<PAGE>

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

                                   FORM 10-KSB

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

             [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                             SECURITIES ACT OF 1934

                     For the period ended December 31, 2001
                         Commission file number 0-24165


                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
      --------------------------------------------------------------------
                 (Name of Small Business Issuer in its Charter)



          NEVADA                                              93-1108124
----------------------------                             -------------------
(State or other jurisdiction                              (I.R.S. Employer
of incorporation or                                      Identification No.)
organization)

 7504 DIPLOMAT DRIVE, SUITE 101, MANASSAS, VA                   20109
---------------------------------------------                ----------
(Address of principal executive offices)                     (Zip Code)

Issuer's Telephone number:   (703) 355-1957
                             --------------

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

   Title of each class                 Name of each exchange on which registered
     Common Stock                                NASDAQ Bulletin Board
   -------------------                 -----------------------------------------

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

                    COMMON STOCK, PAR VALUE $0.001 PER SHARE
                    ----------------------------------------
                                (Title of Class)

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 filings requirements for the past 90 days.
Yes [X]     No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405
ofRegulation S-B is not contained in this form, and no disclosure will
becontained, 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 the Form 10-KSB. [ ]

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         State issuer's revenues for its most recent fiscal year: $28,336,732

         State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a specified date within the past 60 days. There was no market
value for the common stock within the last 60 days.


PART I
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ITEM 1. DESCRIPTION OF BUSINESS

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(a)      BUSINESS DEVELOPMENT

         Mid-Atlantic Home Health Network, Inc. was originally incorporated
under the laws of the State of Utah on December 28, 1979 as U-Can Resources,
Inc.

         On January 31, 1980, the Company commenced a public offering to
residents of the State of Utah of 7,500,000 shares of its common stock for a
total of $75,000. The public offering was made pursuant to the provisions of the
exemption from registration contained in Section 3(a)(11) of the Securities Act
of 1933, as amended. The Company filed with the Utah Securities Commission of
the State of Utah a Registration Statement under the Utah Uniform Securities Act
with respect to the shares of common stock which were offered. An Offering
Circular was used in connection with the offering, which was an exhibit to the
Registration Statement. The offering was completely sold.

         The Company changed its corporate domicile from Utah to Nevada by
merging with a Nevada corporation, which was effective as of February 24, 1993
in Utah and March 26, 1993 in Nevada. The provisions of the Merger Agreement
required a change of corporate name to Trinity Gas Corporation and a twenty-five
(25) for one (1) reverse split of the Company's common stock.

         On July 8, 1993, the Company changed its name to Petro-Sers Corporation
in order to not be confused with another corporation with a similar name.

         The Company did not conduct any business activities until December
9,1994 when it executed an Exchange Agreement with Oak Springs Nursing
HomeLimited Liability Company* for the acquisition of all of the outstanding
stock of Hunt Country Home Health, Inc., a Virginia corporation. As a result of
this corporate reorganization, Hunt Country Home Health, Inc. became a wholly
owned subsidiary of the Company.

         The Company changed its name to Mid-Atlantic Home Health Network, Inc.
It authorized two (2) classes of stock. The present authorized capitalization is
200,000,000 shares of Class A common stock and 10,000 shares of Class B common
stock. The common stock of the Company was exchanged on a share-for-share basis
for a share of the Class A common stock, par value one mill ($0.001) per share.



*OAK SPRINGS NURSING HOME LIMITED PARTNERSHIP WAS REORGANIZED AND THE NAME WAS
CHANGED TO OAK SPRINGS NURSING HOME LIMITED LIABILITY COMPANY (OSNHLLC) ON
AUGUST 20, 2001.

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The Class A common stock, voting as a class, elects one-third of the Board of
Directors and the Class B common stock, voting as a class, elects two-thirds of
the Board. The consideration for the acquisition of all of the outstanding stock
of Hunt Country Home Health, Inc. was 20,474,628 shares of Class A common stock
and 10,000 shares of Class B common stock. This transaction was exempt from the
registration requirements of Section 5 of the Securities Act of 1933, as

         Mid-Atlantic is a regionally based home health and nurse staffing
amended, pursuant to the exemption contained in Section 4(2) of that Act.
company established to provide quality services and home medical products in a
cost-competitive manner to the Mid- Atlantic region. Since its acquisition of
Hunt Country Nursing Services and National Nurses Service in June of 1995 (See
Business of the Company), the majority of Mid-Atlantic's business has involved
the provision of nursing staff services to hospitals, nursing homes and other
facilities such as clinics, correctional facilities and schools, as well as
private duty nursing services.

         The Company has not been subject to bankruptcy, receivership or any
similar proceedings.

         The Company currently employs approximately 3,600 employees, of which
1,250 are full-time employees. The Company's principal executive office is
located at 7504 Diplomat Drive, Suite 101, Manassas, Virginia 20109. The Company
has administrative offices at the following locations:

         70 Main Street, Suite 34            1807 Libbie Avenue, Suite 206
         Warrenton, Virginia  20186          Richmond, Virginia 23226

         607B Jefferson Davis Highway        2971 Valley Avenue
         Fredericksburg, Virginia  22401     Winchester, Virginia 22601

         8630 Fenton Street, Suite 200       10760B Ambassador Drive
         Silver Spring, MD 20910             Manassas, Virginia 20109

         10800 Midlothian Turnpike           Teakwood Office Park
         Suites 205 & 271                    1413 Teakwood Dr., Suite D
         Richmond, Virginia 23225            Tappahannock, Virgina 22560

         2731-C Prosperity Avenue, Suite C   616 Kempsville Ctr., Suite 205
         Fairfax, Virginia 22031             Norfolk, VA  23502

         101 Juliad Court                    1932 Arlington Blvd., Suite 8
         Fredericksburg, Virginia 33406      Charlottesville, VA  22901

(b)      BUSINESS OF THE ISSUER:

         (1) PRINCIPAL PRODUCTS AND SERVICES AND THEIR MARKETS THE HOME
             HEALTH CARE BUSINESS OF THE COMPANY

         Mid-Atlantic is a regionally based home health company established to
provide nurse staffing services and home health and medical products in a
cost-competitive manner to the Mid- Atlantic region. Mid-Atlantic delivers care
to persons in a variety of settings, including private homes, hospitals and
nursing homes. Since its acquisition of Hunt Country Nursing Services and
National Nurses Service (see discussion below), the majority of Mid-Atlantic's
business has involved providing nursing staff for clinics, long-term care
facilities, hospitals and clinics, correctional facilities and schools. Services
are provided to persons of all ages and with all levels of health or health
related needs, varying from high technology interventions to companionship and

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services. Mid-Atlantic carefully seeks and hires competent staff who participate
in continuing education programs. All of Mid-Atlantic's health care providers
are licensed and bonded. This assures the Company's dedication to quality,
consistent delivery state-of-the-art services with a caring approach.

         Mid-Atlantic provides medical equipment and supplies and
around-the-clock skilled nursing. Registered nurses, Licensed Practical Nurses
and Vocational Nurses, as well as Physical, Occupational, Speech and Respiratory
Therapists work under the direction of physicians in the setting of personal
homes.

         Mid-Atlantic provides its services through four entities. These
entities are wholly-owned subsidiaries.

HUNT COUNTRY HOME HEALTH

         In the Spring of 1995, the Company acquired Hunt Country Home Health,
Inc. from the Oak Springs Nursing Home Limited Liability Company, the Company's
majority shareholder.

         Hunt Country Home Health performs approximately 275 home health visits
per month. With this case load, a wide spectrum of services requiring basic
skills to high tech skills are performed. Generally, the services provided fall
into the following program priorities:

         o        Essential physical care which may require frequent visits
                  including weekends, in the absence of which the patient might
                  otherwise require hospitalization or nursing home care.

         o        Patients in need of intravenous therapy, hyperalimentation,
                  blood transfusions or other intensive skilled nursing
                  modalities.

         o        Patients with open wounds which require dressing changes or
                  irrigations, in addition to frequent skilled assessment for
                  significant infections.

         o        Patients in need of rehabilitation services which can be
                  provided in the home and which can maximize the level of
                  functioning.

         o        In-home patients whose condition has deteriorated and who
                  would otherwise require hospitalization.

         o        Homebound patients in need of blood testing. The home care
                  nurse draws the blood, evaluates the patient and carries out
                  related teaching, which allows the physician to monitor the
                  patient's condition while he remains in the home.

