SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB

 (Mark  One)

[X]     ANNUAL  REPORT  PURSUANT  TO  SECTION  13  or  15(d)  OF  THE SECURITIES
        EXCHANGE  ACT  OF  1934
        For  the  fiscal  year  ended:  December  31,  1999

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

                           Commission File No. 1-12451

                           NEW YORK HEALTH CARE, INC.

                 (Name of small business issuer in its charter)

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

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

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

Securities  issued  pursuant  to  Section  12(b)  of  the  Act:

                                                   Name of exchange on
     Title  of  each  class                          which registered
     ----------------------                          ----------------

     Common Stock $.01 par value                   Boston Stock Exchange


                                        1
<PAGE>
Securities  registered  pursuant  to  Section  12(g)  of  the  Act:

Common  Stock  $.01  par  value
Check  whether  the issuer (1) filed all reports required to be filed by Section
13  or  15(d) of the Exchange Act during the past 12 months (or for such shorter
period  that the registrant was required to file such reports), and (2) has been
subject  to  such  filing  requirements  for  the  past  90  days.
Yes  X  No
    ---    ---

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

State  issuer's  revenues  for  its  most  recent  fiscal  year.  $23,772,346

State  the  aggregate  market  value  of the voting stock held by non-affiliates
computed  by  reference to the price at which the stock was sold, or the average
bid and asked prices of such stock, as of a specified date within the past sixty
(60)  days.  $1,753,095  (as  of  3/27/00).

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State  the  number of shares outstanding of each of the issuer's class of common
equity,  as  of  the  latest  practicable  date:  3,668,730

                       DOCUMENTS INCORPORATED BY REFERENCE


The  following  document is incorporated by reference in this Form 10-KSB; Proxy
Statement  on  Form  14A  dated  December  15,  1999.


                                        2
<PAGE>
                           FORWARD LOOKING STATEMENTS

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

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

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

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

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


                                        3
<PAGE>
(d)     There  can be no assurance that the Company will be able to continue its
substantial  historical  growth  or  be  able  to  fully  implement its business
strategies  or  that  management  will  be  able  to  successfully integrate the
operations  of  its  various  acquisitions.





                                     PART I



Item  1.     DESCRIPTION  OF  BUSINESS.



(a)  General  Development  of  Business.

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

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

     The Company operates in all five boroughs of New York City and the counties
of Nassau, Westchester, Rockland, Orange, Dutchess, Ulster, Putnam and Sullivan,
in  the  State  of  New  York.  The  Company's services are supplied principally
pursuant to contracts with health care institutions and agencies such as various
county departments of social services, Beth Abraham Health Services in the Bronx
and  Westchester  County,  Kingsbridge  Medical Center, Mt Sinai Medical Center,
Coram  Network,  Aetna  US  Healthcare,  Prudential  Tri-State  and  Gentiva
Health Services.

     As  a  result  of  recent  acquisitions, described elsewhere in this annual
report,  the Company also operates in Budd Lake, Edison, Shrewsbury, Toms River,
East  Orange  and  Hackensack,  New  Jersey,  where  it recently acquired branch
offices whose operations are being integrated with the Company's existing branch
office  structure.

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


                                        4
<PAGE>
     On December 8, 1997, a newly-formed wholly-owned subsidiary of the Company,
named  "NYHC  Newco  Paxxon,  Inc.",  a  New  York  corporation  ("NYHC Newco"),
purchased  from  Metro  Healthcare  Services,  Inc.,  a  New  Jersey corporation
("Metro"),  the home care business assets (other than accounts receivable) which
Metro  operated  in  West  Orange,  Budd  Lake and Jersey City, New Jersey for a
purchase  price  consisting of $580,000 paid at closing and a promissory note in
the  principal  sum  of  $200,000  payable in eight equal quarterly installments
commencing  March  5,  1998 together with accrued interest at a rate equal to 1%
per  annum  over the prime interest rate published by the Wall Street Journal on
December 8, 1997, adjusted quarterly. The promissory note is subordinated to all
obligations  due  to  the  Company's  banks  or other institutional lenders. The
promissory  note  and the covenants of NYHC Newco are guaranteed by the Company.

     On February 8, 1998, NYHC Newco purchased from Metro the home care business
assets  (other  than  accounts  receivable)  which  Metro  operated  in  Edison,
Shrewsbury  and  Toms  River,  New  Jersey  for  a  purchase price consisting of
$500,000  paid at closing and a promissory note in the principal sum of $580,000
payable  in  twelve equal quarterly installments commencing May 5, 1998 together
with  accrued  interest  at a rate equal to 1% per annum over the prime interest
rate  published  by  the  Wall  Street  Journal  on  February  8, 1998, adjusted
quarterly.  The  promissory  note  is subordinated to all obligations due to the
Company's  banks  or  other  institutional  lenders. The promissory note and the
covenants  of  NYHC  Newco  are  guaranteed  by  the  Company.

     On  March  26,  1998,  NYHC  Newco purchased from Heart to Heart Healthcare
Services,  Inc.,  a  New  Jersey  corporation  ("Heart  to Heart") the home care
business  assets  (other than accounts receivable) which Heart to Heart operated
in  East  Orange and Hackensack, New Jersey for a purchase price consisting of a
promissory note in the principal sum of $1,150,000 payable in 24 equal quarterly
installments  commencing  June 26, 1998 together with accrued interest at a rate
equal  to 1% per annum over the prime interest rate published by the Wall Street
Journal  on  March  26,  1998,  adjusted  quarterly.  The  promissory  note  is
subordinated  to  all  obligations  due  to  the  Company's  banks  or  other
institutional  lenders.  The promissory note and the covenants of NYHC Newco are
guaranteed  by  the  Company.

     As  noted  in  the Company's December 20, 1996 prospectus and in Item 12. -
Certain  Relationship and Related Transactions, certain of its directors are the
sole  stockholders  of  Heart  to  Heart.  The  Company  therefore  obtained  an
independent  opinion that the terms and conditions of the acquisition are, under
all  circumstances,  fair  to  the  Company.

    On  February 22, 1999 NYHC Newco completed the acquisition of the assets of
a  home  health  care  office in Shrewsbury, New Jersey, formerly owned by Staff
Builders  Services,  Inc.  for the purchase price of $65,000. The newly acquired
Shrewsbury  office  generated  annualized  revenues of approximately $600,000 by
providing  home  care  services  throughout  Central  New  Jersey.


                                        5
<PAGE>
     On  June  11,  1999 NYHC Newco completed the acquisition of the assets of a
home  health  care  office  in  Hackensack,  New Jersey, formerly owned by Staff
Builders  Services,  Inc. for the purchase price of $25,700.  The newly acquired
Hackensack  office  generated  annualized  revenues of approximately $300,000 by
providing  home  health  care  services  throughout  Northern  New  Jersey.

     On  October 23, 1999 NYHC completed the acquisition of the assets of a home
health  care  office  in  Manhattan,  New  York, formerly owned by Staff Builder
Services,  Inc. for the purchase price of $30,000.  The newly acquired Manhattan
business  generated  annualized  revenues of approximately $600,000 by providing
home  health  care  services  throughout  the  five boroughs.  This business was
transferred  to  other  existing  New  York  Health  Care  Offices.

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

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

Industry  Background.

     The  home health care industry has grown substantially over the past decade
according  to  published  industry information. In 1997, HCFA estimated that 3.4
million  enrollees  received  fee-for-service  home  health  services  in  1997,
representing  a  greater than 40% rise from the number of home health recipients
in  1990.  For the period 1990-1997, Medicare home health expenditures increased
from  $3.9  billion  to an estimated $17.2 billion. Most of the rise in spending
occurred  as  a  result of the increase in visits, from 70 million in 1990 to an
estimated  270  million  in 1997. Medicaid home health benefits between 1994 and
1997  have  increased from approximately $7 billion and $12 billion. The Company
believes  that the primary reasons for the growth in the home health care market
include  the  aging  of the U.S. population; the realization of substantial cost
savings through treatment at home as an alternative to hospitalization; advances
in  medical  technology  which have enabled a growing number of treatments to be
provided  in  the  home  rather  than  requiring  hospitalization;  the  general
preference  of  patients  to  receive  treatment  in  a  familiar  environment;
reductions  in  the  length  of  hospital  stays  as a result of increasing cost
containment  efforts  in the health care industry; growing acceptance within the
medical  profession  of home health care and the rapid increase in the incidence
of  AIDS-related  diseases  and  cancer.

     Aging  Population.

     The  number of individuals over age 65 in the United States is estimated to
have  grown  from  25.7  million  in  1980,  or  11.3%  of  the  population,  to
approximately 34.1 million in 1996, or 12.9% of the population, and is projected
to  increase  to  more  than 35 million, or 12.8% of the population in 2000. The
elderly  have  traditionally  accounted  for  two to three times the average per
capita share of health care expenditures. As the number of Americans over age 65
increases,  the need for home health care services is also expected to increase.

     Cost  Effectiveness  of  Home  Health  Care  Services.

     National health care expenditures increased from approximately $697 billion
in  1990  (12.6%  of  the United States gross national product) to approximately
$1,008  billion  in 1995 (14.2% of the United States gross national product) and
approximately  to  $1,147  billion  in 1998 and is projected to increase to more


                                        6
<PAGE>
than $1,481 billion (15.9% of the United States cross national product) in 2000.
In  response  to  rapidly  rising  costs,  governmental  and private payers have
adopted  cost  containment  measures that encourage reduced hospital admissions,
reduced  lengths  of  stay  in  hospitals  and delayed nursing, home admissions.
Changes  in  hospital  reimbursement  methods  under  Medicare from a cost-based
method  to  a  fixed  reimbursement method based on the patient's diagnosis have
created  an  incentive  for  earlier discharge of patients from hospitals. These
measures  have  in  turn  fostered  an  increase in home health care which, when
appropriate,  provides  medically  necessary  care at significantly less expense
than  similar  care  provided  in  an  institutional  setting.

     Advances  in  Technology.

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

      Patient  Preference  and  Physician  Acceptance.

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

      Incidences  of  AIDS  and  Cancer.

     Increases in the incidence of AIDS/HIV infections and cancer have also been
responsible  for a significant portion of the growth in the home care market. As
of  June 1998, 665,357 cases of AIDS had been reported to the Center for Disease
Control (not including those with less advanced HIV who could still benefit from
treatment).  During  their  treatment,  AIDS/HIV  patients  may  receive several
courses  of  infusion  and  other  therapies  typically administered by infusion
therapy  companies, including AZT, aerosolized Pentamidine (TM), antibiotics and
nutritional support. The Company presently provides a limited amount of infusion
therapy  with  pharmaceuticals provided by licensed suppliers. The Company plans
to expand its infusion therapy operations during the next year. See "Home Health
Care  Services."

     The National Cancer Institute estimates that 8.2 million of Americans alive
today  have  a  history  of  cancer.  About  1.3  million  new cancer cases were
diagnosed  in  1999.  Cancer treatment is one of the fastest growing segments of
outpatient  infusion  therapy  due  to  increasing  numbers  of patients and new
technologies  that  allow for the therapy's safe and effective administration in
the  home  and  at alternate site locations. Over the course of their treatment,
cancer  patients  may  require  a  range  of  infusion  therapies,  including
chemotherapy,  pain  management  and  nutritional  support.


                                        7
<PAGE>
(b)  Financial  Information  About  Industry  Segments

     Not  Applicable

(c)  Narrative  Description  of  Business

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

Home  Health  Care  Services

     The  Company's  home  health  care services are provided principally by its
professional  and  paraprofessional staff, who provide personal care to patients
and,  to  a  lesser  extent,  by  its skilled nursing staff, who provide various
therapies  employing  medical  supplies  and  equipment  and  infusion  therapy.
Personal  care  and  nursing services for a particular patient can extend from a
few  visits to years of service and can involve intermittent or continuous care.
Approximately  90% of the Company's total net revenues in 1999 were attributable
to  services  by  its  paraprofessional  staff.

