
granted to employees. See Note 10 for pro forma information on the impact of the
fair-value  method  of  accounting  for stock options. The Company uses the fair
value method of accounting for warrants granted to consultants for services.

LOSS  PER  SHARE:

Basic  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.

Diluted  earnings  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. Due to
losses during the years ended December 31, 2003, 2002, and 2001 potential common
stock  attributable  to  options,  warrants  and  convertible  preferred  stock
outstanding  of  3,649,234 for 2003, 538,066 for 2002 and 453,900 for 2001, were
not  included in the computation of diluted earnings per share, because to do so
would  be  antidilutive.


                                      F-10
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


RECENT ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2002, the FASB issued Interpretation No. 45, "Guarantor's Accounting
and  Disclosure  Requirements  for  Guarantees, including Indirect Guarantees of
Indebtedness of Others," which expands previously issued accounting guidance and
disclosure  requirements for certain guarantees.  The Interpretation requires an
entity  to  recognize  an  initial liability for the fair value of an obligation
assumed  by  issuing  a  guarantee.   The  provision for initial recognition and
measurement  of  the  liability  will  be  applied  on  a  prospective  basis to
guarantees issued or modified after December 31, 2002.   This Interpretation did
not  have  a material impact on the Company's consolidated financial position or
results  of  operations.

In  January  2003,  the  FASB  issued  Interpretation  No.  46 "Consolidation of
Variable  Interest  Entities",  which  clarifies  the  application of Accounting
Research Bulletin No. 51, "Consolidated Financial Statements." Interpretation 46
requires  certain  variable  interest entities to be consolidated by the primary
beneficiary  of the entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not provide sufficient
equity to support its activities. In December 2003, the FASB concluded to revise
certain elements of FIN 46. The FASB also modified the effective date of FIN 46.
FIN 46 is to be applied for registrants who file under Regulation S-X in periods
ending  after March 15, 2004. The Company is currently assessing the application
of  FIN 46 on its financial statements.

In  May  2003, the FASB issued SFAS No.  150,  "Accounting for Certain Financial
Instruments  with  Characteristics  of  both  Liabilities and Equity" ("SFAS No.
150").  SFAS  No.  150  establishes  standards  for how an issuer classifies and
measures  certain financial instruments with characteristics of both liabilities
and  equity.  The  Standard  requires  that  an  issuer  classify  a  financial
instrument  that  is  within  its  scope  as  a  liability  (or an asset in some
circumstances).  SFAS  No.  150  is  effective for financial instruments entered
into or modified after May 31, 2003, and otherwise is effective at the beginning
of  the first interim period beginning after June 15, 2003, except for mandatory
redeemable financial instruments of nonpublic entities. The adoption of SFAS No.
150  has  not had and is not expected to have a material impact on the Company's
consolidated  financial  position  or  results  of  operations.


NOTE  2  -  ACQUISITION  OF  NEW  YORK  HEALTH CARE, INC. AND PRIVATE PLACEMENT:

On  January 2, 2003, BioBalance consummated a business combination with New York
Health Care. As a result of the merger, BioBalance shareholders exchanged all of
their BioBalance shares for 21,443,821 shares of common stock of New York Health
Care.  New York Health Care effectuated a one and one-half for one reverse stock
split simultaneously with the merger. Because the former BioBalance stockholders
own  a majority of the common stock (89.7%) of the merged company, BioBalance is
considered  to be the accounting acquirer in the transaction. The acquisition of
New  York  Health  Care  provides  BioBalance  with  access to the public equity
markets  through  New  York Health Care, which would otherwise be unavailable to
BioBalance.


                                      F-11
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The  purchase  price  of  the acquisition was as follows (rounded to the nearest
thousand):

Value  of  New  York  Health  Care  common  stock                    $13,100,000
Value  of  New  York  Health  Care  preferred  stock                   1,890,000
Value  of  New  York  Health  Care  options/warrants                   4,950,000
BioBalance's  transaction  costs                                         390,000
                                                                     -----------

Total  purchase  price                                               $20,330,000
                                                                     ===========

Common  stock  valued at approximately $13.1 million is based on New York Health
Care's  common stock outstanding at January 2, 2003, at an average closing price
for  a  six  day  period  ended  July 24, 2002 ($5.30) (measurement date) (after
giving effect to the one and one half for one reverse stock split).

The  value  of  the  preferred stock was calculated using the common stock price
less a 10% discount which reflects the limited marketability of the common stock
into  which  the preferred stock is convertible.  The fair value of $4.9 million
of  the  New  York  Health  Care  options/warrants  was  determined  using  the
Black-Scholes  valuation  model.  To  determine  the  fair  value  of  these
options/warrants,  the  following  assumptions were used: expected volatility of
122%, risk-free interest rates ranging from 1.62% to 4.55%, and expected life of
approximately  4.95  years.

As  part of the merger, outstanding BioBalance options/warrants (586,452 shares)
became exercisable for New York Health Care's common stock. Compensation expense
of  $721,100  was recorded on January 2, 2003 for the increase in the fair value
of  the  vested  BioBalance  options/warrants  as  a  result  of the merger. The
unvested  options/warrants  will  be remeasured at the fair value on the date of
vesting  and  recorded  as  compensation expense, which was $33,928 for the year
ended  December  31,  2003.

As  part  of their employment agreements, if the two officers/directors from New
York  Health  Care  are  terminated  from  the  Board  of Directors prior to the
expiration  of  their  employment  agreements,  they  will enter into consulting
agreements  with the Company for a period of not less than five years commencing
with  the date of termination. As compensation, the Company will issue an option
to  each  officer/director to acquire 500,000 shares of the Company common stock
at  the  fair  market  value  on  the  date  of  termination.  These options are
contingent  upon future services and will be recorded under Emerging Issues Task
Force  (EITF)  96-18. Accounting for Equity Instruments that are issued to other
than  employees  for acquiring or in conjunction with selling goods or services.
In addition, the agreements required a payment to them if a change in control of
New York Health Care occurred. This amounted to $1,940,526 and was recorded as a
liability in due to related parties in the net assets of New York Health Care on
January  2,  2003.  As of December 31, 2003, this amounted to $1,190,526. During
The  year ended December 31, 2003 payments of $750,000 were made related to this
obligation.