         The Company's home health program provides skilled nursing, physical
therapy, occupational therapy, clinical social work, speech pathology and home
health aide services. These services form the basic framework of the traditional
home health services and disciplines which include skilled nursing for the
assessment, teaching and provision of care, physical therapy for ambulation and
muscle strengthening, occupation therapy for assisting persons to restore
functions in order to perform Activities of Daily Living ("ADL"), home health
aid for personal care and assistance in ADL's, speech therapy for restoration of
communication, and social services for assessment of, and assistance with,

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emotional social problems interfering with the plan of care. These services are
provided to any appropriate referral. Visit duration is usually two hours or
less, two to three times per week.

         Most visits are made to patients experiencing heart disease, cancer,
diabetes, AIDS, fractures and strokes or who have wounds that are in need of
care.

         Hunt Country Home Health has a home office located in Manassas,
Virginia and additional offices located in Fredericksburg and Warrenton. In
2001, 275 home visits per month provided skilled nursing care, physical therapy,
occupational therapy, speech therapy, home health aide and medical social work.
Visit duration was usually two hours or less, two to three times per week.

CENTER FOR AMBULATORY AND HOME INFUSION SERVICES

         In November of 1999, the durable medical equipment assets of Center for
Ambulatory & Home Infusion Services were transferred to Hunt Country Nursing
Services under the name of Advantage Medical Equipment and Supply. This company
is a "trading as" name to provide predominantly adult durable medical equipment.

NATIONAL NURSES SERVICE, INC.

         On June 30, 1995, the Company acquired ATLIS Health Services, Inc.,
which then was doing business under the name National Nurses Service.
Mid-Atlantic maintained the corporate entity, but changed its name to National
Nurses Service, Inc. ("NNS").

         NNS has four offices in the Maryland-Washington, D.C. metropolitan
area, Fairfax, Richmond, and the Tidewater area of Virginia. NNS is a leading
provider of supplemental staffing, including nursing, rehabilitative therapy and
certified nursing assistant services to hospitals, nursing homes, medical
clinics, correctional facilities, schools, and other governmental facilities. It
is certified by the Medicare and Medicaid programs in Virginia as a provider of
skilled and para-professional home health care services. NNS currently has an
active roster of more than 1,500 clinical employees from which to fill its
assignments.

HUNT COUNTRY NURSING SERVICES, INC.

         In connection with its acquisition of NNS, on June 30, 1995,
Mid-Atlantic acquired Hunt Country Nursing Services, Inc. ("HCNS") from its
majority shareholder, Oak Springs Nursing Home Limited Liability Company. HCNS
is a private duty nursing company that provides professional nurses and nursing
assistants to patients in the home for 4 to 24 hours per day, 7 days per week.
HCNS is located in Northern and Central Virginia and generates approximately
$7.5 million in revenues per year. With NNS, HCNS comprises the majority of
services provided by the Company and a majority of the Company's revenue is
derived from the operations of NNS and HCNS.

         (2) COMPETITIVE BUSINESS CONDITIONS

         The Company is part of a highly competitive market for nurse staffing
and private duty nursing services. In addition, the Company is faced with a
market with a shortage of nursing personnel. As a result, the Company faces
competition not in gaining and retaining clients, but gaining and retaining
nursing personnel.

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         (3) GOVERNMENTAL APPROVAL, REGULATION AND ENVIRONMENTAL COMPLIANCE

         The Company relies heavily on payments made by governmental entities
for the services provided by its certified home health entities. Medicare is the
largest single payer of home care services. Effective October 1, 2000, the two
certified Medicare Agencies owned and operated by the Company were required to
switch to the Prospective Pay System (PPS) for their services to Medicare
beneficiaries. The PPS replaces the cost reimbursement system. The PPS pays Home
Health Agencies (HHA) a predetermined base payment. Payment is provided for
60-day "episodes of care" for each beneficiary regardless of the number of days
of care within the episode. The exceptions to this rule are as follows:

         1)       The beneficiary voluntarily elects to transfer to another HHA
         2)       The beneficiary is discharged because treatment goals are met
         3)       A significant change occurs in the beneficiaries' condition,
                  which was not anticipated at the start of care.

         The PPS establishes a list of Home Health Resource Groups (HHRG) to
which patients are assigned. Each HHRG has a corresponding reimbursement dollar
amount. The system defines that dollar amount by using the location of the
client (rural or urban), labor, wage, clinical and functional case mix criteria.

         The combination of a fixed reimbursement by category and the use of
clinical assessment information to establish that reimbursement amount creates a
fundamental shift in how our home health agencies must be managed. Our home
health managers must focus on controlling costs while ensuring that the quality
of the care delivered does not suffer.

         In addition to the challenge of controlling costs and delivering
quality care, Hunt Country Home Health our home health agency in Fredericksburg
and Warrenton, Virginia continues to face the challenge of tough competition and
a shortage of nurses. These factors have contributed significantly to the 54%
decrease in revenue for 2001. Hunt Country Home Health operated at a $136,000
loss for 2001.

         Our home health operation in Richmond, Virginia was profitable under
PPS in 2001 with income of $312,000 versus $100,000 in 2000 under the cost
reimbursement system. This operation continues to find the right mix to prosper
and operate efficiently under the PPS.

         The home health divisions represent approximately 5% of the Company's
revenues.

         (4) RISKS ASSOCIATED WITH OPERATIONS

         The risks associated herewith include the following: no assurance of
profitability from its operations; a potential future need for funds;
significant government regulations; reliance on current management; increase in
competition; a lack of a current market for the securities; and the
uncertainties associated with changes in the health care system. All decisions
with respect to the management of the Company are made exclusively by the
Company.

         Although the Company does not anticipate the accumulation of debts, in
the event of a dissolution and termination of the Company, the proceeds realized
from the liquidation of assets, if any, will be distributed to the shareholders
only after the satisfaction of claims of all creditors. Accordingly, the ability
of a shareholder to recover all or any portion of his investment under such
circumstances will depend on the amount of funds realized and the claims to be
satisfied.

                                        6

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         (5) EMPLOYEES AND FACILITIES

         As of April 16, 2002, the Company had approximately 3600 employees of
which 1,250 are full-time equivalent employees. None of the Company employees
are subject to a collective bargaining agreement and the Company believes its
relations with its employees are good.

(c)      REPORTS TO SECURITY HOLDERS

         Prior to filing its Form 10-SB, the Company had not been required to
deliver annual reports. To the extent that the Company is required to deliver
annual reports to security holders through its status as a reporting company,
the Company shall deliver annual reports. Also, to the extent the Company is
required to deliver annual reports by the rules or regulations of any exchange
upon which the Company's shares are traded, the Company shall deliver annual
reports. If the Company is not required to deliver annual reports, the Company
will not go the expense of producing and delivering such reports. If the Company
is required to deliver annual reports, they will contain audited financial
statements as required.

         Prior to the filing of its Form 10-SB, the Company had not filed
reports with the Securities and Exchange Commission. Now that the Company has
become a reporting company, it is required to file Forms 10K-SB, 10Q-SB, 8-K and
appropriate proxy materials as they come due. If the Company issues additional
shares, the Company may file additional registration statements for those
shares. The public may read and copy any materials the Company files with the
Securities and Exchange Commission at the Commission's Public Reference Room at
450 Fifth Street, N.W., Washington, D.C. 20549. The public may obtain
information on the operation of the Public Reference Room by call the Commission
at 1-800-SEC-0330. The Commission maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the Commission. The Internet address of
the Commission's site is (http://www.sec.gov).

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ITEM 2. DESCRIPTION OF PROPERTY

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

         The Company is not engaged in the business of investing in real estate
or real estate mortgages, however it does own its office at 7504 and 7506
Diplomat Drive in Manassas, Virginia and at 10760 Ambassador Drive, Manassas,
Virginia.

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ITEM 3. LEGAL PROCEEDINGS

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

         The Company is not party to, and none of the Company's property is
subject to, any pending or threatened legal, governmental, administrative or
judicial proceeding except as described below:

         On or about December 2, 1998 the Company filed a complaint in the
Circuit Court of Hanover County, State of Virginia against Home Care Connections
and Bonnie James. In that action the Company alleged that while defendant James

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was employed by the Company, the defendants acted together and wrongly
transferred patients from services provided by the Company to services provided
by defendant Home Care Connections. The Company seeks monetary damages of
$900,000. The action is pending.

