SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

       For Quarter Ended June 30, 1999     Commission File Number 1-155

                            FIRST MEDICAL GROUP, INC.

             (Exact name of Registrant as specified in its charter)


         Delaware                                           13-1920670
--------------------------------------------------------------------------------
(State or other jurisdiction of                          (I.R.S. Employer
Incorporation or Organization)                          Identification No.)

  1055 Washington Boulevard, Stamford, CT                      06901
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip Code)

Registrant's telephone number, including area code        (203) 327-0900
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
               Former name, former address and former fiscal year,
                 if changed since last report

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the  Securities  and  Exchange Act of 1934
during the preceding 12 months (or for such shorter  period that the  Registrant
was  required  to file such  reports)  and (2) has been  subject to such  filing
requirements for the past 90 days.

                                                           YES X     NO
                                                              -----    -----

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

         Class                                  Outstanding at August 13, 1999
-----------------------                         ------------------------------
Common Stock, par value                                    9,567,292
    $.001 per share


<PAGE>



                   FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES

                                      INDEX

                                                                        Page
                                                                       Number
                                                                       ------

Part I.       FINANCIAL INFORMATION

  Item 1.     Financial Statements

              Consolidated Statements of Operations -
              Six Months Ended June 30, 1999 and 1998....................3

              Consolidated Balance Sheets -
              June 30, 1999 and December 31, 1998........................4

              Consolidated Statements of Changes in
              Shareholders' Equity (Deficit) -
              Six Months Ended June 30, 1999 and 1998....................5

              Condensed Consolidated Statements of Cash Flows -
              Six Months Ended June 30, 1999 and 1998....................6

              Notes to Consolidated Financial Statements.................7

  Item 2.     Management's Discussion and Analysis of
              Financial Condition and Results of Operations...........8-12

  Item 3.     Quantitative and Qualitative Disclosures about
              Market Risk............................................12-13

Part II.      OTHER INFORMATION

   Item 1.    Legal Proceedings.........................................13

   Item 3.    Defaults upon Senior Securities........................13-14

   Item 6.    Exhibits and Reports on Form 8-K.......................12-13




                                      -2-
<PAGE>





                         PART I - FINANCIAL INFORMATION

FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED                   SIX MONTHS ENDED
                                                         JUNE 30,                            JUNE 30,
                                                         --------                            --------

                                                    1999          1998                 1999            1998
                                                    ----          ----                 ----            ----


<S>                                           <C>             <C>                <C>              <C>
Revenue                                       $    2,871      $    2,701         $    5,697       $    5,465

Cost of revenue                                    2,179           2,509              4,406            4,646
                                                  ------          ------             ------           ------

         Income from clinic operations               692             192              1,291              819

Operating expenses:
Salaries and benefits                                235              74                401              406
General and administrative                           324             284                421              517
Depreciation and amortization                         97              33                191               65
                                                  ------          ------             ------           ------
     Total operating expenses                        656             391              1,013              988

Income (loss)  from operations                        36            (199)               278             (169)
Interest income (expense),  net                       18             (28)                20              (97)
                                                  ------          ------             ------           ------

Income (loss) before income tax provision             54            (227)               298             (266)
Income tax provision (credit)                        (43)            165                139              327
                                                  ------          ------             ------           ------
Income (loss)  from continuing operations
before discontinued operations                        97            (392)               159             (593)

Discontinued operations:
Income (loss) from operations of
 discontinued physician management
 and electrical supply division                      225            (980)               450           (1,982)
Income on disposal of physician management
 and electrical supply division                       --           4,260                 --            3,669
                                                  ------          ------             ------           ------
Income from discontinued operations                  225           3,280                450            1,687
Cumulative effect of change in
 accounting principle                                 --              --                 --              970
                                                  ------          ------             ------           ------
Net income                                    $      322      $    2,888         $      609       $      124

Income per share - basic and diluted:
Income (loss) from continuing operations      $      .01      $     (.04)        $      .02       $     (.06)
Income from discontinued operations                  .02             .35                .04              .18
Cumulative effect of change in
 accounting principle                                 --              --                 --             (.10)
                                                  ------          ------             ------           ------
Income  per share                             $      .03      $      .31         $      .06       $      .02

Weighted average number of common
 shares outstanding-basic and diluted          9,567,292       9,448,292          9,567,292        9,422,651
</TABLE>


See accompanying notes to the consolidated financial statements.