Under  the  purchase method of accounting, the total estimated purchase price as
detailed  above  was  allocated  to  New  York  Health  Care's  net tangible and
intangible  assets  based  on  their  fair  values  as of January 2, 2003.    At
January  2, 2003, New York Health Care's tangible assets and liabilities at fair
value  were  as  follows  (rounded  to  the  nearest  thousand):


                                      F-12
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     Cash                                                     $3,549,000
     Due  from  lending  institution                             153,000
     Accounts  receivable                                      5,280,000
     Unbilled  services                                           96,000
     Prepaid  expenses  and  other  current  assets              185,000
     Property  and  equipment                                    225,000
     Other  assets                                                53,000
     Accrued  payroll                                         (1,198,000)
     Current  portion  of  lease  obligation                     (18,000)
     Accounts  payable  and  accrued  expenses                (3,382,000)
     Due  to  related  parties                                (1,941,000)
     Due  to  HRA                                             (1,932,000)
                                                              -----------

                                                              $1,070,000
                                                              ==========

Based  on  the  independent  valuation  prepared using estimates and assumptions
provided  by  management,  the  total  purchase  price  of  $20,330,000 has been
allocated  as  follows:

Purchase  price  allocation:

     Net  tangible  assets  of  New  York  Health  Care       $ 1,070,000
     Goodwill                                                  18,770,000
     Customer  base                                               390,000
     Patient  list                                                100,000
                                                              -----------

                                                              $20,330,000
                                                              ===========

The  following  unaudited  supplemental  pro  forma  information is presented to
illustrate  the  effects  of the acquisition on the historical operating results
for  the year ended December 31, 2002, as if the acquisition had occurred at the
beginning  of  that  period.  Since the acquisition occurred on January 2, 2003,
there  is no difference in the pro forma information for the year ended December
31,  2003.

                                                              Year Ended
                                                              December 31,
                                                                  2002
                                                              ------------
     Net revenue                                              $38,880,477
     Net loss for the period                                  $(1,020,689)
     Net loss per share                                       $     (0.05)


Private  Placement:

On  January  2, 2003, BioBalance completed a private placement of 327,327 shares
of its common stock.  The shares were offered to accredited investors at a price
of  approximately $3.27 per share for aggregate gross proceeds of $1,072,000 and
net  proceeds  of  $1,013,808.


                                      F-13
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  3  -  PROPERTY  AND  EQUIPMENT:

Property and equipment at cost consists of the following at December 31:

                                                         2003         2002
                                                       --------     -------
     Machinery and equipment                           $133,161     $     -
     Furniture and fixtures                              87,536           -
     Leasehold improvements                              54,033           -
                                                       --------     -------
                                                        274,730           -
Less accumulated depreciation and amortization          128,832           -
                                                       --------     -------
                                                       $145,898     $     -
                                                       ========     =======


NOTE  4  -  GOODWILL  AND  INTANGIBLE  ASSETS:

As  a  result  of  the  merger,  the  Company  had  recognized  goodwill  on the
transaction.  The  goodwill is associated with the home care business and on the
date  of the merger, the Company determined that the goodwill was impaired.  The
indicator  leading to an impairment was the fact that, based on the current home
health  care market, the home health care business could not be sold in the open
market  for  its  recorded purchase price.  The Company hired a valuation expert
who  valued the Company using the capitalized earnings/cash flow methodology and
the  market  multiple approach.  Based on these methodologies, it was determined
that  an  impairment  had  been  incurred.  The  goodwill impairment amounted to
$17,869,339.

The  changes  in  the  carrying amount of goodwill by reportable segment for the
year  ended  December  31,  2003,  were  as  follows:

<TABLE>
<CAPTION>
                          Balance         Acquisition        Impairment          Balance
                      January 1, 2003   January 2, 2003   January 2, 2003   December 31, 2003
                      ----------------  ----------------  ----------------  ------------------
<S>                   <C>               <C>               <C>               <C>

New York Health Care      $   -         $    18,769,926   $     17,869,339  $         900,587
BioBalance                $   -         $             -   $              -  $               -
</TABLE>

The  impairment  charges  are  noncash in nature and do not affect the Company's
liquidity.


                                      F-14
<PAGE>
<TABLE>
<CAPTION>
                      NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The  major  classifications of intangible assets and their respective estimated useful
lives  are  as  follows:

                                               December  31, 2003
                        --------------------------------------------------------------
                                                                            Estimated
                          Gross Carrying      Accumulated   Net Carrying   Useful Life
                              Amount         Amortization      Amount         Years
                        -------------------  -------------  -------------  -----------
<S>                     <C>                  <C>            <C>            <C>
Intellectual property   $         3,576,500  $     539,189  $   3,037,311           10
Patents/trademarks                1,913,751         83,690      1,830,061           10
Non-compete agreement               770,000         57,750        712,250            5
Patient list                        100,000         20,000         80,000            5
Customer base                       390,000         78,000        312,000            5
                        -------------------  -------------  -------------
                        $         6,750,251  $     778,629  $   5,971,622
                        ===================  =============  =============


                                               December  31, 2002
                        --------------------------------------------------------------
                                                                             Estimated
                          Gross Carrying      Accumulated    Net Carrying   Useful Life
                              Amount         Amortization       Amount         Years
                        -------------------  -------------  -------------  ------------

Intellectual property   $         2,036,500  $     288,450  $   1,748,050           10
Patents/trademarks                  201,133         13,150        187,983           10
                        -------------------  -------------  -------------
                        $         2,237,633  $     301,600  $   1,936,033
                        ===================  =============  =============
</TABLE>

On  July  31, 2001, the Company acquired technology, including patents, relating
to  certain  probiotic agents.  Aggregate consideration paid totaled $2,036,500,
including  990,000  shares of the Company's common stock (valued at $1,485,000),
$510,000  cash to fund the payment of claims against the Sellers, and associated
acquisition  costs of $41,500.  The Company has also incurred fees approximating
$201,000  through  December  31, 2002, principally in connection with patent and
trademark  applications  for  the  technology.