         The Company was a defendant in a lawsuit for breach of contract that is
styled ATLIS SYSTEMS INC V. MID-ATLANTIC HOME HEALTH NETWORK, INC., No. 200383
filed in June of 1999 in the Circuit Court for Montgomery County, State of
Maryland. The plaintiff corporation purports to be the successor-in-interest to
Atlis Federal, Inc. On June 30, 1995, the Company acquired all of the stock of
Atlis Health Services, Inc., a wholly-owned subsidiary of Atlis Federal. As part
of the consideration of the acquisition, the Company agreed to deliver 500,000
shares of the Company's Common Stock to Atlis Federal and, on the third
anniversary of closing of the acquisition (June 30, 1998), to pay Atlis Federal
the difference, if any, between the fair value of such stock $800,000. The Stock
Purchase Agreement between the parties establishes a multi-part formula for
determining the fair value of the stock as of that date. The parties disagree
not only about the proper interpretation of the contract language but also
whether, as a result of Altis Federal's alleged breach of various disclosures
provisions of the agreement, the Company is obligated to make any payment at
all. The Complaint seeks damages in the amount of $787,000 (representing
plaintiff's view of the Company's liability to pay an adjusted purchase price
under the contract formula) plus an unspecified amount of attorneys fees and
costs under an indemnification provision of the agreement. The Company has
asserted claim in recoupment to plaintiff's claims that would, if successful,
reduce the amount of any adverse judgment significantly. This action is pending.

         On October 27, 2000, the Company settled this pending lawsuit by paying
Atlis Health Services, Inc. $900,000 in cash and buying back Atlis Health
Services, Inc.'s 500,000 shares of stock in the Company for $450,000 over three
years. The first installment was made October 27, 2001. The second installment
is October 27, 2002.

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

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

         The Company did not submit any matter to a vote of the shareholders in
the past calendar year 2001.

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PART II
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ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

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Market Information:

         The Company's Class A Common Stock is traded on the Over The Counter
Bulletin Board system under the symbol "MAHN". The following table sets forth
the range of high and low bid prices for the Company's Common Stock for each
quarterly period indicated as reported by the NASDAQ's Historical Research
Department. Quotations reflect inter-dealer prices without retail markup,
markdown or commissions and may not represent actual trades.

                  Quarter Ended            High Bid          Low Bid
                ------------------         --------        ----------

                December 31, 2001          $ 0.30          $ 0.30
                November 30, 2001          $ 0.60          $ 0.50
                June 30. 2001              $ 0.51          $ 0.30
                March 30, 2001             $ 0.68          $ 0.68
                December 31, 2000          $ 0.375         $ 0.06
                September 30, 2000         $ 0.43          $ 0.06
                June 30, 2000              $ 0.875         $ 0.50
                March 31, 2000             $ 0.37          $ 0.125
                December 31, 1999          $ 0.25          $ 0.125
                September 30, 1999         $ 0.18          $ 0.125
                June 30, 1999              $ 0.25          $ 0.03125
                March 31, 1999             $ 0.03          $ 0.03125
                December 31, 1998          $ 0.03          $ 0.03125
                September 30, 1998         $ 0.03          $ 0.03125
                June 30, 1998              $ 0.06          $ 0.03125
                March 31, 1998             $ 0.06          $ 0.0625

         There is no market for the Company's Class B Common Stock.

HOLDERS:

         As of December 31, 2001, there were approximately 344 holders of record
of the Company's Class A Common Stock. All of the Company's 10,000 shares of its
authorized Class B Common Stock are issued and outstanding and owned by one (1)
shareholder, Oak Springs Nursing Home Limited Liability Company.

DIVIDENDS:

         The Company has never paid cash dividends on its stock and does not
intend to do so in the foreseeable future. The Company currently intends to
retain its earnings for the operation and expansion of its business. The
Company's continued need to retain earnings for operations and expansion are
likely to limit the Company's ability to pay dividends in the future.

OPTIONS AND WARRANTS.

         There are no outstanding options or warrants to purchase additional
stock. The Company had an incentive stock option plan that included
substantially all officers and key employees. The Series C options which expired
in 1998 originally had an exercise price of $1 per share. The Company

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subsequently reduced the option price to $.50 per share. Certain of these
options were exercised and the amount due was financed by the Company through
notes bearing interest at 8%. The unpaid balance of outstanding notes receivable
for stock purchases is shown as a reduction of stockholders' equity in the
Company's financial statements.

RECENT SALES OF UNREGISTERED SECURITIES

         There were no sales of unregistered securities in 2001.

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ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

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

         Statements contained herein that are not historical facts are
forward-looking statements as that term is defined by the Private Securities
Litigation Reform Act of 1995. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, the
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ from those projected. 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. Such risks and uncertainties
include, without limitation: well established competitors who have substantially
greater financial resources and longer operating histories, regulatory delays or
denials, ability to compete as a start-up company in a highly competitive
market, and access to sources of capital.

         Mid-Atlantic Home Health Network, Inc. (MAHN) is a holding company of
four corporate entities: National Nurses Service, Inc.; Hunt Country Home
Health, Inc.; Hunt Country Nursing Services, Inc., and The Center for Ambulatory
         and Home Infusion Services. An analysis of consolidated operations as
well as
each of these entities is depicted below.

MID-ATLANTIC HOME HEALTH NETWORK, INC. (MAHN)

CONSOLIDATED FINANCIAL POSITION

         The Company's consolidated total assets were $8,895,000 at December 31,
2001 versus $9,388,000 at December 31, 2000. The 5% decrease was due principally
to a decrease in accounts receivable.

         Liquidity, as represented by working capital (current assets less
current liabilities), decreased from approximately $695,000 to $634,000 at
December 31, 2001. The Company feels that its current and anticipated liquidity
will be sufficient to fund future operations.

         The Company finances a portion of its accounts receivable with a lender
under terms of an agreement that advances up to 80% of qualified accounts
receivable. At December 31, 2001 advances secured by accounts receivable totaled
approximately $4,417,000.

         Due to the nature of the Company's operations, property and
equipmentare not a significant factor in planning future operational needs. At
bothDecember 31, 2001 and 2000 the company's net investment in property and
equipment was less than 6% of total assets.

                                       10

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         Since 1995 the Company has been self-funded for workers compensation
insurance. In the past self-funding has proven to be a viable way of saving on
premiums. However, in recent years the insurance market has begun to harden
industry wide. In 2001, our self- funded plan would have required an additional
$600,000 in letters of credit (LOC), secured by cash, as collateral for the
plan. Since this would have tied up a considerable amount of working capital,
management decided to change from a self-funded plan for workers compensation to
a guaranteed plan. This change resulted in a $298,000 increase in premiums
without the LOC requirement. The professional and umbrella insurance coverages
had similar increases, also due to the volatile market place. The 2001 premium
was $132,000 compared to $70,000 in 2000, a 89% increase. Due to the current
trend in the insurance industry, management anticipates continued increases in
annual premiums.

CONSOLIDATED RESULTS OF OPERATIONS

         Revenues for the year ended December 31, 2001 were approximately
$28,337,000 a less than 1% increase over December 31, 2000 revenues of
approximately $28,243,000.

         Costs related to patient care rose to approximately $22,030,000 an
increase of 2% over the previous year total of $21,699,000. General and
administrative expenses totaled approximately $5,408,000 for the year ended
December 31, 2001 an increase of 10% over the prior period.

         Pretax, income in 2001 decreased to $20,000 versus $844,000 in 2000.
The after tax loss for 2001 was $35,000 versus net income of $512,000 in 2000.

         Earnings per common share was .000 for 2001 versus .04 a year ago.

                                       11

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                               HEALTH CARE TRENDS

         The following is a table of the Company's approximate operating
revenues for the years 1995 through 2001.

                                     Percentage change
                                       From the prior
                         Revenue           year

           1995          9,983,000
           1996         14,269,000         42.9%
           1997         13,740,000         -3.7%
           1998         14,698,000          6.9%
           1999         18,984,000         29.2%
           2000         28,200,000         48.5%
           2001         28,337,000          ---

         The Company has, as described elsewhere in this annual report on Form
10-KSB, positioned itself to benefit from changing trends in the market for
health care services.

         Management anticipates continued and increased demand for the Company's
staffing, private duty nursing services, durable medical equipment and supplies,
and home health services. MAHN does not face difficulties in the marketing of
its services. Its challenges are in the recruitment of sufficient nursing
personnel to meet the demands for its nursing care services.

         MAHN, the holding company, does not generate any income but reports the
corporate-wide administrative expenses for the four entities. The majority of
MAHN's operating expenses is allocated to the entities that it services. For
2001, MAHN had revenue of $178,000; operating expenses of $438,000; resulting in
unallocated expense or a loss of $260,000.

NATIONAL NURSES SERVICE, INC. (NNS)

OPERATING REVENUES:
-------------------

         Operating revenues increased 10% or $1,900,000, from $18,700,000 in
2000 to $20,600,000 in 2001. The staffing division operating revenues increased
$1,700,000 or 10%, from $17,400,000 in 2000 to $19,100,000 in 2001. The home
health revenue increased 15% or $200,000, from $1,300,000 in 2000 to $1,500,000
in 2001.