                                      -3-
<PAGE>







FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                              June 30, 1999             December 31, 1998
                                                              -------------             -----------------

                           ASSETS

<S>                                                             <C>                         <C>
Current assets:
  Cash and cash equivalents                                     $    520                    $    909
  Accounts receivable, net of allowance
    for doubtful accounts of $80,000
    and $54,000 at June 30, 1999
    and December 31, 1998, respectively                              453                         471
  Inventories                                                        103                         117
  Prepaid expenses and other current assets                          540                         164
                                                                --------                    --------

         Total current assets                                      1,616                       1,661

Property and equipment, net                                          660                         603
Deferred tax asset                                                   658                         577
Intangible assets, net                                             2,244                       2,079
Other assets                                                          77                          72
                                                                --------                    --------

         TOTAL                                                  $  5,255                    $  4,992

         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                              $    781                    $    852
  Accrued expenses                                                 1,340                       1,085
  Deferred revenue                                                   521                         689
  Notes payable and accrued interest payable                       1,359                       1,359
  Net liabilities of discontinued operations                         620                         981
                                                                --------                    --------

         Total current liabilities                                 4,620                       4,966

Commitments and contingencies

Shareholders' equity:
  Common stock, par value $.001; authorized
     shares 100,000,000; shares issued and
     outstanding 9,567,292 at June 30, 1999
     and December 31, 1998                                            10                          10
  Additional paid-in-capital                                       8,253                       8,253
  Accumulated deficit                                             (7,628)                     (8,237)
                                                                --------                    --------
         Total shareholders' equity                                  635                          26
                                                                --------                    --------

         TOTAL                                                  $  5,255                    $  4,992
</TABLE>


See accompanying notes to the consolidated financial statements.



                                      -4-
<PAGE>





FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN
   SHAREHOLDERS' EQUITY (DEFICIT)
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)

<TABLE>
<CAPTION>
                                                                              Total
                                Number of      Common      Additional      Accumulated     Shareholders'
                                 Shares        Stock    Paid-in Capital     (Deficit)     Equity (Deficit)

<S>                             <C>             <C>         <C>             <C>               <C>
Balance, December 31, 1997      9,397,292       $  9        $ 8,084         $ (9,147)         $ (1,054)

Issuance of common stock          170,000          1            169               --               170

Net income                             --         --             --              124               124
                                ---------       ----        -------         --------          --------

Balance, June 30, 1998          9,567,292       $ 10        $ 8,253         $ (9,023)         $   (760)
                                =========       ====        =======         ========          ========



Balance, December 31, 1998      9,567,292       $ 10        $ 8,253         $ (8,237)         $     26

Net income                             --         --             --              609
                                ---------       ----        -------         --------

Balance, June 30, 1999          9,567,292       $ 10        $ 8,253         $ (7,628)         $    635
                                =========       ====        =======         ========          ========
</TABLE>


See accompanying notes to the consolidated financial statements.



                                      -5-
<PAGE>





FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>

                                                            Six Months Ended June 30,

                                                            1999                1998
                                                       ----------------------------------


Cash flows from operating activities:

<S>                                                       <C>                 <C>
Net income                                                $   609             $   124

Adjustments to  reconcile  net income to
  net cash used in continuing operating
  activities:
Depreciation and amortization                                 191                  65
Cumulative effect of change in accounting
  principle                                                    --                 970
Noncash compensation                                           --                 170
Increase in deferred tax asset                               ( 81)                 --
Increase in intangibles and other assets                     (263)                (56)
(Decrease) increase  in net liabilities
  of discontinued operations                                 (361)              1,179
Other changes, net                                           (330)                853
                                                          -------             -------

Net cash provide by (used in)  continuing operating
  activities                                                 (235)              3,305


Capital expenditures                                         (154)               (  9)

Repayment of loan payables and others                          --              (2,735)
                                                          -------             -------

(Decrease) increase in cash and cash equivalents             (389)                561

Cash and cash equivalents, beginning of year                  909               1,421
                                                          -------             -------
Cash and cash equivalents, end of the period              $   520             $ 1,982

                                                          =======             =======
</TABLE>


See accompanying notes to the consolidated financial statements.