On  August 20, 2003, the Company purchased from NexGen Bacterium Inc. ("NexGen")
certain  proprietary  technology  and  intellectual property assets that did not
constitute  a  business.  The  purchase  price  for the assets is comprised of a
$250,000  payment  and  the  issuance  of 1,000,000 shares of the Company's $.01
par-value  common  stock.  The stock was valued at $3,600,000 based on a closing
price  of  $3.60  per  share on August 20, 2003. The asset acquisition agreement
includes  noncompete  provisions  restricting  NexGen  from  competing  with the
Company  for a period of five years. Management has allocated the purchase price
as  follows:  intellectual  property:  $1,540,000,  patents:  $1,540,000,  and
noncompete  agreement:  $770,000.  For  the  year  ended  December 31, 2003, the
Company has also incurred fees approximating $173,000, principally in connection
with  patent  and  trademark  applications  for the technology. These assets are
being  amortized  over their estimated useful lives of 10 years for intellectual
property  and  patents  and  5  years  for  the  noncompete  agreement.

Approximately $4.9 million of such amount, relates to intangibles of BioBalance.
BioBalance  is  a  development  stage  Company.  The  Company cannot assure that
BioBalance  will  be able to generate revenues or profits from operations of its
business  or  that BioBalance could be able to generate or sustain profitability
in  the  future.


                                      F-15
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Amortization  expense  amounted  to $477,029, $214,600 and $87,000 for the years
and period ended December 31, 2003, 2002 and 2001, respectively.

Estimated Amortization Expense:

           For The Years
               Ended
            December 31,
            ------------

               2004        $  801,025
               2005           801,025
               2006           801,025
               2007           801,025
               2008           645,275
           Thereafter       2,122,247
                           ----------
                           $5,971,622
                           ==========


NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following at December 31:

                                    2003          2002
                                -----------     --------
Accounts payable                $  500,186      $229,182
Accrued expenses                   967,851             -
Accrued employee benefits        4,381,695             -
                                -----------     --------

                                $5,849,732      $229,182
                                ==========      ========


NOTE 6 - LINE OF CREDIT:

The  Company  has  a  $4,000,000  line  of  credit with G.E. Capital Health Care
Financial  Services that expires November 29, 2004. The availability of the line
of credit is based on a formula of eligible accounts receivable. At December 31,
2003,  approximately  $4,000,000 was available to the Company. Certain assets of
the  Company  collateralize  the  line of credit. The agreement contains various
restrictive  covenants,  which  among  other  things,  require  that the Company
maintain  a  minimum  tangible  net  worth.  Borrowings under the agreement bear
interest  at  prime  plus  1  1/2%  (5.50%)  at  December  31,  2003.

At  December  31,  2003,  there  was an amount due from G.E. Capital Health Care
Financial  Services  of  $208,721.  This  is  due to a lockbox being used by the
Company;  all  collections are deposited with G.E. Capital Health Care Financial
Services  and  then  transferred  to  the  bank.

On  March 29, 2004, the loan agreement was amended to allow New York Health Care
to lend money to its subsidiary BioBalance if there is no outstanding loan under
this  agreement.  The  agreement  has  also been amended to allow the Company to
invest  money  in  the  subsidiary  BioBalance.



                                      F-16
<PAGE>
                  NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  7  -  INCOME  TAXES:

Deferred  tax attributes resulting from differences between financial accounting
amounts  and  tax  bases of assets and liabilities at December 31, 2003 and 2002
follows (rounded to the nearest thousand):

                                             2003         2002
                                         ------------  ----------
   Current assets:
       Allowance for doubtful accounts   $   166,000   $       -
       Valuation allowance                  (166,000)          -
                                         ------------  ----------

   Net current deferred tax asset        $         -   $       -
                                         ============  ==========

   Noncurrent assets:
       Net operating loss carryforwards  $   695,000   $ 685,000
       Depreciation                           28,000           -
       Amortization of goodwill              857,000           -
       Amortization of intangibles           113,000     167,000
                                         ------------  ----------

                                           1,693,000     852,000
      Valuation allowance                 (1,693,000)   (852,000)
                                         ------------  ----------

   Net noncurrent deferred tax asset     $         -   $       -
                                         ============  ==========

As  of  December  31,  2003, the Company had net operating loss carryforwards of
approximately $695,000, which expire at various dates through 2023.


                                      F-17
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The provision for income taxes consist of the following:

                                            2003         2002      2001
                                        ------------  ---------  ----------
   Current tax expense                  $    39,000   $       -  $        -
   Deferred tax expense
   (not including amount listed below)    1,007,000           -           -
   Net change in valuation allowance     (1,007,000)          -           -
                                        ------------  ---------  ----------

                                        $    39,000   $       -  $        -
                                        ============  =========  ==========

The provision for income taxes is comprised of the following:


                                            2003         2002      2001
                                        ------------  ---------  ----------
   Current:
   Federal                              $          -  $       -  $        -
   State                                      39,000          -           -
                                        ------------  ---------  ----------
                                              39,000          -           -
                                        ------------  ---------  ----------

   Deferred:
   Federal                                         -          -           -
   State                                           -          -           -
                                        ------------  ---------  ----------
                                                   -          -           -
                                        ------------  ---------  ----------

                                        $     39,000  $       -  $        -
                                        ============  =========  ==========

The  statutory  Federal  income tax rate and the effective rate is reconciled as
follows:

                                            2003         2002      2001
                                        ------------  ---------  ----------
   Statutory Federal income tax rate             34%        34%         34%
   State taxes, net of Federal tax benefit       12         10          10
   Valuation allowance                          (45)       (44)        (44)
   Over/under accrual                            (1)         -           -
                                        ------------  ---------  ----------
                                                  -          -           -
                                        ============  =========  ==========


                                      F-18
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 - FAIR VALUE OF FINANCIAL INSTRUMENTS:

As  of  December  31,  2003  and  2002,  the  carrying  amount  of cash and cash
equivalents,  accounts  receivable  and  accounts  payable, accrued expenses and
accrued  payroll, due to HRA, and due to related parties approximates fair value
due  to  their  short-term  nature.

NOTE 9 - SHAREHOLDERS' EQUITY:

COMMON STOCK

In May 2001, the Company issued 8,896,709 shares of common stock to its founders
for  cash  proceeds  of  $890.