         The primary reason for the staffing division revenue increase was the
expansion into Norfolk in late 2000 resulting in a $1,400,000 revenue increase
over 2000 in that office. The balance of the increase was attributable to the
Fairfax office, which opened in early 2000 and increased revenues in excess of
$300,000. The Silver Spring office increased revenues by $700,000 due to strong
growth in our government contract and group home business. However this increase
was offset by a $700,000 reduction in the Richmond office as a result of
significantly reduced business levels in correctional facilities.

         The demand for supplemental staffing continues to be strong in all
markets, however some client facilities are increasing efforts to obtain
supplemental nurses directly through their own pool and with more aggressive
recruiting programs for staff nurses. These positive and negative elements
appear to be offsetting each other in the near future. Management believes the
financial and management resources necessary to successfully operate internal
pools by these clients will ultimately become too burdensome and result in a
trend back to even greater levels of outsourcing.

                                       12

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We have also observed increased government interest in mandating staffing ratios
in hospitals and nursing homes as a result of serious understaffing at some
institutions. This will likely add to the already existing pressure in the
market for more nurses at a time when the average age of nurses nationwide is at
an all-time high of 46 years. Even without increased staffing ratios, the number
of nurses leaving the direct patient care workforce exceeds the number of new
graduates by a substantial margin.

OPERATING EXPENSES:
-------------------

         Operating expenses expressed as a percentage of operating revenues
increased to 95% in 2001 versus 93% in 2000.

INCOME/LOSS:
------------

         In 2001, NNS produced a pretax income of $935,000; 67% was generated by
the staffing division and 33% from the home health division.

HUNT COUNTRY NURSING SERVICES, INC. (HCNS)

OPERATING REVENUES:
-------------------

         Hunt Country Nursing Services, Inc., our private duty nursing company,
experienced a decline in revenue in fiscal year 2001. Operating revenues totaled
$7,470,000 versus $8,646,000 a year ago; the decrease is $1,176,000 or 14
percent.

         The decrease in revenue is due to significant reductions in the private
duty nursing/personal care business levels at the Winchester and Fairfax,
Virginia locations; revenues for these locations decreased $477,000 and $566,000
respectively. As well as, the closing of Advantage Pediatrics Home Health Care,
the durable medical equipment division in Charlottesville, Virginia in May 2001.
APHHC generated revenue of $500,000 in 2000 compared to $300,000 in 2001, a
decrease of $200,000.

OPERATING EXPENSES:
-------------------

         Operating expenses for HCNS decreased to $7,975,000 in 2001 versus
$8,441,000 in 2000. This represents a decrease of 6 percent. Operating expenses
did not decrease proportionately to the decrease in revenue for 2001.

INCOME/LOSS:
------------

         HCNS loss $518,000 for fiscal year 2001 as compared to a profit of
$204,000 in 2000.

         The loss is due to a significant drop in revenue that was not
accompanied by a proportionate decrease in operating expenses.


HUNT COUNTRY HOME HEALTH, INC. (HCHH)

OPERATING REVENUES:
-------------------

         The operating revenues for fiscal year 2001 for this Medicare Certified
home health agency totaled $519,000, compared to $1,117,000 for the prior year.

OPERATING EXPENSES:
-------------------

         Operating expenses decreased from $1,080,000 in 2000 versus $619,000 in
2001.

                                       13

<PAGE>

INCOME/LOSS:
------------

         In fiscal year 2001, HCHH experienced a loss of $136,000 versus $37,000
in 2000.

         The loss is attributed to the significant decrease in home health
business in Fredericksburg and Warrenton, Virginia. Both locations face strong
competition from hospital based home health agencies in the area. As well as,
the continual challenge of trying to staff cases during a nursing shortage.


THE CENTER FOR AMBULATORY AND HOME INFUSION SERVICES (CAHIS)

         This company did not conduct any business in 2001.

                                       14

<PAGE>

--------------------------------------------------------------------------------
ITEM 7. FINANCIAL STATEMENTS
--------------------------------------------------------------------------------







                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                          CONSOLIDATED FINANCIAL REPORT

                           DECEMBER 31, 2001 AND 2000










See accompanying notes.

<PAGE>

                                    CONTENTS



                                                                        PAGES
                                                                     -----------

INDEPENDENT AUDITORS' REPORT                                               F-3

FINANCIAL STATEMENTS

   Consolidated balance sheets                                       F-4 - F-5

   Consolidated statements of income                                       F-6

   Consolidated statements of stockholders' equity                         F-7

   Consolidated statements of cash flows                                   F-8

   Notes to consolidated financial statements                        F-9 - F-16



See accompanying notes.

                                       F-2

<PAGE>

                          INDEPENDENT AUDITORS' REPORT



To the Board of Directors
Mid-Atlantic Home Health Network, Inc.
  and Subsidiaries


We have audited the accompanying consolidated balance sheets of Mid-Atlantic
Home Health Network, Inc. and Subsidiaries (the Company), as of December 31,
2001 and 2000, and the related consolidated statements of income, stockholders'
equity and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Mid-Atlantic Home Health Network, Inc. and Subsidiaries as of December 31, 2001
and 2000, and the results of their operations and their cash flows for the years
then ended in conformity with accounting principles generally accepted in the
United States of America.


                                                        /s/ Eggleston Smith P.C.
                                                        ------------------------
                                                        Eggleston Smith P.C.



Newport News, Virginia
April 8, 2002

See accompanying notes.
                                       F-3

<PAGE>


                              FINANCIAL STATEMENTS

                                   YEARS ENDED

                           DECEMBER 31, 2001 AND 2000
                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

                                                           2001         2000
                                                       -----------   -----------
                           ASSETS

CURRENT ASSETS
   Cash and cash equivalents                           $1,283,042    $  549,812
   Accounts receivable, net of allowances of
     $535,153 in 2001 and $103,187 in 2000              5,174,631     6,640,427
   Due from affiliates                                    323,291        97,931
   Prepaid expenses and other current assets               90,024        31,964
   Deferred tax asset                                     102,000        26,000


              Total current assets                      6,972,988     7,346,134
                                                       -----------   -----------

PROPERTY AND EQUIPMENT, NET                               533,672       573,840
                                                       -----------   -----------

OTHER ASSETS
   Goodwill, net of accumulated amortization of
     $375,867 in 2001 and $303,728 in 2000              1,260,771     1,332,909
   Other assets                                           127,360       135,954
                                                       -----------   -----------

              Total other assets                        1,388,131     1,468,863













                                                       -----------   -----------
              Total assets                             $8,894,791    $9,388,837
                                                       ===========   ===========

See accompanying notes.
                                       F-4

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

                                                         2001           2000
                                                     ------------   ------------
       LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
   Current maturities of long-term debt              $   147,089    $   148,405
   Current maturities of capital leases                   72,273         53,635
   Notes payable                                       4,417,098      4,759,680
   Accounts payable                                      488,694        458,104
   Accrued salaries and related employee benefits        436,711        425,882
   Other current liabilities                             495,707        461,905
   Income taxes payable                                  281,542        343,456
                                                     ------------   ------------

              Total current liabilities                6,339,114      6,651,067
                                                     ------------   ------------

LONG-TERM DEBT, NET OF CURRENT MATURITIES
   Notes payable                                         401,762        536,568
   Capital leases                                        183,278        194,168
                                                     ------------   ------------

              Total long-term debt                       585,040        730,736
                                                     ------------   ------------

              Total liabilities                        6,924,154      7,381,803
                                                     ------------   ------------

STOCKHOLDERS; EQUITY
   Common stock, Class A, $.001 par
     value, 200,000,000 shares authorized
     12,105,142 shares issued and outstanding             12,106         12,106
   Common stock, Class B, $.001 par value,
     10,000 shares authorized, issued and
     outstanding                                              10             10
   Additional paid-in capital                            451,002        451,002
   Retained earnings                                   1,671,769      1,708,166
                                                     ------------   ------------
                                                       2,134,887      2,171,284
   Stock subscriptions receivable                       (164,250)      (164,250)
                                                     ------------   ------------

           Total stockholders' equity                  1,970,637      2,007,034
                                                     ------------   ------------

           Total liabilities and stockholders'
            equity                                   $ 8,894,791    $ 9,388,837
                                                     ============   ============

See accompanying notes.
                                       F-5

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                        CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

                                                      2001              2000
                                                 -------------     -------------

REVENUES                                         $ 28,336,732      $ 28,243,016
                                                 -------------     -------------