Certified  Paraprofessionals

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

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

     All  paraprofessional  personnel  must  pass  a  written  exam and a skills
competency test prior to employment, with all certificates having been validated
by  the  issuing  agency.  The Director of Nursing or Director of Maternal/Child
Health  in  each  of  the  Company's  branch  offices validates the professional


                                        8
<PAGE>
competency  of  all  new  hires.  Newly  hired  employees are re-evaluated as to
competency  within  six  months  of  their  employment  and  all  employees  are
re-evaluated  on  an  on-going,  basis at least semi-annually. In addition, they
undergo  an  orientation program which includes material regarding HIV patients,
Hepatitis  B,  universal  precautions  which  must  be  taken with all patients,
patient's  rights  issues,  and  the  Company's  policies  and  procedures.  An
orientation  manual  is  also  provided  to  each  employee.

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

Licensed  Professional  Nurses

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

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

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

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


                                        9
<PAGE>
     While the provision of licensed professional nursing services accounted for
less  than  10%  of the Company's net revenues in 1999, the Company has expanded
its  maternal/child care and infusion therapy operations in its existing markets
as  well  as  new  geographic  locations.  See  "Company  Strategy."

Company  Strategy

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

Acquisitions

     On December 8, 1997, a newly-formed wholly-owned subsidiary of the Company,
named  "NYHC  Newco  Paxxon,  Inc.",  a  New  York  corporation  ("NYHC Newco"),
purchased  from  Metro  Healthcare  Services,  Inc.,  a  New  Jersey corporation
("Metro"),  the home care business assets (other than accounts receivable) which
Metro  operated  in  West  Orange,  Budd  Lake and Jersey City, New Jersey for a
purchase  price  consisting of $580,000 paid at closing and a promissory note in
the  principal  sum  of  $200,000  payable in eight equal quarterly installments
commencing  March  5,  1998 together with accrued interest at a rate equal to 1%
per  annum  over the prime interest rate published by the Wall Street Journal on
December 8, 1997, adjusted quarterly. The promissory note is subordinated to all
obligations  due  to  the  Company's  banks  or other institutional lenders. The
promissory  note  and the covenants of NYHC Newco are guaranteed by the Company.
As  part  of  the  acquisition transaction, NYHC Newco assumed various leasehold
obligations  for  offices  together  with  various equipment leases for items of
business  equipment.


                                       10
<PAGE>
     On February 8, 1998, NYHC Newco purchased from Metro the home care business
assets  (other  than  accounts  receivable)  which  Metro  operated  in  Edison,
Shrewsbury  and  Toms  River,  New  Jersey  for  a  purchase price consisting of
$500,000  paid at closing and a promissory note in the principal sum of $580,000
payable  in  twelve equal quarterly installments commencing May 5, 1998 together
with  accrued  interest  at a rate equal to 1% per annum over the prime interest
rate  published  by  the  Wall  Street  Journal  on  February  8, 1998, adjusted
quarterly.  The  promissory  note  is subordinated to all obligations due to the
Company's  banks  or  other  institutional  lenders. The promissory note and the
covenants  of  NYHC  Newco  are  guaranteed  by  the  Company.  As  part  of the
acquisition  transaction,  NYHC  Newco  assumed  various  leasehold obligations.

     On  March  26,  1998,  NYHC  Newco purchased from Heart to Heart Healthcare
Services,  Inc.,  a  New  Jersey  corporation  ("Heart  to Heart") the home care
business  assets  (other than accounts receivable) which Heart to Heart operated
in  East  Orange and Hackensack, New Jersey for a purchase price consisting of a
promissory note in the principal sum of $1,150,000 payable in 24 equal quarterly
installments  commencing  June 26, 1998 together with accrued interest at a rate
equal  to 1% per annum over the prime interest rate published by the Wall Street
Journal  on  March  26,  1998,  adjusted  quarterly.  The  promissory  note  is
subordinated  to  all  obligations  due  to  the  Company's  banks  or  other
institutional  lenders.  The promissory note and the covenants of NYHC Newco are
guaranteed  by  the  Company. As part of the acquisition transaction, NYHC Newco
assumed various leasehold obligations together with various equipment leases for
items  of  business  equipment.

     As  noted  in  the Company's December 20, 1996 prospectus and in Item 12. -
Certain  Relationship and Related Transactions, certain of its directors are the
sole  stockholders  of  Heart  to  Heart.  The  Company  therefore  obtained  an
independent  opinion that the terms and conditions of the acquisition are, under
all  circumstances,  fair  to  the  Company.

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

     On  June  11,  1999 NYHC Newco completed the acquisition of the assets of a
home  health  care  office  in  Hackensack,  New Jersey, formerly owned by Staff
Builders  Services,  Inc. for the purchase price of $25,700.

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

     The three purchases in 1999 had an approximate revenue of $350,000.

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


                                       11
<PAGE>
     The Company is accounting for each of these acquisitions as a "purchase" in
accordance  with  Generally  Accepted  Accounting  Principles.

Branch  Offices

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

Expansion  of  Infusion  Therapy

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


                                       12
<PAGE>
Professional  Care  Resources

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

Organization  and  Operations

     The  Company  operates  24  hours  a  day,  seven  days  a week, to receive
referrals  and  coordinate services with physicians, case managers, patients and
their  families.  The  Company  provides  services  through its 12 principal and
branch offices and three recruitment and training, offices. The Company seeks to
achieve  economies  of  scale by having each branch office serve a large patient
population. Each office conducts its own marketing efforts, negotiates contracts
with  referral sources,  recruits and trains professionals and paraprofessionals
and  coordinates  patient care and care givers. Each office is typically staffed
with  a  branch  manager,  director  of  nursing,  nursing supervisor, home care
coordinators,  clerical  staff  and  nursing  services  staff.

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

Work  Flow

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

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


                                       13
<PAGE>
     The  clerical  staff  at  the  branch  office enters all of the information
regarding  the  case  into the local area computer network of the branch office,
which then generates the work schedule for the staff member(s), which provides a
detailed  description  of  the  services to be rendered, the hours and number of
days  during  which  the  care  is  to  be  provided. All of this information is
spontaneously received by the Company's principal office by way of the wide area
computer  network  linking  the  principal office to each of the branch offices.
This  information is then processed by the principal office computer system on a
weekly basis to (generate the documentation of the services being provided. Such
documentation  is  then  used to generate the billing for the service as well as
process  the  payroll  for  the  staff  member(s)  providing  the  service.

Referral  Sources

     The  Company  obtains  patients primarily through contracts, referrals from
hospitals, community-based health care institutions and social service agencies,
case  management and insurance companies. Referrals from these sources accounted
for  substantially  all  of  the  Company's  net  revenues  in 1999. The Company
generally  conducts  business  with  most of its institutional referral sources,
including  those referred to below, under one-year contracts which fix the rates
and terms of all future referrals but do not require that any referrals be made.
Under  these  contracts,  the referral sources refer patients to the Company and
the  Company bills the referral sources for services provided to patients. These
contracts  also  generally designate the kinds of services to be provided by the
Company's employees, liability insurance requirements, billing and recordkeeping
responsibilities,  complaint  procedures,  compliance  with applicable laws, and
rates  for  employee  hours  or  days  depending on the services to be provided.
Approximately  150  such  contracts  were  in  effect  as  of December 31, 1999.

     In January 1999, the Company ogbtained a significant referral  source  from
The City of New York to provide services for Medicaid patients.  The  annualized
revenue was estimated at $11,000,000 over the one-year term.

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

<TABLE>
<CAPTION>
                 Percentage  of  Net  Revenues
                 -----------------------------


Referring Institution                       1999   1998
-----------------------------------------  ------  -----
<S>                                        <C>     <C>
New York City Medicaid (1)                 22.94%
New Jersey Medical Assistance Program      18.97%  21.4%
County Departments of Social Services (2)   9.26%  18.6%
Beth Abraham Health Services                6.25%   8.3%
Kingsbridge Medical Center                  3.5 %   5.5%
<FN>
(1)    This  contract with the City of New York's Human Resources Administration
was  first  activated  in  1999  and  is  for  the provision of home health care
services  to  New  York  City's  Medicaid  patients.

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

     Overall,  the  Company's  ten  largest referring institutions accounted for
approximately  71.1%  of net revenues for 1999 and 67% of net revenues for 1998.


                                       14
<PAGE>
Billing  and  Collection

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

     Days  Sales  Outstanding ("DSO") is a measure of the average number of days
taken  by  the  Company  to collect its accounts receivable, calculated from the
date services are billed. For the year ended December 31, 1999 the companies DSO
was  100  compared to 103 for the year ended December 31, 1998.  The improvement
of  3  days  in  DSO  is  the  net effect of combining the New Jersey DSO (which
consist  primarily  of  Medicaid billing) of 55 days, the Home attendant program
(which  consist primarily of Medicaid billing) DSO of 77 days and New York's DSO
which  are  135  days.

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

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

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

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

     Accounts  receivable  reports  are  produced  weekly  and  are analyzed and
reviewed  by staff and management to locate negative trends or emerging problems
which  would  require  immediate attention. All unpaid invoices are reviewed and
telephone  contacts  established  for  invoices  over 90 days old. The Company's
experience  with  collection  of  accounts  receivable  has been favorable, with
uncollectible  accounts  within  the  allowances  provided  by  the  Company.

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


                                       15
<PAGE>
Reimbursement

     The  Company  is  reimbursed  for  its  services,  primarily  by  referring
institutions,  such  as  health  care  institutions and social service agencies,
which in turn receive their reimbursement from Medicaid, Medicare and, to a much
lesser  extent,  through  direct  payments  by  insurance  companies and private
payers. New York State and New Jersey Medicaid programs constitute the Company's
largest  reimbursement source, when including both direct Medicaid reimbursement
and  indirect  Medicaid  payments  through  many  of  the  Company's  referring
institutions.  For  each  of 1998 and 1999, payments from referring institutions
which  receive  direct payments from Medicare and Medicaid, together with direct
reimbursement  to  the Company from Medicaid, accounted for approximately 95% of
net  revenues.  For  the  same  periods,  five referring institutions  with home
health care programs  accounted  for approximately 54% and 44%, respectively, of
net  revenues  for  1998 and 1999. Direct reimbursements from private  insurers,
prepaid  health  plans,  patients  and  other  private  sources  accounted  for
approximately  5% of net revenues for each of the calendar years
1998  and  1999.

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

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

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


                                       16
<PAGE>
     Quality  Assurance

      The Company has established a total quality management program including a
quality  assurance  program to ensure that its service standards are implemented
and that the objectives of those standards are met. The Company believes that it
has  developed  and implemented service standards that comply with or exceed the
service  standards  required by JCAHO. The Company received "Accreditation" from
JCAHO after its triannual survey in November 1997. In February 1996, the Company
was selected by the University of Colorado Health Sciences Center as one of only
22 home health care agencies participating in a two to three year study known as
the  New York State Outcome-Based Quality Improvement in Home Care Demonstration
project  being  funded  by the New York State Department of Health, by reason of
the  Company's  commitment to both quality assurance and improvement. In January
2000,  the  company renewed it's contract with OBQI for an additional year.  The
Company  believes that its reputation for quality patient care has been and will
continue  to be a significant factor in its success. An adverse determination by
JCAHO  regarding  the  Company  on  any branch office could adversely affect the
Company's  reputation  and  competitive  position.

     The  Company's  quality  assurance  program  includes  the  following:

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

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

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

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


                                       17
<PAGE>
     Sales  and  Marketing

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

     Government  Regulation

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

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

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

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


                                       18
<PAGE>
     Various Federal and state laws regulate the relationship among providers of
healthcare  services,  including employment or service contracts, and investment
relationships.  These laws include the broadly worded fraud and abuse provisions
of  the  Social  Security  Act  that are applicable to the Medicare and Medicaid
programs,  which  prohibit  various  transactions involving Medicare or Medicaid
covered  patients  or  services.  Among  other things, these provisions restrict
referrals  for certain designated health services by physicians to entities with
which  the physician or the physician's immediate family member has a "financial
relationship"  and  the  receipt  of remuneration by anyone in return for, or to
induce,  the  referral  of  a  patient  for  treatment  or purchasing or leasing
equipment  or  services  that  are paid for, in whole or in part, by Medicare or
Medicaid.  Violations  of  these  provisions  may  result  in  civil or criminal
penalties for individuals or entities and/or exclusion from participation in the
Medicare  and  Medicaid  programs. The future interpretation of these provisions
and  their  applicability  to the Company's operations cannot be fully predicted
with  certainty.