                                      -6-
<PAGE>





FIRST MEDICAL GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements

1.   BASIS OF PRESENTATION

The  financial  information  for the three  months and six months ended June 30,
1999 and 1998 is unaudited.  However,  the information  reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
management, necessary for the fair statement of results for the interim periods.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted.  These consolidated  financial statements should
be read in conjunction  with the consolidated  financial  statements and related
notes included in First Medical Group,  Inc.'s (the "Company") December 31, 1998
Report on Form-10-K.

The results of  operations  for the three month and six month  period ended June
30, 1999 are not  necessarily  indicative  of the results to be expected for the
full year.

2.   EARNINGS PER SHARE

Earnings  (loss) per common share is calculated by dividing net income (loss) by
weighted average number of common shares for the period.  Dilutive  earnings per
share reflect,  in periods in which they have a dilutive  effect,  the effect of
common  shares   issuable  upon  exercise  of  stock  options  and  other  stock
equivalents.  For the periods presented,  there were no common stock equivalents
included in the calculation, since they would be anti-dilutive.

3.   SUPPLEMENTARY SCHEDULE

                                         1999           1998
                                           (in thousands)
                                           --------------

Cash paid during the six months
ended June 30, for:
Interest                                 $  --          $  52
Income taxes                               100            327






                                      -7-
<PAGE>





  Item 2.     Management's Discussion and Analysis of Financial
              Condition and Results of Operation

GENERAL

     Statements  made in  this  filing  about  management's  intentions,  hopes,
beliefs,   expectations  or  predictions  of  the  future  are   forward-looking
statements.  It is important to note that actual results could differ materially
from those  projected  in such  forward-looking  statements.  Factors that could
cause future results to vary materially from current  expectations  include, but
are not limited to  competition  in the health care  industry,  legislation  and
regulatory  changes,  changes in the economy and stability in the  international
markets in which the Company operates.

Financial Condition

CASH AND CASH  EQUIVALENTS.  At June 30, 1999, the Company had cash of $ 520,000
as compared to $ 909,000 at December  31,  1998.  The  decrease in cash and cash
equivalents  relates  primarily  to  $320,000  of  payments  made by the Company
relating to prepaid rent on the new Moscow clinic facility . The new facility is
scheduled to open in the fourth quarter of 1999.

PREPAID  EXPENSES AND OTHER CURRENT ASSETS.  Prepaid  expenses and other current
assets at June 30, 1999 was  $525,000  as  compared to $164,000 at December  31,
1998.  The  increase in prepaid  expenses and other  current  assets of $361,000
relates  mainly to prepaid  rent  deposits  of  $320,000  made by the Company in
connection with the construction of the new Moscow facility.

INTANGIBLE  ASSETS.  Intangible  assets  at June 30,  1999 was $2.2  million  as
compared to $2.1 million at December 31, 1998. The increase relates primarily to
a  non-compete  agreement  entered  into with a former  employee  of the Company
amounting  to  approximately  $258,000.  This amount is being  amortized  over a
period of five (5) years.

NET  LIABILITIES OF  DISCONTINUED  OPERATIONS.  Net  liabilities of discontinued
operations at June 30, 1999 was $620,000 as compared to $981,000 at December 31,
1998. The decrease in net liabilities is due to the settlement of certain claims
relating to discontinued  operations  which occurred during the first six months
of 1999.



                                      -8-
<PAGE>






Results of Operations
Second Quarter of 1999 in Comparison
with Second Quarter of 1998

     REVENUE.  Total  revenue of the Company for the three months ended June 30,
1999 and 1998 was $2.9 million and $2.7  million,  respectively,  an increase of
6%.  Patient  and dental  visits for the three  months  ended June 30, 1999 were
4,932  and  1,112  respectively,  as  compared  to 5,614 and 1,154 for the three
months ended June 30, 1998.  This represents a decrease of 682 patient visits or
12.2% and 32 dental visits or 2.8%,  for the second  quarter of 1999 as compared
to the second quarter of 1998.  This decrease is primarily  attributable  to the
Company's  outdated facility in Moscow,  Russia. As a result,  the Company is in
the process of constructing a new inpatient/outpatient facility in Moscow. These
decreases were offset by an increase of  approximately 3% in average patient per
diem charged for medical and dental  services in 1999.  Included in revenues for
the three months ended June 30, 1999 was $254,000  relating to  reimbursement of
legal  fees and  other  expenses  paid on  behalf  of the  Hospital  Corporation
International, Ltd. and American Medical Centers, Inc. litigation.