EXPENSES
   Patient care costs                              22,029,578        21,699,600
   General and administrative                       5,407,581         4,907,394
   Amortization                                        90,519            87,405
   Interest expense, net                              789,224           704,238
                                                 -------------     -------------

              Total expenses                       28,316,902        27,398,637
                                                 -------------     -------------

              Income before income taxes               19,830           844,379

PROVISION FOR INCOME TAXES                            (55,027)          332,863
                                                 -------------     -------------

              Net income (loss)                  $    (35,197)     $    511,516
                                                 =============     =============

EARNINGS PER COMMON SHARE                        $          -      $        .04
                                                 =============     =============

See accompanying notes.
                                       F-6

<PAGE>

<TABLE>
                                              MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                                         AND SUBSIDIARIES

                                          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                              YEARS ENDED DECEMBER 31, 2001 AND 2000

--------------------------------------------------------------------------------------------------------------------------
<CAPTION>
                                                                  Additional                      Stock
                                            Common Stock           Paid-In        Retained    Subscriptions
                                       Class A        Class B      Capital        Earnings      Receivable        Total
                                    ------------   ------------  ------------   ------------   ------------   ------------
<S>                                      <C>                <C>  <C>            <C>            <C>            <C>
Balance, December 31, 1999               12,631             10   $ 1,113,475    $ 1,197,850    $  (189,250)   $ 2,134,716

   Reacquisition of shares
     originally issued in
     purchase of
     National Nurses Service               (500)             -      (643,500)             -              -       (644,000)
   Cancelled subscriptions                  (25)             -       (24,975)                       25,000              -
   Issuance of stock to employees
     as compensation                          -              -         6,002              -              -          6,002
   Dividend paid                              -              -             -         (1,200)             -         (1,200)
     Net income                               -              -             -        511,516              -        511,516
                                    ------------   ------------  ------------   ------------   ------------   ------------

Balance, December 31, 2000               12,106             10       451,002      1,708,166       (164,250)     2,007,034

   Dividend paid                              -              -             -         (1,200)             -         (1,200)
   Net income (loss)                          -              -             -        (35,197)             -        (35,197)
                                    ------------   ------------  ------------   ------------   ------------   ------------

BALANCE, DECEMBER 31, 2001               12,106             10             -    $ 1,671,769    $  (164,250)   $ 1,970,637
                                    ============   ============  ============   ============   ============   ============
</TABLE>

See accompanying notes.
                                                                F-7


<PAGE>

<TABLE>
                          MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                     AND SUBSIDIARIES

                           CONSOLIDATED STATEMENTS OF CASH FLOWS
                          YEARS ENDED DECEMBER 31, 2001 AND 2000
-----------------------------------------------------------------------------------------------
<CAPTION>
                                                                        2001           2000
                                                                    ------------   ------------
<S>                                                                 <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income (loss)                                                $   (35,197)   $   511,516
   Adjustments to reconcile net income (loss) to net
     cash provided by (used in) operating activities:
       Depreciation                                                     109,958         25,046
       Amortization                                                      72,138         77,330
       Deferred taxes                                                   (76,000)        46,000
       Changes in assets and liabilities:
         Accounts receivable                                          1,465,796     (2,362,064)
         Due from affiliates                                           (225,360)       175,412
         Prepaid expenses and other current assets                      (58,060)       155,796
         Accounts payable                                                30,590        132,499
         Accrued salaries and related employee benefits                  10,829         28,001
         Income taxes payable                                           (61,914)       218,366
         Other current liabilities                                       33,802        297,635
         Other assets                                                     8,594       (105,168)
                                                                    ------------   ------------

              Net cash provided by (used in) operating activities     1,275,176       (799,631)
                                                                    ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of goodwill                                                       -       (256,000)
   Purchases of property and equipment                                  (18,657)       (44,209)
                                                                    ------------   ------------

              Net cash used in investing activities                     (18,657)      (300,209)
                                                                    ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
   Increase in note payable, net                                       (342,582)     1,766,599
   Current borrowings                                                         -         18,000
   Repayment of long-term debt                                         (136,122)       (16,543)
   Principal payments on capital leases                                 (43,385)       (28,095)
   Reacquisition of stock                                                     -       (644,000)
   Stock issued as employee compensation                                      -          6,002
   Dividend paid                                                         (1,200)        (1,200)
                                                                    ------------   ------------

              Net cash provided by (used in) financing activities      (523,289)     1,100,763
                                                                    ------------   ------------

              Net increase in cash
                and cash equivalents                                    733,230            923

CASH AND CASH EQUIVALENTS
   Beginning                                                            549,812        548,889
                                                                    ------------   ------------

   Ending                                                           $ 1,283,042    $   549,812
                                                                    ============   ============
</TABLE>
See accompanying notes.
                                            F-8

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000

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

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION. The consolidated financial statements include the accounts of
Mid-Atlantic Home Health Network, Inc. (MAHN) and its subsidiaries (collectively
referred to herein as the Company). The subsidiaries include Hunt Country
Nursing Services, Inc. (Hunt Country Nursing), Hunt Country Home Health, Inc.
(Home Health), National Nurses Services, Inc. and the Center for Ambulatory and
Home Infusion Services, Inc. (CAHIS).

Approximately 80% of MAHN's outstanding shares are owned by Oak Springs Nursing
Home Limited Liability Company (Oak Springs).

The Company is engaged in the business of providing integrated home health
services with an emphasis in providing nursing staff services to hospitals,
nursing homes and other facilities. The Company operates in Virginia, Maryland,
and the District of Columbia.

BASIS OF CONSOLIDATION. All significant intercompany accounts and transactions
have been eliminated.

NET REVENUES. Net revenues are reported at the estimated net realizable amounts
from patients, third party payers, and others for services rendered, including
estimated retroactive adjustments under reimbursement agreements with third
party payers. Revenue received under third-party agreements is subject to audit.
Any adjustments as a result of these audits are reflected in current operations.
Approximately 5% and 5% of the Company's net revenues for the years ended
December 31, 2001 and 2000, respectively, were from participation in Medicare
and state Medicaid programs. In addition, approximately 9% and 15% of the
Company's net revenues for the years ended December 31, 2001 and 2000,
respectively, was from contracts with state and local governmental correctional
facilities, including the Commonwealth of Virginia and the District of Columbia.

At December 31, 2001 and 2000, 1% and 3%, respectively, of net accounts
receivable were due from Medicare and Medicaid. The ability of payers to meet
their obligations depends upon their financial stability, future legislation and
regulatory actions.

The Company does not believe there are any significant credit risks associated
with receivables from Medicare and Medicaid.

PROPERTY AND EQUIPMENT. Property and equipment is recorded at cost. The cost and
the related accumulated depreciation are removed from the accounts in the year
the related asset is sold or retired. Depreciation is computed using the
straight-line method over the estimated economic lives of the assets, commencing
at the time the assets are placed into service.

Amortization of assets acquired under capital leases is included in depreciation
expense.

                                                                     (Continued)

                                       F-9

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONCLUDED)

CASH AND CASH EQUIVALENTS. Cash and cash equivalents include cash on hand and in
the bank as well as any investment purchased with an original maturity of three
months or less. The Company maintains its cash in bank deposit accounts which,
at times, may exceed federally insured limits. The Company has not experienced
any losses in such accounts. Cash equivalents are carried at cost which
approximates fair value.

GOODWILL AND OTHER ASSETS. Goodwill arises from acquisitions and represents the
excess of purchase price over identifiable acquired net assets, and is amortized
on a straight-line basis over 20 years. Other assets principally consist of the
estimated value of the assembled workforce and capitalized fees related to other
long-term agreements and transactions. Other assets are amortized on a
straight-line basis over a period of 3 to 5 years.

INCOME TAXES. The income tax provision includes federal and state income taxes
both currently payable and deferred because of differences between financial
reporting and tax bases of assets and liabilities. Deferred tax assets and
liabilities are measured using the enacted tax rates and laws.

USE OF 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.

STOCKHOLDERS' EQUITY. The Company has three classes of stock. Two hundred
million shares of Class A common stock have been authorized. The Class A
shareholders have the right to elect one third of the directors of the Company.
Ten thousand shares of Class B common stock, with the right to elect two thirds
of the directors, have also been authorized. Five million shares of Class C
convertible preferred stock have been authorized. The preferred stock would be
paid a dividend of 12%. No shares of Class C convertible preferred stock are
outstanding.

EARNINGS PER SHARE. Earnings per common share are computed by dividing the
weighted average number of shares outstanding into net income. Diluted earnings
per share are not presented because the outstanding stock options are not
dilutive.