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

     New  York  and  other states also have statutes and regulations prohibiting
payments  for  patient  referrals and other types of financial arrangements with
health  care  providers  which,  while  similar  in many respects to the federal
legislation,  vary  from  state  to state, are often vague and have infrequently
been  interpreted  by  courts or regulatory agencies. Sanctions for violation of
these  state  restrictions  may include loss of licensure and civil and criminal
penalties.  In  addition,  the  professional  conduct of physicians is regulated
under  state  law.  Under  New  York  law,  it  is  unprofessional conduct for a
physician to receive, directly or indirectly, any fee or other consideration for
the  referral  of  a  patient.  Finally,  under New York law, a physician with a
financial  interest  in a health care provider must disclose such information to
the  patients  and  advise  them  of  alternative  providers.

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

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

     In addition, the Company is subject to laws and regulations which relate to
business  corporations in general, including antitrust laws, occupational health
and safety laws and environmental laws (which relate, among other things, to the


                                       19
<PAGE>
disposal,  transportation and handling of hazardous and infectious wastes). None
of these laws and regulations has had a material adverse effect on the Company's
business  or  competitive position or required material expenditures on the part
of the Company, although no assurance can be given that such will continue to be
the  case  in  the  future.

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

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

Competition

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

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

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

     The  United  States  health  care  industry  generally  faces a shortage of
qualified  personnel.  Accordingly,  the Company experiences intense competition
from  other companies in recruiting qualified health care personnel for its home
health  care  operations.  The  Company's  success  to  date  has depended, to a
significant  degree,  on its ability to recruit and retain qualified health care
personnel.  Most  of  the  registered  and  licensed  nurses  and  health  care
paraprofessionals  who are employed by the Company are also registered with, and


                                       20
<PAGE>
may accept placements from time to time through, competitors of the Company. The
Company  believes  it  is  able  to  compete  successfully  for  nursing  and
paraprofessional  personnel  by  aggressive  recruitment  through  newspaper
advertisements,  work  fairs/job  fairs,  flexible  work  schedules  and
competitive  compensation arrangements. There can be no assurance, however, that
the  Company will be able to continue to attract and retain qualified personnel.
The  inability to either attract or retain such qualified personnel would have a
material  adverse  effect  on  the  Company's  business.

Employees

     On March 1, 2000, the Company had 1,311 employees, of whom 96 are salaried,
including  2 executive officers, 3 vice presidents of operations, 17 recruiters,
9  administrators/branch managers, 6 nurses, 25 accounting/clerical staff and 34
field  staff  supervisors.  The  remaining 1,215 employees are paid on an hourly
basis  and  consist  of professional and paraprofessional employees. None of the
Company's  employees  are  compensated  on  an independent contractor basis. The
Company  believes  that  its  employee relations are good. None of the Company's
employees  are  represented  by  a  labor  union.

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

Preferred  Stock

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

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


                                       21
<PAGE>
Transfer  Agent

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

Item  2.     DESCRIPTION  OF  PROPERTIES.

     The  Company's  principal  place  of  business  is  a  one-story commercial
building  of  approximately  6,000  square feet located at 1850 McDonald Avenue,
Brooklyn, New York 11223, which is leased from an unaffiliated person. The lease
is  for  a  period  ending March 30, 2005. The  rent  is $5,850 per month and is
subject to  annual  increases equal to 4% of the total prior year's monthly rent
and  all  increases  in  real  estate taxes for the original and renewal  terms.

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

<TABLE>
<CAPTION>
                                                                 Lease Terms
                                                             ----------------------
                                       Approximate
                                         Opening    Square   Expiration    Annual
Location                                  Date      Footage     Date     Rental(l)
-------------------------------------  -----------  -------  ----------  ----------
<S>                                    <C>          <C>      <C>         <C>
Kings County (2)
Branch Office
1667 Flatbush Avenue
Brooklyn, NY 11210                           11/95    2,000    11/01/00  $   42,291

Nassau County Branch Office
175 Fulton Avenue
Hempstead, NY 11550                           9/93    1,600    10/31/03  $   24,888

Westchester County Branch Office
6 Gramatan Avenue
Mt. Vernon, NY 10550                         12/96    2,000    10/30/01  $   28,566

Rockland County Branch Office
49 South Main Street
Spring Valley, NY 10977                      10/94    1,500     9/30/00  $   17,568

Orange County Branch Office
45 Grand Street
Newburgh, NY 11250                            9/92    1,500     4/30/01  $   11,200

Queens Recruitment Office
91-31 Queens Blvd.
Elmhurst, NY 11373                           11/97      500    10/31/00  $   10,861


                                       22
<PAGE>
Staten Island Recruitment Office
37 New Dorp Plaza
Staten Island, NY 10306                       6/97      500     5/31/99  $   11,075

White Plains Recruitment Office (3)
237 Mamaroneck Avenue
White Plains NY 10605                      1/12/99      500     1/31/99  $    6,915

West Orange Branch Office (4)
111 Northfield Avenue Suite 310
West Orange, NJ 07052                        12/97    1,500    12/31/99  $   28,424

Jersey City Branch Office
2780 Kennedy Blvd.
Jersey City, NJ 07306                         5/98    1,000     4/01/01  $   17,000

Budd Lake  Branch Office
389 Route 46
Budd Lake, NJ 07828                          12/97    1,700    11/30/01  $   16,000

Shrewsbury Branch Office
167 Avenue at the Commons, Suite 11B
Shrewsbury, NJ 07702                          3/98    1,750     4/30/02  $   18,133

Toms River Branch Office
617 Highway 37 West
Toms River, NJ 08753                          2/98    2,400     5/01/01  $   28,264

Edison Branch Office(3)
85 Route 27
Edison, NJ 08820                              2/98    1,500     5/31/99  $   13,680

Edison Branch Office(5)
629 Amboy Avenue
Edison, NJ 08837                              8/99    1,450     7/31/01  $   19,575

East Orange Branch Office
60 Evergreen Place
East Orange, NJ 07018                         9/97    2,000     8/31/02  $   18,000

Hackensack Recruitment Office(6)
144 Main Street Suite 211
Hackensack, NJ 07601                          7/99      300     6/30/99  $   10,923
<FN>
(1)     All  of  the  leases provide for additional rentals based upon increases in
real  estate  taxes  and  other  cost  escalations.

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


                                       23
<PAGE>
(3)  The  Company  did  not  renew  this  lease.

(4) The Company's West Orange location has been merged into the East Orange office.

(5)  The  Company  relocated  the  Edison  Office.

(6)  The  Company's  Hackensack  location  moved  from  suite  211  to  suite  212.
</TABLE>

Item  3.     LEGAL  PROCEEDINGS

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

     To  the  best  of  the  Company's  knowledge,  there  are no material legal
proceedings  pending  or  threatened  against  the  Company  or  its properties.

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

     At a special shareholders' meeting held on December 30, 1999, the Company's
shareholders  approved  a proposal giving the Board of Director the authority to
implement  a  1-for-2  reverse  stock split at any time until December 31, 2000.
The  Company's  Board  of Directors made that proposal so that it would have the
ability  to  implement the reverse stock split if it believed that a decrease in
the  number  of  outstanding  shares  of  Common Stock might improve the trading
market  for  the  Common  Stock  if  required to maintain on the Nasdaq SmallCap
Market, which requires a minimum price of $1.00 per share.  For a period of more
than  30  consecutive  days  prior  to  that shareholder' meeting, the Company's
Common  Stock  had a reported closing price on the Nasdaq SmalCap Market of less
than  $1.00  per  share, with the result that it became eligible for de-listing.
As  of  the  date   of this  report,  the  reverse  stock  split  authorized  by
shareholders  on  December  30,  1999  has  not been implemented by the Board of
Directors  because  the reported closing price of the Company's common stock has
since  increased  to a level which is in compliance with the listing requirement
of the Nasdaq SmallCap Market.

     At  the same meeting, the Company's shareholders also approved the proposal
authorizing an amendment to the Company's Certificate of Incorporation to permit
shareholder  action  to  be  taken  by  a  vote on written consent signed by the
holders of a sufficient number of outstanding shares to constitute not less than
the  minimum  number of votes which would be necessary to authorize or take such
action  at  a  shareholders'  meeting  at which all shares entitled to vote were
present  and  voted.  The  Board  of  Directors made that proposal to enable the
Company  and  its shareholders to take action more promptly and less expensively
than  would  be  possible  without  adopting  such  an  amendment.


                                       24
<PAGE>
                                     PART II

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

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

<TABLE>
<CAPTION>
Fiscal 1999     High   Low
--------------  -----  ----
<S>             <C>    <C>

First Quarter   1.312  .771

Second Quarter  3.125  .906

Third Quarter   1.188  .625

Fourth Quarter  1.75   .406
</TABLE>

     At  March  21, 2000 the Company had 104 holders of record and more than 482
beneficial  holders  of  its  shares  of  Common  Stock.On March 27 , 2000,  the
last sale price of the shares of Common Stock as reported by  NASDAQ  was  $1.50
per  share.

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

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

          Fiscal  year  ended  December  31,  1999  compared
          with  fiscal  year  ended  December  31,  1998.

     Revenues   for   the  year  ended  December  31,   1999  increased  18%  to
approximately  $23,772,000  from  approximately  $20,224,000  for the year ended
December  31,  1998.  Most  of  the  increase is attributable to increased hours
of service provided under the new contract with the City of New York.

     Cost  of professional care of patients for the year ended December 31, 1999
increased  to  approximately  $17,165,000 from approximately $13,795,000 for the
year  ended December 31, 1998. The increase resulted from hiring additional home
health care personnel to service the increased business in New York. The cost of
professional  care  of  patients  as  a  percentage  of revenues increased 4% to
approximately  72.2%  for  the  year  ended December 31, 1999 from approximately
68.2%  for prior year ended December 31, 1998. The increase was primarily caused
by  the  lower  gross  margin  on  the  HRA  contract.


                                       25
<PAGE>
     Selling,  general  and  administrative expenses for the year ended December
31, 1999 increased to approximately $6,190,000 from approximately $5,237,000 for
the  year ended December 31, 1998. The increase resulted primarily from the cost
associated  with  the  increased  revenue.  Selling,  general and administrative
expenses  as  a  percentage  of  revenue  remained  at  26%.

     Interest  expense  for  the  year ended December 31, 1999 was approximately
$323,000 as compared to approximately $321,000 for the year ended December  31,
1998.

     The  credit  for federal, state and local taxes for the year ended December
31,  1999  of  $180,000  is the result of the loss for the year as compared to a
provision  for  taxes  of approximately $256,000 for the year ended December 31,
1998.

     In  view  of  the  foregoing, and in addition to the initial start-up costs
incurred  during  the first nine months that it took for New York Health Care to
receive  it's  full  compliment of the cases allotted to it by HRA, caused a net
loss for the year ended December 31, 1999 amounting to approximately $235,000 as
compared to approximately $341,000 of net income for the year ended December 31,
1998.

Liquidity  and  Capital  Resources

     The  Company's  liquidity  and  capital  resources  are  generated  through
internally generated funds, cash on hand and amounts available under its line of
credit.  The  Company's  line  of  credit  expired  during 1999 and the bank has
continued  to  fund  the  line  of  credit on a month to month basis pending the
Company's  obtaining  replacement  financing. There can be no guarantee that the
bank will continue to fund the line of credit.  The Company is in the process of
obtaining  replacement  financing.  In  addition,  the Company failed to make an
October  1  1999 payment on a note payable to a related party, and paid the July
1,  1999 payment in  October 1999.  In order to accelerate cash flow, in  August
1999 the Company  entered  into an agreement with a third party to sell  certain
receivables.