     COST OF REVENUES. Cost of revenues for the three months ended June 30, 1999
and 1998 was $2.2  million  and $ 2.5  million,  a decrease  of $330,000 or 13%,
respectively.  Cost of revenues as a percentage of revenue,  was 76% and 93% for
the three  months  ended  June 30,  1998 and 1997,  respectively.  The  decrease
relates to a reduction of staffing levels as a result of the decrease in visits.

     OPERATING EXPENSES. Operating expenses for the Company were $656,000 during
the three  months  ended June 30,  1999 as  compared  to $ 391,000  in 1998,  an
increase of $265,000 or 68%.  Operating  expenses as a percentage of revenue was
23% in 1999 as compared to 14% in 1997.  Included in operating  expenses for the
three months ended June 30, 1999 was approximately  $43,000 of additional salary
expense  incurred in connection  with the  construction  of the new facility and
$26,000 of additional  amortization  expense relating to the amortization of the
non-compete agreement.

     INCOME FROM DISCONTINUED  OPERATIONS.  Income from discontinued  operations
for the three  months  ended June 30, 1999 was $225,000 as compared to income of
$3.3 million for the three  months ended June 30, 1998.  Included in income from
discontinued  operations  for the three months ended June 30, 1998 was a gain of
$4.3  million  resulting  from  the  sale  of  the  Florida  physician  practice
management operations.

     NET  INCOME.  Net  income  for the three  months  ended  June 30,  1999 was
$322,000  as  compared  to $ 2.9  million  in the  second  quarter  of 1998  due
primarily  to the gain on sale of the Florida  managed care  operations  of $4.3
million  offset by the  losses of $ 1.0  million  incurred  in  connection  with
discontinued operations during the second quarter of 1998.



                                      -9-
<PAGE>







Results of Operations
First Half of 1999 in Comparision
with First Half of 1998

     REVENUE.  Total  revenue of the Company  for the six months  ended June 30,
1999 and 1998 was $5.7 million and $5.5  million,  respectively,  an increase of
4%.  Patient and dental visits for the six months ended June 30, 1999 were 9,993
and 2,132 respectively, as compared to 11,017 and 2,244 for the six months ended
June 30, 1998.  This  represents a decrease of 1,024 patient  visits or 9.3% and
112 dental  visits or 5%, for the first  half of 1999 as  compared  to the first
half of 1998. This decrease is primarily  attributable to the Company's outdated
facility  in Moscow,  Russia.  As a result,  the  Company  is in the  process of
constructing a new inpatient/outpatient facility in Moscow. These decreases were
offset by an increase of  approximately  3% in average  patient per diem charged
for medical and dental services in 1999. Included in revenues for the six months
ended June 30, 1999 was  $254,000  relating to  reimbursement  of legal fees and
other expenses paid on behalf of the Hospital  Corporation  International,  Ltd.
and American Medical Centers, Inc. litigation.

     COST OF  REVENUES.  Cost of revenues for the six months ended June 30, 1999
and 1998 was $4.4  million  and $4.6  million,  a decrease  of  $240,000  or 5%,
respectively.  Cost of revenues as a percentage of revenue,  was 77% and 85% for
the six months ended June 30, 1999 and 1998, respectively.

     OPERATING  EXPENSES.  Operating  expenses for the Company  were  $1,013,000
during the six months  ended June 30, 1999 as compared to $ 988,000 in 1998,  an
increase of $25,000 or 3%. Operating expenses as a percentage of revenue was 18%
in 1999 and 1998.