In  June  2001, the Company issued 8,456,625 shares of common stock in a private
placement  for  gross  cash  proceeds  of  approximately $253,400.  In addition,
550,000  shares  of  common  stock  (valued at $16,500) were issued for services
provided.

On  July 31, 2001, the Company issued 990,000 shares of its common stock (valued
at  $1,485,000)  as  consideration  for  the  acquisition  of  technology.

In  July  and August 2001, the Company issued 400,000 shares of its common stock
in  a  private  placement  for  gross cash proceeds of $600,000.   An additional
40,000  shares  (valued  at  $60,000)  were issued to a consultant for services.

In  November  and December 2001, the Company issued 367,333 shares of its common
stock  in  private  placements  for  gross  cash  proceeds  of  $1,102,000.

On  January  29,  2002,  the  Company issued 391,656 shares of common stock in a
private  placement.

In the period April 2002 through June 2002, the Company issued 153,000 shares of
its  common  stock  in  private  placement  for  gross  proceeds  of  $459,000.

In the period July 1, 2002 through September 30, 2002, the Company issued 49,000
shares  of  common  stock  in  private placement for gross proceeds of $147,000.

In  the  period  October  1,  2002 through December 31, 2002, the Company issued
822,171  shares  of  common  stock  in  private placements for gross proceeds of
$2,080,033.  $290,000  of  the  gross  proceeds  were  received in January 2003.

In  January  2003,  the  Company issued 327,327 shares of common stock for gross
proceeds  of  $1,072,000.

On  January  2, 2003, the Company recapitalized 2,475,154 shares of common stock
and  590,375  shares  of  preferred  stock  in  connection  with  the  reverse
acquisition.

On  August  20,  2003,  the  Company  issued 1,000,000 shares of common stock in
connection  with  the  purchase  of  intangible  assets.


                                      F-19
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


PREFERRED  STOCK

The  Company  has  authorized  590,375  shares  of Class A preferred stock.  The
holders  of  the  preferred  stock are 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  and  are  not  cumulative.  The holders of preferred stock
receive  no  preference  on  liquidation  and  such shares may be converted into
two-thirds  of  one  share  of  common stock at any time.  The Class A preferred
stockholders  are  entitled  to  vote  on  matters  that  affect  them.

TREASURY  STOCK

The  Company  issued treasury stock for the exercise of options that occurred in
September  and  October 2003.  The Company assigned a cost to the treasury stock
based  on  the  first-in,  first-out  method.


NOTE  10  -  STOCK  OPTION/WARRANTS:

The Company uses the intrinsic-value method of accounting for stock-based awards
granted to employees.  No stock-based compensation cost is included in net loss,
as  all  options granted during periods presented had an exercise price equal to
the market value of the stock on the date of grant.  In accordance with SFAS No.
148,  "Accounting for Stock Based Compensation - Transition and Disclosure," the
following  table  presents  the  effect  on  net loss and net loss per share had
compensation  cost for the Company's stock plans been determined consistent with
SFAS  No.  123, "Accounting for Stock-Based Compensation".


                                      F-20
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The  fair value of each option grant is estimated on the date of grant by use of
the  Black-Scholes  option  pricing  model:

<TABLE>
<CAPTION>
                                                                               Period
                                                                             May 21, 2001
                                                                             (Inception)
                                                Year Ended     Year Ended      through
                                                December 31,   December 31,  December 31,
                                                   2003           2002            2001
                                               -------------  -------------  ------------
<S>                                            <C>            <C>            <C>
Net loss, as reported                          $(22,052,170)  $ (1,399,057)  $  (452,169)
Less stock-based compensation expense
   determined under fair value method for
   all employee stock options                    (1,620,705)             -             -
                                               -------------  -------------  ------------
Pro forma net loss                             $(23,672,875)  $ (1,399,057)  $  (452,169)
                                               =============  =============  ============

Basic and diluted loss per share, as reported  $      (0.91)  $      (0.07)  $     (0.03)
Basic and diluted loss per share, pro forma    $      (0.97)  $      (0.07)  $     (0.03)
</TABLE>

Fair value is estimated based on the Black-Scholes option-pricing model with the
following  assumptions  for grants in 2003; expected volatility used was a range
of  67%-102%,  risk-free  interest  rates  1.10%-3.23%  and  expected  lives  of
approximately  1  to  5  years.

The following tables summarize options and warrants issued during the year ended
December 31, 2003, 2002 and 2001 to consultants and employees (including
non-employee Board of Directors):

Warrants:

These warrants were issued to or earned by consultants

<TABLE>
<CAPTION>
     Grant Date          Number of warrants    Exercise Price     Expiration term
-----------------------  ------------------  -------------------  ---------------
<S>                      <C>                 <C>                  <C>
     January 1, 2003                  7,205  $              3.47            5 yrs
     January 1, 2003                 25,528  $              3.22            5 yrs
     January 1, 2003                 15,653  $              3.37            5 yrs
     January 15, 2003               100,000  $              4.15             1 yr
     February 3, 2003                35,000  $              3.40             1 yr
     April 14, 2003                 500,000  $              2.50             1 yr
     July 15, 2003                  135,000  $              2.70             1 yr
     September 15, 2003             100,000  $              3.69            5 yrs
   * December 17, 2003               75,000  $              2.51            2 yrs
     Grant Date          Number of warrants    Exercise Price     Expiration term
-----------------------  ------------------  -------------------  ---------------
     January 30, 2002                39,166  $              3.00            5 yrs
     November 4, 2002                25,000  $              1.50            2 yrs
     November 7, 2002                20,000  $              1.50            2 yrs

     Grant Date          Number of warrants    Exercise Price     Expiration term
-----------------------  ------------------  -------------------  ---------------
     June 1, 2001                   200,000  $              1.00           10 yrs
     August 31, 2001                210,000  $              1.50            3 yrs
     October 21, 2001                10,000  $              1.50            2 yrs
     November 30, 2001               33,900  $              3.00            5 yrs
</TABLE>

*  These  are performance based warrants which were earned on December 17, 2003.
For  accounting  purposes  they  are  deemed  to  be  outstanding.  The  Company
recognized  a  noncash  compensation  charge  of  $102,203 during the year ended
December  31,  2003.