     The  Company  purchased three Staff Builders offices and computer equipment
for  approximately  $174,000  in  1999.  The  Company paid current maturities of
long-term  debt  and  capital leases of approximately $504,000, purchased Common
Stock for the treasury of approximately $39,000 and paid dividends of $13,500 to
preferred  stock  holders  in 1999.  The Company borrowed an additional $250,000
under  its  line  of  credit  to  fund  the start-up costs for the New York Home
Attendant  Agency  that  began  serving  patients  on  January  6,  1999.


                                       26
<PAGE>
     As  of  December  31, 1999, approximately $6,364,857 (approximately 62%) of
the Company's total assets consisted of accounts receivable from clients who are
reimbursed  by third-party payors, as compared to $5,869,000 (approximately 59%)
as  of  December  31,  1998,  an increase  of 3%.  Such payors generally require
substantial  documentation  in order to process claims. The increase of accounts
receivable from clients who are reimbursed by third-party payors as a percentage
of  total  assets  is  the  result  of  an  increase  in revenue due to the new
contract with the City of New York.

     Days  Sales  Outstanding ("DSO") is a measure of the average number of days
taken  by  the  Company  to collect its accounts receivable, calculated from the
date services are billed. For the year ended  December 31, ,1999  the  Company's
DSO  was  100  compared  to  103  for  the  year  ended  December 31, 1998.  The
improvement  of  3 days in DSO is the net effect of combining the New Jersey DSO
(which consist primarily of Medicaid billing) of 55 days with The Home Attendant
program  DSO  (which  consist   primarily  of  Medicaid billing)  of 77 days and
New York's  DSO of  135  days.

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

Potential  Regulatory  Changes

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


                                       27
<PAGE>
                                    PART III

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

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

<TABLE>
<CAPTION>
 Name                        Age                     Position
---------------------------  ---  -----------------------------------------------
<S>                          <C>  <C>
 Jerry Braun                  43  President, Chief Executive Officer and Director

 Jacob Rosenberg              42  Vice President, Chief Operating Officer, Chief
                                  Financial and Accounting Officer, Seceratary and Director

*David Grossman               31  Chief Financial Officer and Chief
                                  Accounting Officer

 Hirsch Chitrik               71  Director

 Sid Borenstein               46  Director

 H. Gene Berger               59  Director

 Charles J. Pendola           54  Director
<FN>
*David  Grossman  resigned  from  the  Company  in  August  1999.
</TABLE>

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

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

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

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


                                       28
<PAGE>
     H.  Gene  Berger  has been a director  of the Company since February  1998.
Since  1981 Mr.  Berger  has  been  the  president  of Jay  Isle  Associates,  a
consulting firm to the health care industry.  From October 1991 to October 1997,
Mr. Berger was employed by  Transworld  Health Care,  Inc.,  which is a regional
provider of alternate  site health care  services and  products,  in a number of
capacities  including  executive  vice  president,  president,  chief  operating
officer  and  chief  executive  officer.

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

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

     The  Company's  Board  of  Directors  did  not  meet during the fiscal year
ended  December  31,  1999  and  took  action  in  lieu of meetings by executing
unanimous  written  consents.

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

Employment  Agreements

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

     Mr.  Braun's  agreement  provides that he will serve as President and Chief
Executive  Officer  in  consideration of (i) initial annual base compensation of
$232,925;  (ii)  reimbursement  of  authorized  business  expenses  incurred  in
connection  with  the  conduct of the Company's business; (iii) participation in
the  Company's  Bonus  Plan,  401  (k)  Plan and Option Plan; (iv) an automobile
reimbursement  allowance  of  $750 per month toward automobile leasing costs and
payment  of  reimbursement of automobile insurance and maintenance costs; (v) an
allowance  of $5,000 per year towards the cost of life insurance, like insurance
and  disability  insurance; (vi) four weeks paid vacation; vacation and eighteen
sick  or  personal leave days; and (vii) an annual increase in salary of 10% for
each  year.


                                       29
<PAGE>
     Mr.  Rosenberg's agreement has the same general terms and conditions as Mr.
Braun's,  except  that  he  will  serve  as  Vice President, Secretary and Chief
Operating  Officer,  and  the  annual  base  compensation  $186,340.

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

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

Directors  Compensation

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

Savings  and  Stock  Option  Plans

401(k)  Plan

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


                                       30
<PAGE>
Plan,  the  Company  may  make  matching  contributions on behalf of the pre-tax
contributions made by participants. For 1995 and for the first half of 1996, the
Company  contributed  50% of each dollar contributed to the Plan by participants
up  to  a maximum of 6% of the participant's salary.  All participants are fully
vested  in  their  accounts  in  the  Plan with respect to their salary deferral
contributions  and  are  vested in Company matching contributions at the rate of
20%  per  year  for two years through four years of  service, with 100%  vesting
after  five  years of  service.  However, participants who are first hired after
December 31, 1994 will not be vested in the Company matching contributions until
the completion of five years service,  when they become 100% vested. The Company
has  agreed with the Underwriter that no discretionary contributions to the Plan
may  be  made  for  officers  or  stockholders  of  the  Company.

Stock  Option  Plan

     In  March  1996, the Company's Board of Directors and stockholders approved
and  adopted  the  New  York  Health  Care, Inc. Performance Incentive Plan (the
"Option  Plan") providing for options to purchase up to 262,500 shares of Common
Stock  for  to  key  employees  of the Company.  On June 25, 1998, the Company's
shareholders  ratified  an  amendment  to  the  Option  Plan  authorizing  the
reservation  of  an additional 210,000 shares of Common Stock for issuance under
that  plan  for  each  of  two additional years, resulting in a total of 682,500
shares  in  the  Option  Plan.  On  July 28,1999  the  Option  Plan  was further
amended  to  provide  an  additional 350,000 shares of common stock for issuance
under  the  Option Plan after January 1, 2000.  The total number of shares which
may  be  issued  under  the plan increased from 682,500 to 1,032,500 shares. The
amendment also provided that each stock option granted under the plan, including
unexercised options outstanding on the date of the amendment, may exercisable in
either  one, two or three equal annual installments.  To date, options have been
granted  under  the  plan  for  a  total of 626,500  shares.  The Option Plan is
administered  by  a  Compensation  Committee appointed by the Board of Directors
(the  "Committee"),  which  is  authorized  to grant incentive stock options and
non-qualified  stock  options  to  selected  employees  of  the  Company  and to
determine  the participants, the number of options to be granted and other terms
and  provisions  of  each  option.

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

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


                                       31
<PAGE>
     If  a  grantee's  employment  by, or provision of services  to, the Company
shall be terminated,  the Committee may, in its discretion,  permit the exercise
of stock options for a period not to exceed one year following such  termination
of  employment  with respect to incentive  stock options and for a period not to
extend beyond the expiration date with respect to non-qualified options,  except
that no incentive stock option may be exercised after three months following the
grantee's  termination  of  employment,  unless it is due to death or  permanent
disability,  in which case they may be exercised  for a period of up to one year
following  such  termination.


                                       32
<PAGE>
<TABLE>
<CAPTION>
                      Option/SAR Grants in Last Fiscal Year

                                Individual Grants
--------------------------------------------------------------------------------


                   Number of     % of Total
                  Securities    Options/SARs
                  Underlying     Granted to
                 Options/SARs   Employees in    Exercise or      Expiration
Name                Granted      Fiscal Year    Base Price          Date
---------------  -------------  -------------  -------------  -----------------
<S>              <C>            <C>            <C>            <C>
Jerry Braun      50,000 Shares            25%  $ .6875/Share  May 11, 2004
                 50,000 Shares            25%  $  .625/Share  May 11, 2008

Jacob Rosenberg  50,000 Shares            25%  $ .6875/Share  May 11, 2004
                 50,000 Shares            25%  $  .625/Share  May 11, 2008
</TABLE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------

                    Aggregated Option/SAR Exercises in Last fiscal Year
                           and Fiscal Year-End Option/SAR Values

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


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

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


                                       33
<PAGE>
     Other than the stock options described in the tables above, the Company has
not  issued  any  options  to  officers  and directors under the Option Plan, or
otherwise, except common stock purchase warrants issued to two outside directors
during  1999.  On  November 12, 1999, the Registrant issued warrants pursuant to
warrant  agreements  with each of H. Gene Berger and Charles J. Pendola, who are
directors  of  the  Registrant.  Each  warrant  provided  that  the holder could
purchase  up to an aggregate of 10,000 shares of the Registrant's $.01 par value
common  stock  at an exercise price of $.625 per share at any time comencing May
12,  2000  up  until  November  12,  2004.

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

Item  11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

     The  following table sets forth certain information regarding shares of the
Common  Stock  beneficially owned as of March 27, 2000 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)                     1,415,639           33.20%
929 East 28th Street
Brooklyn, NY  11210

Jacob Rosenberg(3)                   810,096           19.96%
932 East 29th Street
Brooklyn, NY  11210


                                       34
<PAGE>
Samson Soroka(4)                     551,606           14.59%
1228 East 22nd Street
Brooklyn, NY  11210

Hirsch Chitrik(5)                    616,075           16.27%
1401 President Street
Brooklyn, NY  11213

Sid Borenstein(6)                    136,697            3.69%
1246 East 10th Street
Brooklyn, NY  11230

H. Gene Berger (7)                    20,000             .54%
11 Fenimore Drive
Scotch Plains, NJ 07076

Charles J. Pendola(8)                 10,000             .27%
18 Guild Court
Plainview, NY 11803-3932

All officers and directors
as a group (7 persons)(1)(2)
(3)(4)(5)(6)(7)(8)                 3,560,113           72.03%
<FN>
(1)     The shares of Common Stock owned by each person or by the group, and the
shares  included in the total number of shares of Common Stock outstanding, have
been  adjusted  in  accordance with Rule 13d-3 under the Securities Exchange Act
of  1934,  as  amended,  to  reflect  the  ownership  of  shares  issuable  upon
exercise  of  outstanding  options,  warrants  or other common stock equivalents
which  are  exercisable  within  60  days. As provided in such Rule, such shares
issuable  to  any  holder  are deemed outstanding for the purpose of calculating
such  holder's  beneficial  ownership  but  not  any  other  holder's beneficial
ownership.

(2)     Includes  a  total of  373,750 shares of  Common  Stock  issuable  upon
the  exercise of stock options granted to Mr. Braun and 221,391 shares issuable
upon  the  conversion  of  shares  of  Class  A  Convertible  Preferred  Stock.

(3)     Includes  a  total of 280,000 shares of Common Stock  issuable  upon the
exercise  of  stock  options  granted  to  Mr.  Rosenberg  and  110,695  shares
issuable  upon  the  conversion  of  his shares of Class A Convertible Preferred
Stock.

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

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


                                       35
<PAGE>
(6)     Includes  29,519  shares of Common Stock issuable upon the conversion of
Mr.  Borenstein's  shares  of  Class  A  Convertible  Preferred  Stock.

(7)     Includes  20,000  shares  of  Common Stock issuable upon the exercise of
Common  Stock  Purchase  Warrants  granted  to  Mr.  Berger.

(8)     Includes  10,000  shares of Common Stock issuable upon the exercise of a
common  stock  purchase  warrant  granted  to  Mr.  Pendola.
</TABLE>

Item  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

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

     On  March  26,  1998, NYHC Newco, a wholly-owned subsidiary of the Company,
purchased  Heart to Heart's  home care  business  assets  (other  than  accounts
receivable)  for  a  purchase  price  consisting  of  a  promissory  note in the
principal  sum  of  $1,150,000  payable  in  24  equal  quarterly   installments
commencing  June 26, 1998 together  with accrued  interest at a rate equal to 1%
per annum over the prime  interest rate  published by the Wall Street Journal on
March 26, 1998, adjusted  quarterly.  The promissory note is subordinated to all
obligations  due  to  the  Company's banks or other institutional  lenders.  The
promissory  note  and the covenants of NYHC Newco are guaranteed by the Company.
As part of the acquisition transaction, NYHC Newco assumed leasehold obligations
for  the  two  offices  located  in  East Orange (expiring August 31,  2002) and
Hackensack,  New Jersey  (expiring  May 31, 1998) in the aggregate sum of $1,815
per  month,  together  with  various  equipment  leases  for  items of  business
equipment.  Because  directors  of the Company are the owners of Heart to Heart,
the Company obtained an independent opinion that the terms and conditions of the
acquisition agreement with Heart to Heart are, under all circumstances,  fair to
the  Company.