     INCOME FROM DISCONTINUED  OPERATIONS.  Income from discontinued  operations
for the six months  ended  June 30,  1999 was  $450,000  as  compared  to a $1.7
million for the six months  ended June 30,  1998.  The income form  discontinued
operations  for the six months  ended June 30,  1999  relates  primarily  to the
settlement of certain claims  relating to discontinued  operations.  Included in
income from discontinued operations for the six months ended June 30, 1998 was a
net  gain of $3.7  million  resulting  from the  sale of the  Florida  physician
practice management and electrical supply business.

     CUMULATIVE  EFFECT  OF A CHANGE IN  ACCOUNTING  PRINCIPLE.  The  cumulative
effect  of a change  in  accounting  principle  of $  970,000  reflected  in the
consolidated  statement of operations  during the six months ended June 30, 1998
relates to the  write-off of start-up  costs of certain  operations  pursuant to
Statement of Position 98-5.

     NET INCOME. Net income for the six months ended June 30, 1999 was $ 609,000
as compared to $124,000 for the six months ended June 30, 1998 due  primarily to
the factors noted above.





                                      -10-
<PAGE>







Liquidity and Capital Resources

     The  working  capital of the Company as of June 30, 1999 is at a deficit of
$3.0 million as compared to $3.3  million as of December 31, 1998.  The decrease
in the deficit of $301,000 relates  primarily to the obligation  incurred by the
Company in the amount of  $258,000  relating  to the  non-compete  offset by the
reduction of net  liabilities  of  discontinued  operations  resulting  from the
settlement of cetain claims.  Included in the working capital deficit as of June
30,  1999 are the notes  payable  and accrued  interest  of  approximately  $1.3
million of which the Company is unable to locate the note  holders.  The Company
intends  to reduce  such  deficit  by  raising  additional  funds  from  current
stockholders and other related parties.

     The  Company  is in  default  on the  payment  of  interest  (approximately
$969,000  interest was past due as of June 30,  1999) on the $390,000  aggregate
principal amount of its 13 1/2 % Senior Subordinated Notes due May 15, 1998 ("13
1/2 % Notes") and 14 7/8%  Subordinated  Debentures  due October 15, 1995,  ("14
7/8%  Debentures")  that  remain  outstanding  and were not  surrendered  to the
Company in connection with its financial restructuring  consummated in 1991. The
Company  has been  unable to locate the holders of the 13 1/2% Notes and 14 7/8%
Debentures (with the exception of certain of the 14 7/8% Debentures,  which were
retired  during  1996).  The  Company  believes  that any claim for  payment  of
interest  on  these  securities  is  precluded  by  the  applicable  statute  of
limitations.  The Company is currently  reviewing the legal status of the matter
to determine  its  obligations,  if any,  given that the note holders  cannot be
located.

     Subsequent to June 30, 1999, the Company  intends to enter into  agreements
to raise $1 million to $1.5 million from current  stockholders and other related
parties,  of which  $500,000  was advanced to the Company  August 12, 1999.  The
funds raised will be used to complete the American Hospital of Moscow Annex, the
Company's  new medical  facility in Moscow,  Russia.  In  addition,  the Company
intends to engage an investment  bank to assist it in raising an additional  $10
million to facilitate the Company's business plan.


Year 2000

     The Company is aware of the issues  related with the computer  systems that
could be  affected  by the "Year  2000." The Year 2000  problem is the result of
computer  programs being written using two digits rather than four to define the
applicable   year.  This  could  cause  those  systems  to  process  and  record
information incorrectly or possibly fail to function in the year 2000.

     The Company  primarily  uses general  business  applications  on a PC-based
system that are licensed by the same vendor.  These  applications  are Year 2000
compliant.  Should such systems not be fully  functional,  the Company  believes
that  reasonable  manual  alternatives  are available to produce such data.  The
Company  believes that such cost to perform these tasks are not considered to be
material.  The Company is in the process of testing a new billing and scheduling
system for its  clinic  operations.  The  Company  expects  to install  this new
program during the fourth quarter of 1999. Such system is Year 2000 compliant.



                                      -11-
<PAGE>




     The Company is in the process of  identifying  those vendors that it relies
on to supply  diagnostic test results relating to patient testing and to a small
group of third-party  payors.  The Company is in the process of sending inquires
to these vendors and third-party payors to ascertain compliance. If such vendors
do not reply or cannot  provide Year 2000  compliant  services,  the Company may
need to locate alternative sources for goods and services.