NOTE 2. ACCOUNTS RECEIVABLE

Accounts receivable arise from the provision of staffing services to hospitals,
nursing homes and other facilities in the Virginia, Maryland, District of
Columbia and Pennsylvania areas. The principal payers for these services are the
patients, insurance companies, various state and local government agencies,
other institutional providers of healthcare, the Medicare program, and certain
Medicaid programs.

                                      F-10

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 3. PROPERTY AND EQUIPMENT

As of December 31, 2001 and 2000, property and equipment consisted of the
following:

                                                         2001           2000
                                                     ------------   ------------
   Building and building improvements                $   349,587    $   321,355
   Equipment acquired under capital leases               327,031        275,898
   Furniture and equipment                               475,982        512,480
                                                     ------------   ------------
                                                       1,152,600      1,109,733
   Less accumulated depreciation and amortization        618,928        535,893
                                                     ------------   ------------
                                                     $   533,672    $   573,840
                                                     ============   ============

NOTE 4. NOTES PAYABLE

National Nurses Service, Home Health and Hunt Country Nursing borrow funds under
terms of agreements with a lender and secured by accounts receivable. These
agreements provide for advances on accounts receivable of approximately 83% of
the collateralized balances. The Company is required to refund any borrowings
for financial accounts receivable balances not collected within 180 days.
Interest is accrued at 10.25%. The funding agreements expire June 30, 2004.
Repayment of these advances requires collection directly by lender and credited
against amounts outstanding. Interest is paid separately.

                                                         2001           2000
                                                     ------------   ------------
   Amount of advances on accounts receivable         $ 5,612,143    $ 5,869,123
   Less:  Lender reserves                              1,195,045      1,109,443
                                                     ------------   ------------
           Note payable                              $ 4,417,098    $ 4,759,680
                                                     ============   ============

NOTE 5. LONG-TERM DEBT

Long-term debt as of December 31, 2001 and 2000, consisted of the following:

                                                         2001          2000
                                                     ------------   ------------
Note payable, C.W. Cobb, collateralized by first
    deed of trust on building and guaranteed
    by the general partners of Oak Springs.
    Payable in monthly installments of $761,
    including interest at 11%. Due April, 2021.      $    64,046    $    64,946

Note payable, C.W. Cobb, collateralized by
    second deed of trust on building and
    guaranteed by the general partners
    of Oak Springs. Payable in monthly
    installments of $221, including interest
    at 13%. Due April, 2021.                              17,678         18,011

Note payable, Way Point Bank. Payable in
    monthly installments of $1,116, including
    interest at 8.5%. A balloon payment of
    $86,809 is due September, 2008.                       56,453         70,472

                                                                     (Continued)

                                      F-11

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 5. LONG-TERM DEBT (CONCLUDED)

                                                         2001           2000
                                                     ------------   ------------
Note payable, SunTrust Bank, collateralized
    by building and guaranteed by the managing
    general partner of Oak Springs. Payable in
    monthly installments of $772, including
    interest at 8%. Due December, 2024.              $    75,751    $    77,862

Note payable, Wachovia Bank guaranteed by
    the general partners of Oak Springs,
    payable in monthly installments of
    $1,668, including interest at 11.21%.
    Due December 5, 2007.                                 56,591         62,682

Note payable, ATLIS Systems, Inc.,
    collateralized by stock, payable in
    annual installments of $150,000, including
    interest at an imputed rate of 10%.
    Due October 27, 2003. The note does not
    bear interest.  The face amount of
    $450,000 has been discounted to $373,000.
    The discount will be charged to interest
    expense over the term of the note.                   260,331        373,000

Note payable, stockholder, uncollateralized,
    no stated repayment terms                             18,000         18,000
                                                     ------------   ------------
                                                         548,850        684,973
         Less current maturities                         147,088        148,405
                                                     ------------   ------------
                                                     $   401,762    $   536,568
                                                     ============   ============

Annual maturities of long-term debt outstanding at December 31, 2001, are as
follows:

       2002                                          $   147,088
       2003                                              160,505
       2004                                               25,259
       2005                                               26,482
       2006                                               23,753
       Thereafter                                        165,763
                                                     ------------
                                                     $   548,850
                                                     ============

                                      F-12

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 6. CAPITAL LEASES

The Company leases equipment under capital leases. Assets obtained under capital
leases total $327,031 and accumulated depreciation expense related to those
assets was $100,324. The following is a schedule of future minimum payments
under these leases:

   Year Ending
     December 31, 2002                                        $         104,591
     December 31, 2003                                                  104,591
     December 31, 2004                                                   87,315
     December 31, 2005                                                   16,981
                                                              ------------------
     Total minimum lease payments                                       313,478
     Less:  Amount representing taxes                                    12,885
                                                              ------------------
     Net minimum lease payments                                         300,593
     Less:  Amount representing interest                                 45,042
                                                              ------------------
     Present value of net minimum lease payments                        255,551
     Current portion                                                     72,273
                                                              ------------------
     Long-term portion                                        $         183,278
                                                              ==================

NOTE 7. STOCK OPTION PLAN AND STOCK SUBSCRIPTIONS

The Company had an incentive stock option plan that included substantially all
officers and key employees. The Series C options which expired in 1998
originally had an exercise price of $1 per share. The Company subsequently
reduced the option price to $.50 per share. Certain of these options were
exercised and the amount due was financed by the Company through notes bearing
interest at 8%. The unpaid balance of outstanding notes receivable for stock
purchases is shown as a reduction of stockholders' equity.

During 2001 and 2000, the Company did not receive any payments on outstanding
notes receivable for the purchase of shares. Because the market value of the
outstanding shares is below the option price, the Company has suspended the
required payments (including interest) on these notes.

NOTE 8. LEASE COMMITMENTS

The Company leases certain office facilities and other equipment under non-
cancelable leases for terms ranging from one to five years. Future minimum lease
payments under these operating leases are as follows:

       2002                                                   $         204,889
       2003                                                             121,198
       2004                                                              76,969
       2005                                                               3,668
                                                              ------------------
       Total future minimum lease payments                    $         406,724
                                                              ==================

During 2001 and 2000, rent expense for all operating leases totaled $326,335 and
$294,730, respectively.

                                      F-13

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 9. INCOME TAXES

The Company files a consolidated federal income tax return, which includes the
Center for Ambulatory and Home Infusion Service, Hunt Country Nursing, Home
Health and National Nursing Service. The Company and its subsidiaries file
separate returns for state purposes.

The provision for income taxes for the years ended December 31, 2001 and 2000,
was comprised of the following:

                                                         2001           2000
                                                     ------------   ------------
   Current provision                                 $   131,027    $   306,863
   Deferred expense (benefit)                            (76,000)        26,000
                                                     ------------   ------------
     Total provision                                 $    55,027    $   332,863
                                                     ============   ============

The provision for income taxes differed from the amount of income tax determined
by applying the applicable federal statutory tax rate to pre-tax income as a
result of the following:

                                                         2001           2000
                                                     ------------   ------------
   Statutory federal tax rate                                 34%            34%
   State taxes, net of federal benefit                         3              3
   Goodwill amortization                                       -             (6)
   Other (in 2001, principally non deductible
     penalties and changes in the estimates
     used in prior tax returns)                              240              8
                                                     ------------   ------------
   Effective tax rate                                        277%            39%
                                                     ============   ============

The deferred tax asset relates to the allowance for doubtful accounts reflected
on the balance sheet, and differences in the book and tax allowances for
depreciation and amortization. Realization of the deferred tax asset is
contingent on the occurrence of a write-off of the accounts receivable for tax
purposes and payment of premiums to the insurer or payments of actual claims. No
valuation allowance was established since the Company believes it is more likely
than not that this asset will be realized.

NOTE 10. RELATED PARTY TRANSACTIONS

Periodically, Oak Springs and its affiliates provide the Company with funds
needed for various transactions. Oak Springs also enters into debt on behalf of
the Company. Amounts due from and due to affiliates as of December 31, 2001 and
2000, are as follows:

                                                                     (Continued)

                                      F-14

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 10. RELATED PARTY TRANSACTIONS (CONCLUDED)

                                                            2001          2000
                                                         ---------     ---------
Due from affiliates:
  Oak Springs Nursing Home LLC                           $  8,240      $  7,895
  Oak Springs Nursing Home                                338,251       142,152
  Health Care Ventures, Inc.                              112,330       112,863
  All Stat Home Health, Inc.                                4,924         2,282
  Care Connections of Pennsylvania, Inc.                    9,724         2,177
                                                         ---------     ---------
                                                          473,469       267,369
                                                         ---------     ---------

Due to affiliates:
  Western Pennsylvania Home
    Health Network, Inc.                                       37            37
  Health Ventures Group                                    23,843        23,843
Care Connections of
  Pennsylvania, Inc.                                        2,967         1,145
All Stat Home Health, Inc.                                      -           153
Oak Springs Nursing Home LLC                              105,980       105,980
Oak Springs Nursing Home                                   17,351        38,280
                                                         ---------     ---------
                                                          150,178       169,438
                                                         ---------     ---------
      Net due from affiliates                            $323,291      $ 97,931
                                                         =========     =========

Oak Springs maintains a workers compensation policy, which covers the Company.
The Company paid Oak Springs $288,638 and $160,190 during the years ended
December 31, 2001 and 2000, respectively, related to this policy.