                                       36
<PAGE>
     On  June  2, 1998, the Company issued stock options pursuant to Option Plan
to  each  of Jerry  Braun,  Jacob  Rosenberg and David  Grossman.  Mr. Braun was
granted  an  Incentive  Stock  Option  to purchase up to an aggregate  of 55,000
shares  of the Company's  Common Stock at an exercise price of $1.7875 per share
at any time up until June 2, 2003 and a  Non-Qualified  Stock Option to purchase
up to an aggregate of 55,000 shares of the Company's Common Stock at an exercise
price  of $1.625 per share at any time up until June 2, 2008.  Mr. Rosenberg was
granted  an  Incentive  Stock  Option  to  purchase up to an aggregate of 55,000
shares of the Company's  Common Stock at an exercise  price of $1.7875 per share
at any time up until June 2, 2003 and a  Non-Qualified  Stock Option to purchase
up to an aggregate of 55,000 shares of the Company's Common Stock at an exercise
price of $1.625  per share at any time up until June 2, 2008.  Mr. Grossman  was
granted an Incentive Stock Option to purchase up to an aggregate of 7,500 shares
of the  Company's  Common Stock at an exercise  price of $1.625 per share at any
time  up  until  June  2,  2008.

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

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

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


                                       37
<PAGE>
Rosenberg  was  granted an Incentive Stock Option to purchase up to an aggregate
of  35,000 shares of the Company's  Common Stock at an exercise price of $1.0318
per  share at any time up until  December  23,  2003 and a  Non-Qualified  Stock
Option  to purchase up to an aggregate of 35,000 shares of the  Company's Common
Stock  at  an  exercise  price of $.938 per share any time up until December 23,
2008.  Mr.  Grossman  was granted an Incentive Stock Option to purchase up to an
aggregate of 10,000 shares of the Company's Common Stock at an exercise price of
$.938  per  share  at  any  time  up  until  December  23,  2008.

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

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

     On  November  12,  1999,  the  Company  issued warrants pursanut to warrant
agreements  with  each  of  H. Gene Berger and Charles J. Pendola.  Each warrant
provided  that  the holder could purchase up to an aggregate of 10,000 shares of
the  Company's  $.01  par  value  common stock at an exercise price of $.625 per
share  at  any  time  commencing  May  12,  2000  up  until  November  11, 2004.

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

     The transactions  described above involve actual or potential  conflicts of
interest  between the Company and its officers or directors.  In order to reduce
the potential for conflicts of interest between the Company and its officers and
directors,  prior to entering into any transaction in which a potential material
conflict  of  interest  might  exist,  the  Company's  policy  has been and will


                                       38
<PAGE>
continue  to be that the Company does not enter into transactions with officers,
directors  or other  affiliates unless the terms of the transaction are at least
as  favorable  to the Company as those which would have been  obtainable from an
unaffiliated  source.  The  Company  has  no  plans to enter into any additional
transactions which involve actual or potential conflicts of interest between the
Company  and  its  officers  or  directors  and  will  not  enter  into any such
transactions  in  the future without first obtaining an independent opinion with
regard  to  the  fairness to the Company of the terms and conditions of any such
transaction.


                                       39
<PAGE>
Item  13.     EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULES,AND  REPORTS  ON
              FORM  8-K

(a)  The  following  documents  are  filed  as  part  of  the  Report:

     (1)  FINANCIAL  STATEMENTS:

     Report  of  Independent  Certified  Public  Accountants.

     Consolidated  Balance  Sheet  at  December  31,  1999.

     Consolidated  Statements  of  Operations for the Years Ended  December  31,
     1999  and  1998.

     Consolidated  Statements  of  Stockholders'  Equity  for  the  Years  Ended
     December  31,  1999  and  1998.

     Consolidated  Statements  of  Cash Flows for the Years Ended  December  31,
     1999  and  1998.

     Notes  to  consolidated  Financial  Statements.

     (2)  FINANCIAL  STATEMENT  SCHEDULES.

     NONE

     (3)  EXHIBITS


<TABLE>
<CAPTION>
Exhibit
Number   Description of Exhibit
-------  ----------------------
<S>      <C>
1.1      Form of Underwriting Agreement.*

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

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

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

3.1      Certificate of Incorporation of the Company.*


                                       40
<PAGE>
3.2      Restated Certificate of Incorporation of the
         Company.*

3.3      Certificate of Correction of Restated Certificate of
         Incorporation of New York Health Care, Inc.*


3.4      Amendment to the Certificate of Incorporation filed
         October 17, 1996.*

3.5      By-laws of the Company.*

3.6      Amendment to the Certificate of Incorporation of the
         Company filed December 4, 1996.*

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

4.1      Form of certificate evidencing shares of Common
         Stock.*

4.2      Underwriter's Warrant Agreement and Form of
         Underwriter's Warrant.*

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

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

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

10.4     Deed for 1667 Flatbush Avenue, Brooklyn, New York
         from Tiara Realty Co. to the Company dated April 22, 1994.*

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


                                       41
<PAGE>
10.6     Lease for 49 South Main Street, Spring Valley, New
         York by and between the Company and Joffe
         Management dated November 1, 1994.*

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

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.*

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.*

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.*

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.*

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

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

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

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


                                       42
<PAGE>
10.16    Lease for 1667 Flatbush Avenue, Brooklyn, New
         York by and between the Company and 1667 Flatbush
         Avenue LLC dated November 1, 1995.*

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.*

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

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.*

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

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

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

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

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

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


                                       43
<PAGE>
10.26    Stock Option Agreement by and between the
         Company and Jerry Braun dated March 26, 1996.*

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

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

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

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

10.31    Agreement for the Purchase of Accounts Receivable
         between the Company and 1667 Flatbush Avenue
         LLC dated July 8, 1996.*

10.32    401 (k) Plan for the Company.*

10.33    Performance Incentive Plan for the Company.*

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

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

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


                                       44
<PAGE>
10.37    Lease for 6 Gramatan Avenue, Mount Vernon, New
         York, 10550 by and between the Company and 6
         Gramatan Avenue Corp. dated December 1, 1996.*

10.38    Form of Financial Consulting Agreement with H.J.
         Meyers & Co., Inc.*

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

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

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

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

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

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

11       Computation of Earnings Per Common Share of the
         Company.
<FN>
*        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.

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

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

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

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


                                       45
<PAGE>
******   Incorporated by reference to Exhibits filed as part of the Company's Form
         10-QSB Report  for  the  quarter  ended  June  30,  1999.

*******  Incorporated  by  reference  to  Exhibits filed as part of the Company's
         Form  10-QSB Report  for  the  quarter  ended  September  30,  1999.
</TABLE>

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

(b)     Reports  on  Form  8-K.

        The  company did not file any reports on Form 8-K during the year  ended
        December 31,  1999.


                                       46
<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  29,  2000

                              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 29, 2000
----------------------  Officer and Director
Jerry Braun


/s/ Jacob Rosenberg     Vice President, Chief Operating    March 29, 2000
----------------------  Officer, Chief Financial and
Jacob Rosenberg         Accounting Officer, Secretary,
                        Director

/s/ Hirsch Chitrik      Director                           March 29, 2000
----------------------
Hirsch Chitrik


/s/ Sid Borenstein      Director                           March 29, 2000
----------------------
Sid Borenstein


/s/ H. Gene Berger      Director                           March 29, 2000
----------------------
H. Gene Berger


/s/ Charles J. Pendola  Director                           March 29, 2000
----------------------
Charles J. Pendola


                                       47
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                   -------------------------------------------

NEW  YORK  HEALTH  CARE,  INC.:


Independent Auditors' Report                                            F-1

Consolidated Balance Sheet at December 31, 1999                         F-2

Consolidated Statements of Operations for the Years Ended
December 31, 1998 and 1999                                              F-3

Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1998 and 1999                                              F-4

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998 and 1999                                              F-5

Notes to Consolidated Financial Statements                           F-6 - F-22


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



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

We  have  audited the accompanying consolidated balance sheet of New York Health
Care,  Inc.  and Subsidiary (the "Corporation") as of December 31, 1999, and the
related  consolidated  statements  of  operations, shareholders' equity and cash
flows  for  the  years  ended  December  31,  1998  and  1999.  These  financial
statements  are  the  responsibility  of  the  Corporation's  management.  Our
responsibility  is  to express an opinion on these financial statements based on
our  audits.

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

In  our  opinion,  the financial statements referred to above present fairly, in
all  material respects, the financial position of New York Health Care, Inc. and
Subsidiary  as  of  December 31, 1999, and the results of its operations and its
cash  flows  for  the  years ended December 31, 1998 and 1999 in conformity with
generally  accepted  accounting  principles.

Reference  is made to Note 1 for information relating to the Company's plans for
replacing  its  line  of  credit.



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



New  York,  NY
March  17,  2000


                                       F-1
<PAGE>
<TABLE>
<CAPTION>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 1999

                                   A S S E T S

<S>                                                              <C>
Current assets:
  Cash and cash equivalents                                      $    97,114
  Accounts receivable, net of allowance for uncollectible
    amounts of $341,000                                            6,039,049
  Unbilled services                                                  325,808
  Prepaid expenses                                                   113,802
  Prepaid income taxes and income tax receivable                     154,906
  Deferred tax assets                                                130,000
                                                                 ------------
      Total current assets                                         6,860,679

Property and equipment, net                                          481,917
Intangibles, net                                                   2,937,830
Deposits                                                              52,726
                                                                 ------------

      Total assets                                               $10,333,152
                                                                 ============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accrued payroll                                                $   970,175
  Line of credit                                                   2,850,000
  Current maturities of long term debt                               333,610
  Current portion of lease obligations payable                        41,212
  Accounts payable                                                   584,129
  Other current liabilities                                          321,544
                                                                 ------------
      Total current liabilities                                    5,100,670
                                                                 ------------

Deferred tax liability                                                33,000
Lease obligations payable, less current portion                       78,659
Long-term debt, less current maturities                               83,404
                                                                 ------------
                                                                     195,063
                                                                 ------------

Commitments, contingencies and other comments

Shareholders' equity:
  Preferred stock $.01 par value, 2,000,000 shares authorized;
    590,375 issued                                                     5,904
  Common stock, $.01 par value, 12,500,000 shares authorized;
    3,750,000 shares issued; 3,668,730 outstanding                    37,500
  Additional paid-in capital                                       4,758,414
  Retained earnings                                                  325,897
                                                                 ------------
                                                                   5,127,715
      Less: Treasury stock (81,270 common shares at cost)            (90,296)
                                                                 ------------
      Total shareholders' equity                                   5,037,419
                                                                 ------------

      Total liabilities and shareholders' equity                 $10,333,152
                                                                 ============
</TABLE>

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


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

                        CONSOLIDATED STATEMENTS OF OPERATIONS


                                                             For  The  Years  Ended
                                                                  December  31,
                                                           --------------------------
                                                               1998          1999
                                                           ------------  ------------
<S>                                                        <C>           <C>
Net patient service revenue                                $20,223,674   $23,772,346
                                                           ------------  ------------

Expenses:
  Professional care of patients                             13,794,969    17,164,782
  General and administrative                                 5,236,740     6,188,011
  Bad debts expense                                            150,000       236,000
  Depreciation and amortization                                197,826       263,392
                                                           ------------  ------------
    Total operating expenses                                19,379,535    23,852,185
                                                           ------------  ------------