     The Company  believes that the most  reasonably  likely worse case scenario
with respect to the Year 2000 issues is the possibility  that medical  equipment
and systems used to diagnosis  patients will result in the Company  experiencing
difficulty in providing proper treatment to patients.  In addition,  the Company
also deals with numerous client customers and insurance  companies and such Year
2000 issues may result in delays in payment to the Company for services rendered
which could adversely affect the Company's results of operations and liquidity.

     The Company believes that it is taking  reasonable and adequate measures to
address Year 2000 issues.  However, there can be no assurance that the Company's
information  systems,  medical  equipment  and other  systems  will be Year 2000
compliant by December 31, 1999,  or that  suppliers  and  third-party  insurance
payors are, or will be Year 2000 compliant, or that the cost required to address
the Year 2000  issue will not have a material  adverse  effect on the  Company's
business,  financial  condition or results of  operations.The  Company's  clinic
operations  are located in Eastern  European  countries.  To the extent that the
Year 2000 problems  affect the  Company's  ability to provide  adequate  patient
care, the Company may cease  providing  such services to patients.  In addition,
failures of the  banking  system,  basic  utility  providers,  telecommunication
providers  and other  services as a result of Year 2000  problems,  could have a
material adverse effect on the ability of the Company to conduct its business.

  ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     There has been no  material  change  in the  quantitative  and  qualitative
disclosures about market risk since December 31, 1998.



                                      -12-
<PAGE>







                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings

1.     On September 16, 1998, The Lehigh Group, Inc., now known as First Medical
       Group,  Inc. was sued along with other  defendants  in the United  States
       District  Court  of  Northern  Ohio  Western  Division  pursuant  to  the
       Comprehensive Environmental Response, Compensation and Liability Act. The
       plaintiffs have alleged that the Company is the  successor-in-interest to
       the Hilfinger Corporation (a defunct subsidiary of the Company) and claim
       that the Hilfinger  Corporation arranged for the disposal or treatment of
       waste  chemicals at one or more sites.  The Company  disputes  that it is
       such  successor-in-interest.  The plaintiffs are seeking damages, jointly
       and  severally,  against the  defendants  in excess of $25  million.  The
       occurrence  was  alleged  to have taken  place  during the period of 1950
       through 1972. The Company has put several insurance carriers on notice of
       this matter,  however no  determination  has been made regarding  whether
       there is insurance coverage.  The Company has retained counsel in Ohio to
       defend this claim.

       On or about January 7, 1999, the United States  Environmental  Protection
       Agency  ("USEPA")  forwarded  a  demand  to the  Company  and  the  other
       defendants for payment of USEPA'S response costs at the various landfills
       in an aggregate amount of approximately $792,000. A tolling agreement was
       entered  between  USEPA and the  Company,  and other  parties to toll the
       statute  of  limitations  until  August 1, 1999 to allow the  parties  to
       negotiate a  settlement.  The demand  asserts  that the  liability of the
       Company is joint and several.  To date, to the knowledge of the Company's
       counsel  handling  this matter,  no court action has been  instituted  by
       USEPA  against  the  Company  with  respect to this  matter.  The Company
       believes that it has no liability  with respect to this matter.  However,
       if this matter is adversely determined,  it could have a material adverse
       effect on the Company's financial condition.

2.     On or about June 26,  1998,  the  Company  was sued in the United  States
       District  Court for the Southern  District of Florida by  plaintiffs  who
       seek damages in connection with the sale of stock in Dominion  Healthnet,
       Inc. The  plaintiffs  claim they are entitled to this amount based upon a
       buy-out  agreement  the  plaintiffs   entered  into  with  First  Medical
       Corporation (a subsidiary of the Company) when the plaintiffs  sold their
       interest in  Dominion  Healthnet,  Inc.,  to First  Medical  Corporation.
       Subsequent  to June 30, 1999,  the Company has reached an agreement  with
       the plaintiffs to settle this claim for $165,000.

3.     In 1998 a claim was asserted against the Company by former consultants to
       the  Company  alleging  the  Company's  obligation  to pay  approximately
       $50,000 and provide further  consulting  contracts to the  complaintants.
       The Company does not believe that the final resolution of this claim will
       have any material adverse effect on the Company's financial condition.