NOTE 11. LITIGATION SETTLEMENT

In October, 2000, the Company settled litigation with the former owners of
National Nurses Service, Inc. The settlement adjusted the original purchase
price of $920,000 to $1,549,000.

The settlement required the former owners of NNS to surrender it's 500,000
shares of MAHN stock received in exchange for consideration in the form of cash,
and notes with a discounted value of $373,000. As a result, stockholders equity
has been reduced by $644,000, and goodwill has been increased by $629,000.

The note issued requires three annual payments of $150,000, and has a discounted
value of $373,000. The note is secured by the 500,000 shares surrendered and
contains provision for increasing the amount under the note to $900,000, and
reclaiming of the shares surrendered in the event of default on the note. The
Company has only recorded the discounted value of the note and the surrender of
the shares. Management is of the opinion that the potential penalties associated
with the default make it a remote possibility that the Company would fail to
meet the required payments under the note.

                                      F-15

<PAGE>

                     MID-ATLANTIC HOME HEALTH NETWORK, INC.
                                AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           DECEMBER 31, 2001 AND 2000
--------------------------------------------------------------------------------

NOTE 12. SUPPLEMENTARY CASH FLOW INFORMATION

Interest paid during 2001 and 2000 was $794,61 and $692,535, respectively.
Income taxes paid during 2001 were $265,999.

The Company acquired assets of $51,133 under capital leases during 2001.

Cash paid for income taxes was $261,758 in 2001 and $82,286 in 2000.




                                      F-16

<PAGE>

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

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

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

         There have been no disagreements with the Company's independent
accountants over any item involving the Company's financial statements. The
Company's independent accountants are Eggleston Smith, P.C. located at 603 Pilot
House Drive, Suite 400, Newport News, Virginia 23606.


PART III
--------------------------------------------------------------------------------

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

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

(a)      DIRECTORS AND EXECUTIVE OFFICERS

         As of April 16, 2002, the directors and executive officers of the
Company, their ages, positions in the Company, the dates of their initial
election or appointment as director or executive officer, and the expiration of
the terms as directors are as follows:
                                                        (3)*
(1)                     (2)                             Period Served As
Name                    Age    Position                 Director
----                    ---    --------                 ----------------

Philip V. Warman         53    Chairman of the Board,   Dec. 9, 1994 to present
                               and CEO and Director

Tom Waugh                34    Secretary & Treasurer,   Dec., 1999 to present
                               Director

Joanne B. Warman         51    Vice President           Dec., 1999 to present

Ronald L. Messenheimer   50    President of NNS         July 1, 1995 to present

Gary Paz                 43    Vice President of NNS    Dec. 1999 to present



The Company's directors are elected at the annual meeting of stockholders and
hold office until their successors are elected and qualified. The Company's
officers are appointed annually by the Board of Directors and serve at the
pleasure of the Board.

                                       15

<PAGE>

(b)      BUSINESS EXPERIENCE:

PHILIP V. WARMAN
----------------

         Philip V. Warman is the Chairman of the Board and has over 27 years
experience in health venture development and health care financial management.
He also serves as the Company's Treasurer and is a director. He has a degree in
Business Administration from Wake Forest University. Mr. Warman served in
various positions at Prince William Hospital culminating as Senior Vice
President. During his 18 years at Prince William Hospital, he acquired Annaburg
Manor Nursing Home, initiated home health, DME, private duty, physician billing,
a collection agency, a child care enter and an alcoholic treatment center.

         Since 1981, Mr. Warman has been Managing Member of Oak Springs
Nursing Home Limited Liability Company (formerly Oak Springs Nursing Home
Limited Partnership), the Company's majority and controlling shareholder.

RICHARD TOMLINSON WAUGH
-----------------------

         Tom Waugh is the Secretary and Treasurer and a director of the Company.
Mr. Waugh received his undergraduate degree from Colorado State and earned a
Masters of International Management from the American Graduate School of
International Management at Thunderbird. Mr. Waugh has worked for Bear Sterns in
the international securities division and is currently the Managing director of
Cavallo Capital Corp., a New York based hedge fund that manages $120 million. In
this capacity, Mr. Waugh is responsible for the operational activities of the
managed accounts, including personnel, execution of trades, creating trade
models and analyzing prospective deals.

JOANNE BROWNING WARMAN
----------------------

         Joanne Browning Warman is the Vice President of the Company. She has
over 29 years of nursing experience in the health care industry. She has a
Bachelors of Science degree in nursing from the University of Virginia. In
December of 1983, Mrs. Warman opened Hunt Country Home Health ("HCHH"), a
medicare-certified home health agency servicing Warrenton and the surrounding
areas. She remained the Administrator of HCHH until November of 1984, at which
time she became a part-time employee of HCHH. Mrs. Warman continues to advise
the Company on its clinical management operations.

RONALD L. MESSENHEIMER
----------------------

         Ronald L. Messenheimer is the President of National Nurses Service. Mr.
Messenheimer earned a Bachelor of Science degree in Business and Management with
a major in Accounting from the University of Maryland in 1974. From 1991 to the
present he has led the growth of ATLIS Health Services from 1991 to 1995. During
his tenure as president, NNS entered the home health market by obtaining
Medicaid certification in 1991 and Medicare certification in 1992.
Mr.Messenheimer negotiated the purchase of a small Medicare-certified home
health agency in June of 1993 established a specialized AIDS treatment program.

                                       16

<PAGE>

He created a rehabilitation service company in early 1994. Mr. Messenheimer has
direct responsibility for essentially all payroll, billing, human resources and
administrative functions, as well as day-to-day operating responsibility of NNS.
NNS currently has 75 full time employees and an additional 1,200 active
employees of which approximately 600 work each week. Prior to 1991, Mr.
Messenheimer was President of ATLIS Federal Services and served in various
capacities with UNC, Inc.

GARY PAZ
--------

         Mr. Paz is the Vice President of NNS. During the past 5 years, Mr. Paz
has been responsible for the daily operations and overall performance of NNS's
Richmond, Virginia office. In this regard, Mr. Paz's duties include recruitment
of nursing staff, maintaining nurse and client files, billing for services and
tracking accounts receivable and budgeting for the Richmond office. Mr. Paz also
handles the Company's marketing program and tracks quality assurance on the
Company's accounts. Prior to working with NNS, Mr. Paz was an Assistant Vice
President of Wheat First Securities.


(c)      DIRECTORS OF OTHER REPORTING COMPANIES:

         None of the officers or directors of the Company are directors of any
other reporting company.

(d)      FAMILY RELATIONSHIPS:

         Phillip V. Warman, the Chairman of the Board and a director of the
Company, and Jo Anne Warman, the Company's Vice President, are husband and wife.


(e)      INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS:

         Except as noted below, none of the officers, directors, promoters or
control persons of the Company have been involved in the past five (5) years in
any of the following:

   (1)   Any bankruptcy petition filed by or against any business of which such
         person was a general partner or executive officer either at the time of
         the bankruptcy or within two years prior to that time;

   (2)   Any conviction in a criminal proceeding or being subject to a pending
         criminal proceeding (excluding traffic violations and other minor
         offenses);

   (3)   Being subject to any order, judgment or decree, not subsequently
         reversed, suspended or vacated, or any Court of competent jurisdiction,
         permanently or temporarily enjoining, barring, suspending or otherwise
         limiting his involvement in any type of business, securities or banking
         activities; or

   (4)   Being found by a court of competent jurisdiction (in a civil action),
         the Commission or the Commodity Futures Trading Commission to have
         violated a federal or state securities laws or commodities law, and the
         judgment has not been reversed, suspended, or vacated.