Income (loss) from operations                                  844,139       (79,839)
                                                           ------------  ------------

Nonoperating income (expenses):
  Interest income                                               56,720
  Other income                                                  17,273
  Interest expense                                            (320,980)     (323,100)
                                                           ------------  ------------
    Nonoperating expenses, net                                (246,987)     (323,100)
                                                           ------------  ------------

Income (loss) before provision (credit) for income taxes       597,152      (402,939)
                                                           ------------  ------------

Provision (credit) for income taxes:
  Current                                                      234,000       (89,000)
  Deferred                                                      22,000       (91,000)
                                                           ------------  ------------
                                                               256,000      (180,000)
                                                           ------------  ------------

Net income (loss)                                              341,152      (222,939)

Dividends paid on preferred stock                                    -        13,500
                                                           ------------  ------------

Net income (loss) applicable to common stock               $   341,152   $  (236,439)
                                                           ============  ============

Basic and diluted earnings (loss) per share                $      0.09   $     (0.06)
                                                           ============  ============

Weighted average shares outstanding                          3,739,864     3,684,685
                                                           ============  ============

Diluted weighted average shares outstanding                  3,933,179     3,684,685
                                                           ============  ============
</TABLE>

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


                                       F-3
<PAGE>
<TABLE>
<CAPTION>
                                          NEW YORK HEALTH CARE, INC. AND SUBSIDIARY
                                        CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                        FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1999


                                                    Preferred                        Treasury
                                 Common Stock         Stock        Additional         Stock
                              ------------------  ---------------    Paid-In    -------------------   Retained
                               Shares    Amount   Shares   Amount    Capital     Shares    Amount     Earnings       Total
                              ---------  -------  -------  ------  -----------  --------  ---------  -----------  -----------
<S>                           <C>        <C>      <C>      <C>     <C>          <C>       <C>        <C>          <C>
Balance at January 1, 1998    3,750,000  $37,500                   $4,064,807                        $221,184     $4,323,491

Treasury stock purchased
  during June through
  December ($1.30
  average per share)                                                             51,970   $(67,663)                  (67,663)

Exercise of stock warrants
  on June 2, 1998                                                        (489)  (10,000)    16,739                    16,250

Issuance of preferred stock
  on August 6, 1998 in
  exchange for promissory
  note ($1.25 per share)                          480,000  $4,800     595,200                                        600,000

Net income                                                                                              341,152      341,152
                              ---------  -------  -------  ------  -----------  --------  ---------  -----------  -----------

Balance at December 31, 1998  3,750,000   37,500  480,000   4,800   4,659,518    41,970    (50,924)     562,336    5,213,230

Treasury stock purchased
  during January through
  June ($1.06 average
  per share)                                                                     19,800    (21,079)                  (21,079)

Treasury stock purchased
  during July through
  September ($0.97
  average per share)                                                              9,500     (9,203)                   (9,203)


Treasury stock purchased
  on October 26, 1999
  ($.91 per share)                                                               10,000     (9,090)                   (9,090)

Dividends paid on preferred
  stock ($.03 per share)                                                                                (13,500)     (13,500)

Issuance of preferred stock
  on July 29, 1999 in
  exchange for promissory
  note ($.91 per share)                           110,375   1,104      98,896                                        100,000

Net loss                                                                                               (222,939)    (222,939)
                              ---------  -------  -------  ------  -----------  --------  ---------  -----------  -----------

Balance at December 31, 1999  3,750,000  $37,500  590,375  $5,904  $4,758,414    81,270   $(90,296)  $  325,897   $5,037,419
                              =========  =======  =======  ======  ===========  ========  =========  ===========  ===========
</TABLE>

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


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


                                                                      For  The  Years  Ended
                                                                           December  31,
                                                                     ------------------------
                                                                         1998         1999
                                                                     ------------  ----------
<S>                                                                  <C>           <C>

Cash flows from operating activities:
  Net income (loss)                                                  $   341,152   $(222,939)
  Adjustments to reconcile net income (loss) to net cash
    (used in) provided by operating activities:
      Depreciation and amortization                                      197,826     263,392
      Bad debts expense                                                  150,000     236,000
      Deferred tax provision (credit)                                     22,000     (74,000)
      Deferred revenue                                                   (36,000)
      Changes in operating assets and liabilities:
        Increase in accounts receivable and unbilled services         (1,370,283)   (584,574)
        (Increase) decrease in due from affiliates                        (6,475)      6,475
        (Increase) decrease in prepaid expenses                          (15,953)     27,145
        Increase in prepaid income taxes and income tax receivable                  (154,906)
        Increase in deposits                                             (19,053)     (6,874)
        Decrease in accounts receivable due after one year               180,604
        Increase in accrued payroll                                      207,483     405,218
        Decrease in accounts payable                                    (214,391)    525,989
        Increase in other current liabilities                            321,544
        Decrease in income taxes payable                                 (67,818)    (35,215)
                                                                     ------------  ----------
          Net cash (used in) provided by operating activities           (309,364)    385,711
                                                                     ------------  ----------

Cash flows from investing activities:
  Acquisition of fixed assets                                           (154,507)   (123,224)
  Payments for purchase of intangible assets in connection
    with acquisitions                                                   (571,602)    (50,700)
                                                                     ------------  ----------
          Net cash used in investing activities                         (726,109)   (173,924)
                                                                     ------------  ----------

Cash flows from financing activities:
  Borrowings under notes payable                                       1,450,000     250,000
  Repayment of long-term debt                                           (342,298)   (504,476)
  Net charges from issuance of common stock                               16,250
  Preferred stock dividends paid                                                     (13,500)
  Purchase of treasury stock                                             (67,663)    (39,372)
                                                                     ------------  ----------
          Net cash provided by (used in) financing activities          1,056,289    (307,348)
                                                                     ------------  ----------

Net increase (decrease) in cash and cash equivalents                      20,816     (95,561)

Cash and cash equivalents at beginning of year                           171,859     192,675
                                                                     ------------  ----------

Cash and cash equivalents at end of year                             $   192,675   $  97,114
                                                                     ============  ==========
</TABLE>

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


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     BASIS OF CONSOLIDATION AND THE COMPANY:

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

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

     Financing:

     The  Corporation's  line of  credit  expired  during  1999 and the bank has
     continued to fund the line of credit on a month-to-month  basis pending the
     Corporation's  obtaining replacement  financing.  There can be no guarantee
     that the bank will continue to fund the line of credit.  The Corporation is
     in the process of obtaining replacement financing.

     Acquisitions:

     On February 8, 1998, the Corporation purchased the customer lists and other
     intangible assets of an additional three offices in the State of New Jersey
     from Metro  Healthcare  Services,  Inc. for $500,000  cash and a promissory
     note in the amount of $580,000.  The  acquisition  was  accounted  for as a
     purchase and, accordingly,  the assets acquired have been recorded at their
     estimated fair values at the date of  acquisition.  The excess of cost over
     fair values of the  purchased  business  has been  allocated  to  goodwill,
     customer lists and other  intangible  assets and is being amortized over 25
     and 10 years,  respectively.  Operating  results of the business  have been
     included in the consolidated  financial statements of the Corporation since
     the date of acquisition.

     The  purchase  price of  $1,080,000  plus  costs  incurred  in  making  the
     acquisition ($73,000),  aggregating $1,153,000,  exceeded the fair value of
     the net assets  acquired  at the date of  acquisition  by  $1,123,000.  The
     purchase  price has been  allocated to furniture  and fixtures for $30,000,
     $79,000 was assigned to contract  value and employee  lists and  $1,044,000
     was assigned to goodwill.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     On March 26, 1998, the  Corporation  purchased the customer lists and other
     intangible assets of Heart to Heart Health Care Service, Inc. The entity is
     related to the Corporation  through common  ownership and  management.  The
     aggregate  purchase  price is  $1,150,000.  This  amount  was paid  through
     issuance of a promissory  note.  The  acquisition  was  accounted  for as a
     purchase and, accordingly,  the assets acquired have been recorded at their
     estimated fair values at the date of  acquisition.  The excess of cost over
     fair values of the  purchased  business  has been  allocated  to  goodwill,
     customer lists and other  intangible  assets and is being amortized over 25
     and 10 years,  respectively.  Operating  results of the business  have been
     included in the consolidated  financial statements of the Corporation since
     the date of acquisition.

     The  purchase  price of  $1,150,000  plus  costs  incurred  in  making  the
     acquisition  ($45,000),  aggregating  $1,195,000 exceeded the fair value of
     the net assets  acquired  at the date of  acquisition  by  $1,185,000.  The
     purchase  price has been  allocated to furniture  and fixtures for $10,000;
     $55,000 was assigned to contract  value and employee  lists and  $1,130,000
     was assigned to goodwill.

     On February 22, 1999,  the  Corporation  purchased  customer list and other
     intangible assets from Staff Builders Service,  Inc. (Shrewbury Office) for
     $65,000.  The purchase  price has been  allocated to furniture and fixtures
     for  $25,000  and  the  remaining  $40,000  to  customer  lists  and  other
     intangibles.

     On June 11,  1999,  the  Corporation  purchased  customer  lists  and other
     intangible assets from Staff Builders Services,  Inc.  (Hackensack  Office)
     for  $25,700.  The  purchase  price has been  allocated  to  furniture  and
     fixtures for $20,000 and the  remaining  $5,700 to customer  list and other
     intangibles.

     On October 23, 1999,  the  Corporation  purchased  customer lists and other
     intangible assets from Staff Builders Services, Inc. (Manhattan Office) for
     $30,000.  The purchase  price has been  allocated to furniture and fixtures
     for  $25,000  and  the  remaining   $5,000  to  customer  lists  and  other
     intangibles.

     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.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     REVENUE RECOGNITION:

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

     In December 1999, the  Securities  and Exchange  Commission  ("SEC") issued
     Staff  Accounting  Bulletin  No. 101,  "Revenue  Recognition  in  Financial
     Statements"  ("SAB 101"). SAB 101 summarizes  certain of the SEC's views in
     applying generally accepted accounting principles to revenue recognition in
     financial  statements.  SAB 101 is not a rule or interpretation of the SEC,
     however,  it  represents  interpretations  and  practices  followed  by the
     Division of Corporation  Finance and the Office of the Chief  Accountant in
     administering the disclosure  requirements of the Federal  securities laws.
     The Company does not believe that the  interpretations  outlined in SAB 101
     will have an impact on the Company's revenue recognition policies.

     PROPERTY,  PLANT  AND  EQUIPMENT:

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

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

     LONG-LIVED  ASSETS:

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

     INCOME  TAXES:

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


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     CASH  EQUIVALENTS:

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

     STOCK  BASED  COMPENSATION:

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

     EARNINGS  (LOSS)  PER  SHARE:

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

     Diluted  earnings (loss) per share is computed by dividing income available
     to common  shareholders  by the weighted  average  number of common  shares
     outstanding  for the  period,  adjusted  to  reflect  potentially  dilutive
     securities  including the presumed  conversion of the Preferred  Stock from
     the date of its  issuance.  For 1998,  the  options and  warrants  were not
     included  in the  computation  of diluted  earnings  per share  because the
     exercise price was greater than the average market price of the stock.  Due
     to a loss in 1999, the options,  warrants,  and Convertible Preferred Stock
     are not included in the  computation  of diluted loss per share because the
     effect would be to reduce the loss per share.

     START-UP  COSTS:

     During the year ending December 31, 1998, the Corporation adopted Statement
     of Position 98-5 "Reporting on the Costs of Start-Up  Activities." Start-up
     activities,   which  include  (i)  one-time   activities  relating  to  the
     introduction  of a new  product or  service,  conducting  business in a new
     territory, conducting business with a new class of customer or commencing a
     new operation and (ii)  organization  costs, are expensed as incurred.  The
     Company  believes  that  there is no  cumulative  effect  on the  amount of
     retained  earnings at December 31, 1998  resulting from the adoption of SOP
     98-5.  During  the  year  ended  December  31,  1998,   start-up  costs  of
     approximately $34,000 was expensed as incurred.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     OTHER  ACCOUNTING  PRONOUNCEMENTS:

     In  1998,  SFAS  130,  "Reporting   Comprehensive   Income"  and  SFAS  131
     "Disclosures  about  Segments of an  Enterprise  and  Related  Information"
     became effective.  The Corporation operates in one business segment.  These
     standards expand or modify disclosures and, accordingly,  have no effect on
     the Corporation's financial position, results of operations or cash flows.