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<PAGE>





4.     In 1998, a number of former  employees of the Company and its  affiliates
       presented  claims  against the Company in State  Court,  Miami,  Florida,
       claiming in excess of $300,000 for vacation and sick pay,  together  with
       benefits and  attorneys'  fees. The Company has settled with the majority
       of the plaintiffs for approximately $30,000.



Item 3. Defaults Upon Senior Securities

The Company continues to be in default in the payment of interest (approximately
$969,000  interest is past due as of June 30,  1999) on the  $390,000  principal
amount of 131/2% Notes and 14 7/8% Debentures.

Item 6. Exhibits and Reports on Form 8-K.

No reports on Form 8-K were filed during the quarter ended June 30, 1999.

EXHIBITS
--------
3.1    Restated    Certificate   of   Incorporation   and   Amendments   thereto
       (incorporated by reference to the Registrant's Annual Report on Form 10-K
       filed on April 16, 1998).

3.2    Certificate of Amendment to Restated  Certificate of Incorporation  dated
       November 12, 1997  (incorporated by reference to the  Registrant's  Proxy
       Statement dated October 29, 1997).

3.3    Form of Certificate of Designation of the Series A Convertible  Preferred
       Stock  (incorporated by reference to Appendix B of the Registrant's Proxy
       Statement  contained in  Pre-Effective  Amendment No. 5 to the Registrant
       Registration  Statement on Form S-1 (previously  Form S-4) dated June 26,
       1997).

3.4    Amended  and  Restated  By-Laws  of the  Registrant,  as  amended to date
       (incorporated by reference to Exhibit 3 (ii) to the Registrant's  Current
       Report on Form 8-K dated July 17, 1996).

4.1    Form of Indenture, dated as of October 15, 1985, among Registrant,  NICO,
       Inc.  and J. Henry  Schroder  Bank & Trust the  Registrant,  as  Trustee,
       including  therein the form of the subordinated  debentures to which such
       Indenture  relates  (incorporated  by  reference  to Exhibit 4 (a) to the
       Registrant's Current Report on Form 8-K dated November 7, 1985).




                                      -14-
<PAGE>





4.2    Amendment  to  Indenture  dated as of March  14,  1991  (incorporated  by
       reference to Exhibit (b) (2) to  Registrant's  Annual Report on Form 10-K
       for the year ended December 31, 1990).

4.3    Indenture dated as of March 15, 1991 (the "Class B Note Indenture") among
       the Registrant,  NICO, the guarantors  signatory thereto, and Continental
       Stock  Transfer  and Trust the  Registrant,  as Trustee,  to which the 8%
       Class B Senior Secured  Redeemable  Notes due March 15, 1999 of NICO were
       issued together with the form of such Notes (incorporated by reference to
       Exhibit 4 (i) to the Registrant's Annual Report on Form 10-K for the year
       ended December 31, 1990).

4.4    First  Supplemental  Indenture  dated as of May 5, 1993  between NICO and
       Continental  Stock Transfer & Trust the Registrant,  as trustee under the
       Class B Note Indenture (incorporated by reference to Exhibit 4 (h) to the
       Registrant's  Annual Report on Form 10-K for the year ended  December 31,
       1993).

4.5    Form of indenture between the Registrant, NICO and Shawmut Bank, N.A., as
       Trustee, including therein the form of Senior Subordinated Note due April
       15, 1998  (incorporated  by reference to Exhibit 4 (b) to Amendment No. 2
       to the  Registrant's  Registration  Statement  on Form S-2  dated May 13,
       1988).

10.0   Employment Agreement,  dated as of April 1, 1999, by and between American
       Medical Centers Management Company, Ltd. and George D. Rountree.

11.0   Statement re: computation of per share earnings  (incorporated  herein by
       reference to the notes to consolidated financial statements).

27.0   Financial Data Schedule






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                                   SIGNATURES
                                   ----------



Pursuant  to the  requirements  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.



                                           FIRST MEDICAL GROUP, INC.



                                           By: /s/ Elias M. Nemnom
                                               ------------------------------
                                               Elias M. Nemnom
                                               Senior Vice President and
                                               Chief Financial Officer



Dated:  August 13, 1999








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