Some  of  these  warrants  granted  in 2003 vest immediately, some warrants vest
monthly.  These  warrants are expensed at the fair value on the date of vesting.
For  accounting  purposes, unvested warrants are not considered outstanding. For
the  year  ended  December  31,  2003, $870,359 was expensed as compensation for
these  warrants, which includes compensation expense for the BioBalance warrants
of  $33,928  for  the  year ended December 31, 2003 and 75,000 performance based
warrants  earned  in  December  2003  of  $102,203.

The  fair  value  of  options  granted  to  consultants during 2001 and 2002 was
$26,000  and  $72,450  respectively.  Fair  value  is  estimated  based  on  the
Black-Scholes option pricing model with the following assumptions. For grants in
2001  and  2002 the expected volatility used was 0% and risk-free interest rates
of  3.0%  and  expected  lives  equal  to  the  lives  of  the  warrants.


                                      F-21
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NASDAQ  implemented  a  rule  on  July 1, 2003 that requires a company to obtain
shareholder  approval  prior  to  the  issuance  of  warrants  to consultants or
non-employee  Board  of  Directors and that it designate a certain amount of the
Company's  shares  in  connection  with  any  issuances  to  consultants  and
non-employee  Board  of  Directors.

The  Company  committed  to  issue warrants to certain consultants subsequent to
July 1, 2003. Therefore, these commitments of warrants will be re-valued at each
balance sheet date with the appropriate adjustment made to compensation expense.
Once  shareholder  approval  is  obtained, no further adjustment to compensation
expense  will  be  recorded.

On  January  29,  2004  the  Company granted options to purchase an aggregate of
450,000  shares  of common stock at the then fair market value to three officers
of  the  Company.

Options/Warrants:

These options and warrants were issued to employees and non-employee Board of
Directors in accordance with the Company's Performance Incentive Plan.

     Grant Date          Number of Options  Exercise Price   Expiration Term
-----------------------  -----------------  ---------------  ---------------

     March 7, 2003                 500,000  $          3.14           10 yrs
     March 7, 2003                  60,000  $          3.14           10 yrs
     June 16, 2003                   7,500  $          2.87            3 yrs
     June 26, 2003                 200,000  $          2.48           10 yrs
     September 26, 2003             80,000  $          3.77           10 yrs

Since the warrants and options were given to employees and non-employee Board of
Directors  at  not  less  than  fair value on the date of grant, no compensation
expense  was  recorded.

On November 26, 2003, the Company suspended the 100,000 options granted on March
7,  2003  to  Paul  Stark,  the  former President of BioBalance. The options are
considered  outstanding  but can not be exercised until the Company gives notice
that  they  may be exercised. The options have been recorded under the intrinsic
value  method  and  are  included  in  the  Black-Scholes  calculation  above.

At  December 31, 2003, the Company has 4,834,592 shares of common stock reserved
for  issuance  of  these  options/warrants  and  for  options/warrants  granted
previously.

PERFORMANCE  INCENTIVE  PLAN:

On  March  26,  1996,  the  Company's Board of Directors adopted the Performance
Incentive Plan, (the "Option Plan"). Under the terms of the amended Option Plan,
as  amended,  up  to 4,712,500 shares of common stock may be granted at December
31,  2003.  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 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.


                                      F-22
<PAGE>
<TABLE>
<CAPTION>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Activity in stock options, and warrants, including those outside the Performance
Incentive  Plan, for each of the three years ended December 31, is summarized as
follows:

                                        Shares Under     Weighted Average
                                      Options/Warrants    Exercise Price
                                      -----------------  ----------------
<S>                                   <C>                <C>

Options and warrants granted                   453,900   $           1.39
                                      -----------------

Balance at December 31, 2001                   453,900               1.39

Options and warrants granted                    84,166               2.20

Options cancelled                                    -                  -
                                      -----------------  ----------------

Balance at December 31, 2002                   538,066               1.52

New York Health Care's options
 and warrants, due to merger                 1,024,167               1.84

Options and warrants granted                *1,840,886               3.40

Options exercised                              (20,801)               .88

Options cancelled/expired                     (126,667)              2.25
                                      -----------------  ----------------

Balance at December 31, 2003                 3,255,651               2.27
                                      =================

Eligible for exercise at
 December 31, 2003                           3,065,134               2.26
                                      =================
<FN>
* Includes the performance based warrants discussed above.
</TABLE>


                                      F-23
<PAGE>
<TABLE>
<CAPTION>
                       NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The  following  table  summarizes  information  about options and warrants outstanding and
exercisable  at  December  31,  2003.


                           Options/Warrants  Outstanding          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>
$4.50                 62,500              3.25 Years            4.50       62,500         4.50
$4.15                100,000              0.04 Years            4.15      100,000         4.15
$3.77                 80,000              9.53 Years            3.77       80,000         3.77
$3.69                100,000              4.70 Years            3.69      100,000         3.69
$3.40                 35,000              0.08 Years            3.40       32,000         3.40
$3.22 - $3.47         48,386              4.00 Years            3.31       48,386         3.31
$3.14                560,000              8.28 Years            3.14      560,000         3.14
$3.00                 39,166              2.42 Years            3.00       39,166         3.00
$3.00                 33,900              2.92 Years            3.00       33,900         3.00
$2.87                  7,500              2.50 Years            2.87        7,500         2.87
$2.70                135,000              1.53 Years            2.70      123,750         2.70
$2.51                 75,000              1.96 Years            2.51       75,000         2.51
$2.50                500,000              0.54 Years            2.50      500,000         2.50
$2.48                200,000              9.42 Years            2.48       33,333         2.48
$2.45                 75,333              4.50 Years            2.45       75,333         2.45
$1.50                 25,000              0.83 Years            1.50       15,400         1.50
$1.50                 20,000              0.83 Years            1.50       20,000         1.50
$1.50                210,000              0.75 Years            1.50      210,000         1.50
$1.50                  9,200              0.25 Years            1.50        9,200         1.50
$1.41                 51,333              5.00 Years            1.41       51,333         1.41
$1.00                200,000              7.50 Years            1.00      200,000         1.00
$.95 - $1.04         140,000              3.43 Years            0.98      140,000         0.98
$.89-$.98            275,000              5.42 Years            0.93      275,000         0.93
$.75-$.83            273,333              4.38 Years            0.79      273,333         0.79
                 -----------                                          -----------