     In 1998,  the  Accounting  Standards  Executive  Committee  of the American
     Institute of Certified Public Accountants issued Statement of Position 98-1
     (SOP 98-1),  "Accounting  for the Costs of Computer  Software  Developed or
     Obtained for Internal Use." This statement, which became effective in 1999,
     requires  that  certain  costs of  developing  or  obtaining  software  for
     internal use be capitalized. This statement does not have a material effect
     on the Company's financial position, results of operations or cash flows.

     In June 1999, the Financial  Accounting Standards Board issued Statement of
     Financial   Accounting   Standards  No.  137,  "Accounting  for  Derivative
     Instruments  and Hedging  Activities"  which delayed the effective  date of
     Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting
     for Derivative  Instruments and Hedging  Activities" for one year. SFAS 133
     provides  guidance for the  recognition  and measurement of derivatives and
     hedging  activities.  It requires an entity to record,  at fair value,  all
     derivatives as either assets or  liabilities  in the balance sheet,  and it
     establishes specific accounting rules for certain types of hedges. SFAS 133
     is now effective for fiscal years beginning after June 15, 2000 and will be
     adopted by the Corporation  when required.  The Corporation does not expect
     SFAS 133 to have a material effect on the Corporation's financial position,
     results of operations or cash flows for the year ended December 31, 1999.

2.   PROPERTY AND EQUIPMENT:

     Property and equipment consist of the following at December 31, 1999:

          Machinery and equipment                         $362,781
          Furniture and fixtures                           207,533
          Leasehold improvements                           120,652
                                                          --------

                                                           690,966
          Less accumulated depreciation and amortization   209,049
                                                          --------

                                                          $481,917
                                                          ========


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     At  December  31,  1999,   the  amounts  shown  above  include   assets  of
     approximately   $160,750   under   capitalized   leases   and   accumulated
     depreciation of approximately $32,150, relating thereto.

3.   INTANGIBLES:

     Intangibles consist of the following at December 31, 1999:

                                                      Lives
                                                     --------
          Goodwill                       $3,008,834  25 years
          Contract value                    112,700  10 years
          Customer lists                     72,000  10 years
                                         ----------
                                          3,193,534
          Less accumulated amortization     255,704
                                         ----------

                                         $2,937,830
                                         ==========

4.   LINE OF CREDIT:

     The  Corporation  has  a  $6,000,000  line  of  credit  with  a  bank.  The
     availability  of the  line of  credit  is based on a  formula  of  eligible
     accounts   receivable.   All  property   and  assets  of  the   Corporation
     collateralize  the line and the Corporation has also guaranteed the line of
     credit.  At December 31, 1999 $2,850,000 was outstanding.  Borrowings under
     the agreement bear interest at prime plus 1/2% (9.0%) at December 31,1999).
     The line of credit  expired during 1999, and the bank has continued to fund
     the line of credit on a  month-to-month  basis  pending  the  Corporation's
     obtaining replacement financing.

5.   OTHER CURRENT LIABILITIES:

     During 1998, the Corporation entered into 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 commencing  January 1,
     1999.

     Per the agreement with HRA, if the Corporation  incurs direct costs of home
     attendant  services  under the  maximum  allowable  per the  contract,  the
     Corporation  must repay the difference to HRA. During 1999, the Corporation
     incurred  less direct costs than the maximum  allowable  and has recorded a
     liability to HRA (included as Other Current Liabilities in the accompanying
     balance sheet) for the difference in the amount of $321,544.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6.   LONG-TERM DEBT AND CAPITALIZED LEASES:

     Long-term debt consists of the following at December 31, 1999:

<TABLE>
<CAPTION>
<S>                                                                          <C>
          Capitalized  computer  equipment lease,  payable in equal monthly
          installments of  approximately  $1,100,  including  principal and
          interest  through  December  2003,   collateralized  by  computer
          equipment costing approximately $51,400                            $     43,288

          Capitalized  computer  equipment lease,  payable in equal monthly
          installments of  approximately  $2,570,  including  principal and
          interest  through  November  2001,   collateralized  by  computer
          equipment costing approximately $81,200                                  54,003

          Capitalized   phone  system  lease,   payable  in  equal  monthly
          installments  of  approximately  $600,  including  principal  and
          interest through October 2003, collateralized by the phone system
          costing approximately $28,150                                            22,580

          Note payable in 12 equal  quarterly  installments  commencing May
          1998 of $48,333,  including  principal only,  bearing interest at
          prime rate plus 1% per annum (9.50% at December 31, 1999)               241,667

          Note payable,  to a related  party,  in 5 quarterly  installments
          commencing June 1998 of $47,917, and 6 quarterly  installments of
          $35,069  starting  October,  1999 through  January 2001 including
          principal only,  bearing interest at prime rate plus 1% per annum
          (9.5% at December 31,  1999).  During 1999,  principal  quarterly
          installments  were  reduced due to a reduction  of the  principal
          amount  outstanding  as a result of conversion of $100,000 of the
          Company's Class A stock (See Note 14)                                   175,347
                                                                             ------------

                                                                                  536,885

          Less current maturities                                                 374,822
                                                                             ------------

                                                                             $    162,063
                                                                             ============
</TABLE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     The  following  are  maturities of long-term  debt  (excluding  capitalized
     leases, see Note 12):

          For the Years
          Ended
          December 31,
          -------------
          2000           $334,000
          2001             83,000

7.   INCOME TAXES:

     The  components of deferred tax assets and  liabilities  as of December 31,
     1999 are as follows:

          Deferred tax assets:
            Accounts receivable reserve  $130,000
                                         =========

          Deferred tax liabilities:
            Property and equipment       $ 27,000
            Intangibles                   (60,000)
                                         ---------

                                         $(33,000)
                                         =========

     Differences between book and tax are primarily due to temporary differences
     resulting from use of the direct write-off  method for  receivables,  using
     accelerated  methods of  amortization  and  depreciation  for  property and
     equipment, and using statutory lives for intangibles for tax purposes.

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

                           1998       1999
                         --------  ----------
              Current:
                Federal  $180,000  $ (69,000)
                State      54,000    (20,000)
                         --------  ----------
                          234,000    (89,000)
                         --------  ----------
              Deferred:
                Federal    13,200    (54,600)
                State       8,800    (36,400)
                         --------  ----------
                           22,000    (91,000)
                         --------  ----------

                         $256,000  $(180,000)
                         ========  ==========


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

                                                       1998   1999
                                                       -----  -----
              Statutory Federal income tax rate          34%    34%
              State taxes, net of Federal tax benefit     9     10
                                                       -----  -----

                                                         43%    44%
                                                       =====  =====

8.   FAIR VALUE OF FINANCIAL INSTRUMENTS

     As of December  31,  1999,  the  carrying  amount of  accounts  receivable,
     unbilled  services,  accounts  payable  and accrued  expenses,  and accrued
     payroll  approximates fair value due to the short-term  maturities of these
     instruments.

9.   THIRD-PARTY RATE ADJUSTMENTS AND REVENUE:

     Approximately  19% and 9% of net patient  service revenue was derived under
     New York State  third-party  reimbursement  programs during the years ended
     December 31, 1998 and 1999,  respectively.  These  revenues  are based,  in
     part,  on cost  reimbursement  principles  and are  subject  to  audit  and
     retroactive adjustment by the respective third-party fiscal intermediaries.
     Provision for estimated  amounts due to/from the  Corporation has been made
     in the financial  statements.  Differences  between estimated revised rates
     and  subsequent  revisions will be reflected in the statement of operations
     in the year revisions are calculated.

10.  SALE OF ACCOUNTS RECEIVABLE:

     The  Corporation  has an agreement  with a finance  company to sell certain
     accounts  receivable.  As part of the agreement,  the  Corporation may from
     time-to-time  offer to sell a certain  accounts  receivable  to the finance
     company,  which the finance company may at such time elect to purchase, but
     is not obligated to purchase the accounts receivable offered.  The purchase
     price to be paid by the  finance  company  shall be the face  amount of the
     accounts  receivable  discounted  at the  discount  rate  established  from
     time-to-time by the finance company.

     During 1999, the Corporation sold  approximately  $150,000 of such accounts
     receivable to the finance company.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

     PERFORMANCE INCENTIVE PLAN:

     On March  26,  1996,  the  Corporation's  Board of  Directors  adopted  the
     Performance  Incentive Plan,  (the "Option  Plan").  Under the terms of the
     amended  Option  Plan,  682,500  shares  of common  stock  may be  granted,
     including  the  June  25,  1998  authorization  for the  reservation  of an
     additional  210,000 shares of $.01 par value common stock,  for each of two
     additional  years, for a total of 420,000  additional  shares.  On July 29,
     1999,  the  Corporation  further  amended the Option Plan to provide for an
     additional  350,000 shares of the Corporation's $.01 par value common stock
     for issuance  under the plan after January 1, 2000 so that the total number
     of shares which may be issued  under the plan is increased  from 682,500 to
     1,032,500  shares.  The Option  Plan will be  administered  by a  Committee
     appointed by the Board of Directors. The Committee will determine which key
     employee,  officer or director on the regular payroll of the Company, shall
     receive  stock  options.  Granted  options are  exercisable  in three equal
     annual  installments,  commencing  six months after the date of grant,  and
     expire up to ten years after the date of grant.  The exercise  price of any
     incentive stock option or nonqualified option granted under the Option Plan
     may not be less than 100% of the fair market  value of the shares of common
     stock of the Company at the time of the grant.

     On June 2, 1998 and December 23, 1998, the Corporation  granted 247,500 and
     191,000 stock  options,  respectively,  pursuant to the Option Plan, to key
     employees  at  exercise  prices   ranging from   $ 1.7875  to  $.938.   The
     options expire in 5-10 years. The exercise price  of these options was  not
     less than the  fair  market  price of the Common Stock  as  of  the date of
     grant.

     On November  12, 1999,  the  Corporation  granted  200,000  stock  options,
     pursuant  to  the Option Plan, to key  employees at exercise prices ranging
     from $.6787 to $.625 per share.  The  options  expire  in 5-10  years.  The
     exercise price of these options  was not less than  the fair  market  price
     of the Common  Stock as of the date of grant.

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


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

<TABLE>
<CAPTION>
                                                Shares Under  Weighted Average
                                                   Options     Exercise Price
                                                ------------  ----------------
<S>                                             <C>           <C>
    Balance at December 31, 1997                     93,750   $           3.00

    Options granted                                 438,500               1.38
    Options cancelled                                (6,000)              1.63
                                                ------------  ----------------

    Balance at December 31, 1998                    526,250   $           1.73

    Options granted                                 220,000                .65
    Options cancelled                               (25,500)              1.22
                                                ------------  ----------------

    Balance at December 31, 1999                    720,750   $           1.37
                                                ============  ================

    Eligible for exercise at December 31, 1999      306,417   $           1.96
                                                ============  ================
</TABLE>

     The following table summarizes  information  about options  outstanding and
     exercisable at December 31, 1999.

<TABLE>
<CAPTION>
                         Options Outstanding                  Options Exercisable
             ---------------------------------------------  ------------------------
                              Weighted                                     Weighted
Range of                      Average          Weighted                    Average
Exercise       Options       Remaining          Average       Options      Options
Price        Outstanding  Contractual Life  Exercise Price  Exercisable  Exercisable
-----------  -----------  ----------------  --------------  -----------  -----------
<S>          <C>          <C>               <C>             <C>          <C>
$1.63-$1.79      231,000        6.62 years  $         1.70      154,000  $      1.70
$ .94-$1.03      176,000        7.01 years             .97       58,667          .97
$3.00             93,750        7.25 years            3.00       93,750         3.00
$ .63-$ .69      220,000        7.27 years             .65
             -----------                                    -----------
                 720,750        7.00 years  $         1.37      306,417  $      1.96
             ===========  ================  ==============  ===========  ===========
</TABLE>

     The Corporation does not recognize  compensation  expense for stock options
     granted at or above fair  market  value,  as  permitted  by the  accounting
     standards.  The fair  value of  options  granted  during  1998 and 1999 was
     $372,500 and $112,000,  respectively.  Fair value is estimated based on the
     Black-Scholes  option-pricing  model  with the  following  assumptions  for
     grants  in 1998 and 1999:  expected  volatility  of 55% and 90%;  risk-free
     interest  rates  ranging from 4.81% through 5.56% in 1998 and 4.77% in 1999
     and expected  lives of  approximately  8 years for the years ended 1998 and
     1999. Had  compensation  expense been determined based on the fair value of
     the options on the grant  dates,  the  Corporation's  net income would have
     been  decreased by $372,500 ($.09 per share) in 1998 and its net loss would
     have been increased by $112,000 ($.03 per share) in 1999.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     401 (K) PLAN:

     NYHC  maintains an Internal  Revenue Code Section  401(k)  salary  deferred
     savings plan (the "Plan") for eligible employees who have been employed for
     at  least  one year and are at least  21  years  old.  Subject  to  certain
     limitations,  the Plan allows participants to voluntarily  contribute up to
     15% of their pay on a pretax basis. The Corporation  currently  contributes
     50% of each dollar  contributed to the Plan by participants up to a maximum
     of 6% of the  participants  salary.  The Plan  also  provides  for  certain
     discretionary  contributions  by the Corporation as determined by the Board
     of  Directors.  The  Corporation's  contributions  amounted  to $41,000 and
     $63,000 for the years ended December 31, 1998 and 1999, respectively.

12.  COMMITMENTS, CONTINGENCIES AND OTHER COMMENTS:

     LEASE COMMITMENTS:

     The Corporation leases office space under  noncancellable  operating leases
     in New York and New Jersey that expire  between  September 2000 and October
     2003.

     At December 31, 1999, future minimum lease payments due under operating and
     capital leases approximate:

<TABLE>
<CAPTION>
                                                  Rental Expense
                                                    Operating      Capital
                                                      Leases        Leases
                                                 ----------------  --------
<S>                                              <C>               <C>
2000                                             $       295,000   $ 51,000
2001                                                     194,000     49,000
2002                                                     113,000     20,000
2003                                                      90,000     19,000
2004                                                      70,000
    Thereafter                                            18,000
                                                 ----------------  --------

    Total minimum future payments                $       780,000    139,000
                                                 ================

    Less amounts representing interest                              (19,000)
                                                                   --------

    Present value of net minimum lease payments                  $  120,000
                                                                   ========
</TABLE>


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     Rental  expense  charged  to  operations  was  approximately  $302,000  and
     $343,000  for the years ended  December  31,  1998 and 1999,  respectively.
     Rental income under the sublease agreement in the amount of $28,000 for the
     year ended December 31, 1998 has been offset against rental expense.  There
     was no sublease agreement for the year ended December 31, 1999.

     Interest rates on capitalized leases vary from 9.2% to 11.0%.

     EMPLOYMENT AGREEMENTS:

     The Corporation  has entered into employment  agreements with two officers,
     with terms  expiring in 2004.  The  agreements  call for  aggregate  annual
     compensation of  approximately  $420,000 with an annual increase of 10% and
     provide for certain additional benefits.

     BONUS PLAN:

     The  Corporation  has established a bonus plan pursuant to which 10% of the
     Corporation's  pre-tax net income is  contributed  to a bonus pool which is
     available  for  distribution  to  all  employees  as  decided  upon  by the
     Corporation's Compensation Committee. The Corporation accrued approximately
     $65,000  for its  contributions  to the bonus  pool for 1998.  There was no
     bonus accrual for 1999 due to a net loss for the year.

     CONCENTRATIONS OF CREDIT RISK:

     Financial   instruments  which  potentially   subject  the  Corporation  to
     concentrations  of credit risk consist of temporary cash investments  which
     from  time-to-time  exceed the Federal  depository  insurance  coverage and
     commercial  accounts  receivable.   The  Corporation  has  cash  investment
     policies  that  restrict   placement  of  these  investments  to  financial
     institutions  evaluated as highly  creditworthy.  Cash and cash equivalents
     exceeding  federally insured limits  approximated  $171,000 at December 31,
     1999. The Corporation  does not require  collateral on commercial  accounts
     receivable   as  the   customer   base   generally   consists   of   large,
     well-established institutions.

     MAJOR CUSTOMERS:

     Two major customers  accounted for approximately 30% and 42% of net patient
     service   revenue  for  the  years  ended   December  31,  1998  and  1999,
     respectively.  In addition,  the  Corporation  has another  customer  whose
     accounts  receivable  balance  represents  approximately  14%  of  accounts
     receivable at December 31, 1999.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     BUSINESS RISKS:

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

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

13.  RELATED PARTY TRANSACTION:

     The  Corporation  had an agreement  with an  affiliated  company to provide
     administrative  services relating to payroll,  benefits management and data
     processing  through  December  31,  1998.  The fee for these  services  was
     approximately $12,000 for the year ended December 31, 1998.

     The Corporation leases one of its offices from an affiliated  company.  The
     lease  expires  on October  31,  2000.  Rent  expense  for the years  ended
     December 31, 1998 and 1999 amounted to  approximately  $40,000 and $42,000,
     respectively.

14.  SHAREHOLDERS' EQUITY:

     PREFERRED STOCK:

     On August 6, 1998,  the Board of  Directors  created a series of  Preferred
     Stock to  consist  initially  of  480,000  shares  of  Class A  Convertible
     Preferred  Stock.  On July 29, 1999,  the Board of Directors  authorized an
     increase  in the number of shares of Class A  Convertible  Preferred  Stock
     from  480,000 to  590,375.  The  holders of the  Preferred  Stock  shall be
     entitled to a dividend  equal to 9% of the purchase price for shares of the
     Preferred Stock before any dividend is paid on Common Stock.  Dividends may
     be  declared  quarterly  at  the  discretion  of  the  Board  of  Directors
     commencing with the first calendar  quarter of 1999 and are not cumulative.
     The holders of Preferred  Stock receive no preference  on  liquidation  and
     such shares may be converted into one share of Common Stock at any time.


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     On August 6, 1998,  Heart to Heart Care Services,  Inc. ("Heart to Heart"),
     which  was the  holder  of the  Corporation's  promissory  note in the face
     amount of  $1,150,000,  and  bearing  interest at the rate of prime plus 1%
     (9%),  converted  $600,000 of the principal  amount of that promissory note
     into 480,000 shares of Class A Stock. The Class A Stock may be converted at
     a  conversion  price of $1.25 per share,  into shares of the  Corporation's
     $.01 par value Common  Stock at any time.  Heart to Heart is owned by Jerry
     Braun, Jacob Rosenberg,  Samson Soroka,  Hirsch Chitrik and Sid Borenstein.
     Messrs. Braun, Rosenberg,  Chitrik and Borenstein are officers or directors
     of  the  Corporation  and  together  with  Mr.  Soroka  are  all  principal
     shareholders.  The Corporation  therefore  obtained an independent  opinion
     that  the  terms  and  conditions  of  the  transaction   were,  under  the
     circumstances, fair to the Corporation.

     On March 31,  1999,  the  Corporation  declared  a dividend  (amounting  to
     $13,500), to holders of preferred stock, which was paid in April 1999.

     On July 29, 1999, Heart to Heart,  which was still then owed  approximately
     $360,000  under the terms of the  promissory  note,  converted  $100,000 of
     principal amount into 110,375 shares of the Corporation's  Class A stock at
     a conversion price of $.91 per share, each share of which is convertible at
     any time into shares of the Corporation's  $.01 par value Common Stock. The
     remaining  balance under the promissory  note is payable,  with interest at
     prime plus 1% (9.5% at December 31, 1999), in quarterly  installments until
     January 2001.

     WARRANTS:

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


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

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


     On November 12, 1999,  the  Corporation  granted two of its board members a
     warrant for each to purchase up to 10,000  shares of Common  Stock at $.625
     per share during a period  commencing May 12, 2000 and concluding  November
     12, 2004.

     TREASURY STOCK:

     During 1998, the  Corporation  purchased  51,970 shares of Common Stock for
     treasury at a cost of $67,663. The treasury stock is shown at cost. On June
     2, 1998, the  Corporation  issued 10,000 shares of Common Stock  previously
     held in treasury in connection  with the exercise of the warrants issued on
     June 2, 1998. The aggregate cost of the treasury shares issued exceeded the
     aggregate  proceeds from the exercise of the warrants by $489, which amount
     has been charged to additional paid-in-capital.

     During 1999, the  Corporation  purchased  39,300 shares of Common Stock for
     the treasury at a cost of $39,372. Treasury stock is shown at cost.

     RESERVES:

     The  Corporation  has reserved an  aggregate of 1,157,500  shares of Common
     Stock for the exercise of options under the Option Plan referred to in Note
     11 and warrants.

     ONE-FOR-TWO REVERSE STOCK SPLIT:

     On  December 30,  1999,  the  Corporation  approved  an  amendment  to  the
     Certificate  of  Incorporation  for the purpose of effecting a  one-for-two
     reverse stock split of the issued and outstanding shares of the Corporation
     $.01  par  value  common  stock  to be  adopted  at the  discretion  of the
     Corporation's  Board of  Directors  at any time prior to December 31, 2000.
     Simultaneously  with the effective  date of this  amendment,  the number of
     unissued  and issued and  outstanding  $.01 par value  Common  shares shall
     automatically  and  without  any  action  on  the  part  of the  holder  be
     reclassified  as and changed into one half (1/2) of a  Common  share. This
     amendment was not effective as of the issuance of this report.


                                      F-21
<PAGE>
                    NEW YORK HEALTH CARE, INC. AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


15.  EARNINGS (LOSS) PER SHARE:

     Earnings (loss) per share are computed as follows:

<TABLE>
<CAPTION>
                                                       For  the  Years  Ended
                                                           December  31,
                                                      -----------------------
                                                         1998        1999
                                                      ----------  -----------
<S>                                                   <C>         <C>

    Basic and diluted earnings (loss) per share:
      Earnings (loss):
      Net income applicable to common stock           $  341,152  $ (236,439)
                                                      ==========  ===========

    Shares:
      Weighted average number of common shares
         outstanding - basic                           3,739,864   3,684,685

      Effect of dilutive convertible preferred stock     193,315
                                                      ----------  -----------

  Diluted weighted average shares outstanding          3,933,179   3,684,685
                                                      ==========  ===========

  Basic earnings (loss) per share                     $      .09  $     (.06)
                                                      ==========  ===========

  Diluted earnings (loss) per share                   $      .09  $     (.06)
                                                      ==========  ===========
</TABLE>

16.     SUPPLEMENTAL  CASH  FLOW  DISCLOSURES:

<TABLE>
<CAPTION>
                                                              For the Years Ended
                                                                  December  31,
                                                              --------------------
                                                                 1998       1999
                                                              ----------  --------
<S>                                                           <C>         <C>

  Cash paid during the year for:
    Interest                                                  $  295,338  $329,583
                                                              ==========  ========

    Income taxes                                              $  300,685  $184,195
                                                              ==========  ========

  Supplemental schedule of noncash investing and
    financing activities:
      The Corporation purchased customer lists, furniture
        and other intangibles which were partially
        acquired through the issuance of promissory
        notes                                                 $1,730,000  $    -0-
                                                              ==========  ========

      The Corporation issued preferred stock
        in exchange for a promissory note                     $  600,000  $100,000
                                                              ==========  ========

      The Corporation entered into capital lease obligations
        for certain equipment                                 $  160,750
                                                              ==========
</TABLE>


                                      F-22
<PAGE>