                   3,255,651              4.44 Years            2.27    3,065,134         2.26
                 ===========                                          ===========
</TABLE>


                                      F-24
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  11  -  COMMITMENTS  AND  CONTINGENCIES:

In  February  2003,  the  Company  entered  into  consulting agreements with two
individuals  to serve as Director of Medical and Regulatory Affairs and Director
of  Research  and  Development  for  its  BioBalance  subsidiary. The agreements
provide  for  aggregate annual compensation of $250,000 and provide for specific
bonuses  when the Company meets certain goals. In December 2003, the Company met
these  goals  and  the bonuses were expensed. These agreements were subsequently
renewed  under  the  same  terms,  through  December  31,  2004.

In  April  2003,  the Company entered into a consulting agreement with a firm to
assist  the  Company  in  developing,  studying and evaluating a financing plan,
strategic  and  financial alternatives and merger and acquisition proposals. The
agreement  provides  for  the  firm to be compensated in the amount of 4% of the
total  gross  consideration or value attributed to a business combination at the
closing  of a completed transaction. In addition, the consulting firm received a
warrant  to  purchase  up  to 500,000 shares of the Company's common stock. This
transaction  is  one  of the matters addressed in the allegations referred to in
Note  1,  under  Recent  Developments.

In  February  2004,  the  Company  entered  into an agreement with St. Michael's
Hospital  in  Toronto,  Canada  to  conduct  clinical  trials on PROBACTRIX as a
medical food for the dietary management of IBS symptoms.  The committed cost for
this  study  is  $292,000.

LEASE  COMMITMENTS:

The  Company  leases  office  space under noncancellable operating leases in New
York and New Jersey that expire between April 2004 and February 2007.

At  December  31, 2003, future minimum lease payments due under operating leases
approximate:

          2004                                 $386,000
          2005                                  258,000
          2006                                  181,000
          2007                                    4,000
                                               --------
          Total minimum future payments        $829,000
                                               ========

Rental  expense  charged  to  operations was approximately $432,000, $60,000 and
$10,000,  for  the  years  and  period  ended  December 31, 2003, 2002 and 2001,
respectively.


                                      F-25
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


EMPLOYMENT  AGREEMENTS:


On  November  10,  1999, the Company entered into employment agreements with two
officers,  with  terms  beginning  December  27,  1999 and expiring in 2004. The
agreements  called  for  initial  aggregate annual compensation of approximately
$420,000  with  an  annual  increase  of 10% and provided for certain additional
benefits.  This  employment agreement was amended on January 2, 2003 pursuant to
the  Stock  for  Stock Exchange Agreement between the Company and The BioBalance
Corporation  (Note 2). Under the amended employment agreement, the two officers'
employment  was  extended  until December 31, 2009. The amendment also calls for
assurance  that  the  two  officers continue their election as Directors for the
full  term  of  their  employment  contracts.  If the officers are terminated as
Directors, the Company shall enter into consulting agreements with the officers,
effective  the  date  of  termination. In such case, consulting services will be
provided  on an as needed basis for a period of not less than five years and, as
compensation  for consulting services, each officer will be granted an option to
acquire  500,000 shares of the Company's common stock for a term of no less than
ten  years  at  a price per share equal to the closing price of the stock on the
date  of  such  termination.

On March 15, 2004, the Compensation Committee approved a bonus of $500,000 to be
paid  to  the two officers for the year ended December 31, 2003; such amount was
accrued  as  of  December  31,  2003.

401(K)  PLAN:

The  Home  Health Care segment 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 Company currently contributes 50% of each
dollar  contributed  to  the  Plan  by participants up to a maximum of 3% of the
participant's  salary.  The  Plan  also  provides  for  certain  discretionary
contributions  by  the  Company  as  determined  by  the Board of Directors. The
Company's contributions offset by unvested, forfeited matching funds amounted to
$54,000  for  the  year ended December 31, 2003. The Bio Balance segment did not
have  a  401(k)  plan for the years and period ended December 31, 2002 and 2001.


                                      F-26
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


BONUS  PLAN:

The  Home  Care  segment of the Company has established a bonus plan pursuant to
which  10%  of  the  Company's pre-tax net income is contributed to a bonus pool
which is available for distribution to all employees as decided by the Company's
Compensation Committee.  A bonus of $58,000 was accrued as of December 31, 2003.

CONCENTRATIONS  OF  CREDIT  RISK:

Financial  instruments that potentially subject the Company 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  Company  has  cash  investment  policies  that  restrict placement of these
investments  to  financial  institutions evaluated as highly creditworthy.  Cash
and  cash  equivalents  held  in  one  bank  exceed  federally insured limits by
approximately  $7,236,000,  at  December 31, 2003 and $2,675,000 at December 31,
2002.  The Company 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  60% of net patient service
revenue  for  the  year  ended  December 31, 2003.  In addition, three customers
represented  approximately  44%  of  accounts  receivable  at December 31, 2003.
BioBalance  had  no  accounts  receivable  for  the  year  ended  2002.

BUSINESS  RISKS:

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

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

CAUTIONARY  STATEMENT

BioBalance  operates  in  a  competitive  environment  that involves a number of
risks,  some  of  which  are  beyond  its  control.  Although  we  believe  the
expectations  for BioBalance are based on reasonable assumptions, we can give no
assurance  that  our  expectations  will  be  attained. Factors that could cause
actual events or results to differ materially from expected results involve both
known  and  unknown risks. Key factors include, among others: our need to secure
additional  financing  and at acceptable terms; the high cost and uncertainty of
clinical  trials  and  other  development  activities  involving  pharmaceutical
products;  the  dependence  on  third  parties  to manufacture its products; the
unpredictability  of  the  duration  and  results of regulatory approval for our
products;  our  dependence  on our lead biotherapeutic agent, PROBACTRIX and the
uncertainty  of  its market acceptance; the possible impairment of, or inability
to  enforce,  intellectual property rights and the subsequent costs of defending
these  rights;  and  the  loss  of  key  executives  or  consultants.


                                      F-27
<PAGE>
                   NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 12 - THIRD-PARTY RATE ADJUSTMENTS AND REVENUE AND
CERTAIN CONTRACTS:

Approximately 5% of net patient service revenue was derived under New York State
Medicaid  reimbursement programs during the year ended December 31, 2003.  These
revenues are based, in part, on cost reimbursement principles and are subject to
audit  and  retroactive  adjustment.  Differences  between  current  rates  and
subsequent  revisions  are  reflected  in the year the revisions are determined.
There  was no revenue generated by BioBalance for the years ended 2002 and 2001.

The  Company  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.  The agreement with HRA sets a fixed direct labor cost in the reimbursement
rate.  Should  the  Company  incur direct costs of home attendant services below
this  fixed rate, the Company must repay the difference to HRA, subject to final
audit  by the City of New York.  As of December 31, 2003, the amount included in
due  to  HRA  relating to direct labor costs amounted to $828,555.  In addition,
the  City's reimbursement methodology for general and administrative expenses is
based  on  a fixed amount per client based on the number of cases.   The Company
is reimbursed at an hourly rate.  Any amount over this fixed rate must be repaid
to  HRA.  As  of  December 31, 2003, this amount was $2,927,952 subject to final
audit  by  the City of New York.  The aggregate amount due to HRA was $3,756,507
at  December  31,  2003.  As of December 31, 2003, HRA had completed their audit
for  the  fiscal year ended June 30, 2000 and was in the process of auditing the
fiscal  year  ended  June  30,  2001.

The  New  York State Department of Health ("DOH") approved additional funding to
home  health care agencies in a form of a rate increase.  The additional funding
is  to be used exclusively for the recruitment and retention of home health care
employees.  Any  unspent money relating to recruitment and retention is recorded
as an accrued liability until such time as it is spent. As of December 31, 2003,
the  Company  accrued  approximately  $1,318,000  related  to  recruitment  and
retention  funds  not yet expended and is included in accrued employee benefits.



                                      F-28
<PAGE>
                  NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE  13-  SUPPLEMENTAL  CASH  FLOW  DISCLOSURES:

<TABLE>
<CAPTION>
                                                                       Period
                                                                    May 21, 2001
                                                                     (Inception)
                                     Year Ended       Year Ended       Through
                                     December 31,     December 31,   December 31,
                                        2003             2002            2001
                                     --------------  -------------  -------------
<S>                                  <C>             <C>            <C>
Supplemental cash flow disclosures:

   Cash paid during the period for:
      Interest                       $        2,173  $           -  $           -
                                     ==============  =============  =============

      Income taxes                   $       58,465  $       6,800  $           -
                                     ==============  =============  =============

Supplemental schedule of noncash
investing and financing activities:

The Company purchased intangibles
which were partially acquired through
the issuance of 1,000,000 shares of
common stock. (See note 4)
                                     $    3,600,000  $           -  $           -
                                     ==============  =============  =============
</TABLE>

NOTE 14 - SEGMENT REPORTING:

The  Company  has two reportable business segments: New York Health Care, a home
health  care  agency that provides a broad range of health care support services
to  patients  in  their  homes,  and  BioBalance, a segment that is developing a
biotherapeutic agent for the treatment of gastrointestinal disorders. BioBalance
has not generated any revenue as of December 31, 2003.

<TABLE>
<CAPTION>
                                          New York          Bio            Total
                                         Health Care      Balance       Consolidated
                                         -------------  ------------  --------------
<S>                                      <C>            <C>           <C>

YEAR ENDED DECEMBER 31, 2003
Revenue:
   Net patient service revenue           $ 45,060,449   $         -   $  45,060,449
   Sales                                            -             -               -
                                         -------------  ------------  --------------
      Total revenue                      $ 45,060,449   $         -   $  45,060,449
                                         =============  ============  ==============

Loss before provision for income taxes   $(17,370,598)  $(4,642,572)  $ (22,013,170)
                                         =============  ============  ==============

Depreciation and amortization            $    225,563   $   381,184   $     606,747
                                         =============  ============  ==============

Interest income                          $     35,720   $    15,535   $      51,255
                                         =============  ============  ==============

Interest expense                         $      2,173   $         -   $       2,173
                                         =============  ============  ==============

Income tax expense                       $     24,500   $    14,500   $      39,000
                                         =============  ============  ==============

Noncash Compensation                     $          -   $ 1,591,459   $   1,591,459
                                         =============  ============  ==============

Assets                                   $ 14,801,531   $ 6,827,437   $  21,628,968
                                         =============  ============  ==============

Expenditures for long lived assets       $     12,245   $ 4,061,092   $   4,073,337
                                         =============  ============  ==============
</TABLE>

Prior to its acquisition of New York Health Care on January 2, 2003, BioBalance
had only one segment, which did not generate any revenue.


                                      F-29
<PAGE>
                  NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 15 - QUARTERLY FINANCIAL DATA (UNAUDITED):

<TABLE>
<CAPTION>
                                Cost of
                 Net Patient  Professional
                   Service      Care of         Net      Basic and
2003               Revenue      Patients        Loss     Diluted EPS
-----------     ------------  -----------  -------------  ----------
<S>             <C>            <C>         <C>            <C>
First quarter   $11,994,489    $9,706,778  $(19,004,862)  $(0.79)

Second quarter   10,820,260     8,531,889      (689,088)   (0.03)

Third quarter    11,044,365     8,821,090    (1,099,192)   (0.05)

Fourth quarter   11,201,335     9,046,964    (1,259,028)   (0.04)


2002
-----------

First quarter   $         -    $        -  $   (380,123)  $(0.02)

Second quarter            -             -      (338,475)   (0.02)

Third quarter             -             -      (254,926)   (0.01)

Fourth quarter            -             -      (425,533)   (0.01)
</TABLE>


                                      F-30
<PAGE>
<TABLE>
<CAPTION>
                            NEW YORK HEALTH CARE, INC. AND SUBSIDIARIES
                            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                              SCHEDULE  II  -  VALUATION  AND  QUALIFYING  ACCOUNTS


Column A                                    Column B                   Column C     Column D      Column E
-----------------------------------------  -----------                             ----------  --------------
                                                         Additions
                                                        -------------------------
                                           Balance at   Charged to    Charged to
                                            Beginning    Costs and      Other                    Balance at
Description                                 of Period    Expenses      Accounts    Deductions   End of Period
-----------------------------------------  -----------  -----------  ------------  ----------  --------------
<S>                                        <C>          <C>          <C>           <C>         <C>

Year ended December 31, 2003
 Deducted from asset accounts:
   Allowance for doubtful accounts         $         -  $    50,000   *$694,000    $ (347,000)  $      397,000
   Deferred tax asset valuation
     allowance                             $   852,000  $   841,000            -                $    1,693,000

Year ended December 31, 2002
 Deducted from asset accounts:
   Allowance for doubtful accounts         $         -  $         -            -   $        -  $            -
   Deferred tax asset valuation
     allowance                             $   208,000  $   644,000            -   $        -  $      852,000

For period ended May 21, 2002 (inception)
through December 31, 2001
 Deducted from asset accounts:
   Allowance for doubtful accounts         $         -  $         -  $         -   $        -  $            -
   Deferred tax asset valuation
     allowance                             $         -  $   255,000            -   $        -  $      208,000

<FN>

*Cash collected in excess of the estimated fair value of accounts receivable of New York Health Care acquired
in  the  reverse  merger,  offset  by  an  additional  equal  amount  of  $347,000.
</TABLE>




                                      F-31
<PAGE>
                                INDEX TO EXHIBITS

     These Exhibits are numbered in accordance with Exhibit Table of Item 601 of
Regulation S-K.

Exhibit
 Number   Description of Exhibit
--------  ----------------------
 2.1      Stock  for Stock Exchange Agreement between the Company and BioBalance
          dated  October  11, 2001, as amended by Amendment No. 1 dated February
          13,  2002,  Amendment No. 2 dated July 10, 2002, Amendment No. 3 dated
          August  13,  2002  and  Amendment  No.  4  dated  October  25,  2002
          (incorporated  herein by reference to Exhibits No. 2.1-2.4, inclusive,
          to  the  Company's  registration  statement  on  FormS-4, SEC file no.
          333-85054).
 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
          the Company. (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. (2)
 4.1      Form of certificate evidencing shares of Common Stock. (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)
10.15     Personal Care Aide Agreement by and between the Company and Nassau
          County Department of Social Services dated October 18, 1995. (1)
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)
10.19     Homemaker and Personal Care Agreements by and between the Company and
          the County of Rockland Department of Social Services dated January 1,
          1996. (1)
10.43 ++  Employment Agreement by and between the Company and Jerry Braun dated
          November 12, 1999. (3)
10.44 ++  Employment Agreement by and between the Company and Jacob Rosenberg
          dated November 12, 1999. (3)
10.45     Loan and Security Agreement among New York Health Care, Inc., NYHC
          Newco Paxxon, Inc. and Heller Healthcare Finance, Inc. dated November
          28, 2000. (incorporated by reference to Exhibits to the Company's Form
          8-K Report filed on December 8, 2000)
10.46     Revolving Credit Note dated November 28, 2000 made by the Company and
          NYHC Newco Paxxon, Inc. to the order of Heller Healthcare Finance,
          Inc. ((incorporated by reference to Exhibits to the Company's Form 8-K
          Report filed on December 8, 2000)
10.49     Amendment No. 1 to Loan and Security Agreement and Consent and Waiver
          with Heller Healthcare Finance, Inc. dated November 27, 2002
          (incorporated by reference to Exhibit to the Company's Form 8-K
          Current Report filed on December 4, 2002)
10.50 ++  Amended Performance Incentive Plan (Stock Option Plan) of the
          Company. (4)
10.51 ++  Amendment to Employment Agreement between the Company and Jerry
          Braun dated January 28, 2003. (4)
10.52 ++  Amendment to Employment Agreement between the Company and Jacob
          Rosenberg dated January 28, 2003. (4)
14.1*     Code of Ethics for Senior Financial Officers.
23.1*     Consent of Weiser LLP Independent Public Accountants.
23.2*     Consent of Holtz Rubenstein & Co., LLP.


                                       57
<PAGE>
31.1*     Certification of Chief Executive Pursuant to Section 302 of the
          Sarbanes-Oxley Act of 2002.
31.2*     Certification of Chief Financial Officer Pursuant to Section 302 of
          the Sarbanes-Oxley Act of 2002.
32.1*     Certification of Chief Executive Officer Pursuant 18 U.S.C. 1350, as
          adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
32.2*     Certification of Chief Financial Officer Pursuant 18 U.S.C. 1350, as
          adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.

----------------
*     Filed  herewith.
++    Compensation  plan.
(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 Exhibits filed as part of the Company's Form
      10-QSB  report  for  the  quarter  ended  June  30,  1998.
(3)   Incorporated  by reference to Exhibits filed as part of the Company's Form
      10-QSB  Report  for  the  quarter  ended  September  30,  1999.
(4)   Incorporated by reference to Exhibits filed part as of Company's Form 10-K
      Annual Report for the year ended December 31, 2002.


                                       58
<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.


March 31, 2004
                                        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.


/s/  Jerry  Braun        President,  Chief  Executive             March 31, 2004
-----------------------  Officer  and  Director
Jerry  Braun


/s/ Jacob Rosenberg      Vice President, Chief Operating          March 31, 2004
-----------------------  Officer, Chief Financial and Accounting
Jacob  Rosenberg         Officer and Director


/s/  Dennis  O'Donnell   Director                                 March 31, 2004
-----------------------
Dennis O'Donnell


/s/  H.  Gene  Berger    Director                                 March 31, 2004
-----------------------
H.  Gene  Berger


/s/ Fred E. Nussbaum     Director                                 March 31, 2004
-----------------------
Fred E. Nussbaum


/s/ Mark Gray            Director                                 March 31, 2004
-----------------------
Mark Gray


/s/ Mordecai H. Dicker   Director                                 March 31, 2004
-----------------------
Mordecai H. Dicker


                                       59
<PAGE>