                                       17

<PAGE>

            Phillip Warman, an officer and director of the Company, served as a
director of Bayou State Home Health doing business as Care Connections Home
Health in the state of Louisiana. This Medicare certified home health agency
filed for bankruptcy in August of 1998. In addition, Oak Springs Nursing Home
Limited Liability Company was an owner of Care Connections of Louisiana and Mr.
Warman is the managing general partner of Oak Springs Nursing Home Limited
Liability Company. He also served as a director of Home Health Services of
Allegheny County, a non-profit home health agency in Pittsburgh, Pennsylvania,
an entity which filed for bankruptcy in December of 1998.

         Ron Messenheimer, an officer of the Company, was the Vice President of
Atlis Systems, Inc. and the chairman and CEO of Atlis Federal Services, Inc.,
entities which filed bankruptcy in May of 1996.

         The officers and directors who are identified above are significant
employees of the Company.

(g)      SECTION 16a BENEFICIAL OWNERSHIP COMPLIANCE

         The officers, directors and beneficial owners of more than 10% of the
Company's common stock have filed their initial statements of ownership on Form
3 and annual statements on Form 5, or will do so within a reasonable time
following the filing of this Form 10-KSB.












                                       18

<PAGE>

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

ITEM 10. EXECUTIVE COMPENSATION

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

         The following table sets forth information about compensation paid or
accrued during the years ended December 31, 2001, 2000, 1999, and 1998 to the
Company's officers and directors.

<TABLE>
<CAPTION>
                                                    Summary Compensation Table

                                                                                           Long Term Compensation
                                                                           --------------------------------------------------
                                        Annual Compensation                        Awards             Payouts
                           ---------------------------------------------   -----------------------   ----------
(a)                         (b)       (c)          (d)           (e)          (f)          (g)          (h)          (i)
                                                               Other                     Securities                  All
                                                               Annual      Restricted     Under-                    Other
Name and                                                       Compen-       Stock        Lying        LTIP        Compen-
Principal                                                      Sation        Awards      Options/     Payouts      sation
Position                   Year    Salary ($)     Bonus($)       ($)          ($)         SARs(#)       ($)          ($)
-------------              -----   ----------   -----------   ----------   ----------   ----------   ----------   -----------

<S>                        <C>       <C>        <C>           <C>          <C>             <C>       <C>          <C>
Philip v. Warman           2001      $99,000    $     0.00    $    0.00    $    0.00       None      $    0.00    $  0.00
Chairman & CEO             2000      $54,000    $     0.00    $    0.00    $    0.00       None      $    0.00    $ 2,769 (1)
And Treasurer              1999      $54,000    $     0.00    $    0.00    $    0.00       None      $    0.00    $21,306 (2)
                           1998      $24,000    $     0.00    $    0.00    $    0.00       None      $    0.00    $23,075 (3)

Tom Waugh                  No compensation received
Secretary/Treasurer

Ronald L. Messenheimer     2001      $94,808    $    3,500    $    0.00    $    0.00       None      $    0.00    $  0.00
President, NNS             2000      $92,900    $    2,500    $    0.00    $    0.00       None      $    0.00    $  0.00
                           1999      $95,073    $    2,000    $    0.00    $    0.00       None      $    0.00    $  0.00
                           1998      $61,640    $      350    $    0.00    $    0.00       None      $    0.00    $  0.00

Gary Paz                   2001      $88,115    $    1,000    $    0.00    $    0.00       None      $    0.00    $30,663 (4)
Vice President, NNS        2000      $60,000    $    1,000    $    0.00    $    0.00       None      $    0.00    $52,450 (5)
                           1999      $60,000    $      750    $    0.00    $    0.00       None      $    0.00    $41,024 (6)
                           1998      $60,000    $     0.00    $    0.00    $    0.00       None      $    0.00    $38,258 (7)
</TABLE>


----------------------------------------------
This information is provided in regards to Mid-Atlantic Home Health Network
Agencies, Hunt Country Home Health, Hunt Country Nursing Services, and National
Nurses Service.

                                                               F-19

<PAGE>

M---------------------

         (1) This "other compensation" is representative of partnership draws at
Hunt Country Nursing Services.

         (2) This "other compensation" is representative of partnership draws at
Hunt Country Nursing Services.

         (3) This "other compensation" is representative of partnership draws at
Hunt Country Nursing Services.

         (4) This "other compensation" is representative of commission payments
made at National Nurses Service.

         (5) This "other compensation" is representative of commission payments
made at National Nurses Service.

         (6) This "other compensation" is representative of commission payments
made at National Nurses Service.

         (7) This "other compensation" is representative of commission payments
made at National Nurses Service.








                                      F-20

<PAGE>

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

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

(a)      5% SHAREHOLDERS:

         The following information sets forth certain information as of December
31, 1999 about each person who is known to the Company to be the beneficial
owner of more than five percent (5%) of the Company's Common Stock:

                      (2)
  (1)          Name and Address                      (3)                 (4)
Title          of Beneficial                 Amount and Nature of     Percent of
of Class       Owner                         Beneficial Ownership       Class
--------       -------------------------     --------------------    -----------

Common         Oak Springs Nursing Home
Stock          Limited Liability Company         10,063,778(8)          79.9%
Class A        c/o Philip V. Warman
               7504 Diplomat Drive, Suite 101
               Manassas, Virginia  20109

               Nevada Agency and Trust Co.          697,552              5.5%
               50 West Liberty Street,
               Suite 880
               Reno, Nevada 89501

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

         (8) Philip V. Warman, an officer and director of the Company, is the
Managing Member of Oak Springs Nursing Home Limited Liability Company.


(b)      SECURITY OWNERSHIP OF MANAGEMENT:

                      (2)
  (1)          Name and Address                      (3)                 (4)
Title          of Beneficial                 Amount and Nature of     Percent of
of Class       Owner                         Beneficial Ownership       Class
--------       -------------------------     --------------------    -----------

Common         Philip V. Warman                  10,131,103(9)          80.4%
Stock          7504 Diplomat Drive
Class A        Manassas, Virginia  20109


               Ronald L. Messenheimer                 9,500        Less than 1%
               7504 Diplomat Drive
               Manassas, Virginia 20109

               Gary Paz                               2,000        Less than 1%
               7504 Diplomat Drive
               Manassas, Virginia 20109

               All Directors and                 10,142,603             80.5%
               Officers as a Group

                                       21

<PAGE>

----------------------
         (9) Of this amount, 10,063,778 shares are owned by Oak Springs Nursing
Home Limited Liability Company, of which Mr. Warman is the Managing Member.


(c)      CHANGES IN CONTROL:

         There is no arrangement which may result in a change in control.

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

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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

         Mid-Atlantic has entered into many of its lines of business since the
corporation's name was changed in December of 1994 by acquiring entities or
businesses from entities related to the Company's management. As evident from
the discussion in the preceding sections, various members of management maintain
their relationships with other entities from which the Company acquired its
businesses and with which the Company interacts as part of the Company's ongoing
business.

         The Company acquired Hunt Country Home Health from Oak Springs Nursing
Home Limited Liability Company ("OSNHLLC") in the Spring of 1995 for 10,224,628
shares of the Company's Class A Common Stock and 10,000 shares of the Company's
Class B Common Stock. OSNHLLC thereby became the Company's majority stockholder,
now owning approximately 80% of the Company's Class A Common Stock and 100% of
the Company's Class B Common Stock. The Company's Chairman of the Board, Philip
Warman, and the Estate of J.L. Mathews, M.D., are the general members of
OSNHLLC. Because this acquisition involved an entity related to the Company, the
Company has booked the acquisition of Hunt Country Home Health on a "processor
cost" basis. Also, OSNHLLC has guaranteed a number of the Company's debt
obligations, as discussed in Note 4 of the Consolidated Financial Report.

         In March of 1995, the Company established a subsidiary corporation
named Western Pennsylvania Home Health Network, Inc. WPHHN operated as a wholly
owned subsidiary until June 30, 1998 when it was sold for book value to Care
Connections of Pennsylvania, a corporation controlled by Phillip Warman, the
Company's Chairman and a general partner of the Corporation's majority
shareholder. On November 1, 1999, the Company acquired the Center for Ambulatory
and Home Infusion Services (CAHIS) from Care Connections of Pennsylvania in a
non-cash transaction in exchange for settlement of inter-company indebtedness.
The total purchase price of $98,804 exceeded the fair market value of the assets
acquired less the liabilities assumed by $155,670. The excess consideration,
recorded as goodwill, represents the goodwill associated with CAHIS's position
in the durable medical equipment market.

         On June 30, 1995, the Company acquired ATLIS Health Services, Inc.,
which then was doing business under the name National Nurses Service. The
Company changed the subsidiary's name to National Nurses Service, Inc. ("NNS").

                                       22

<PAGE>



All of the stock in NNS was acquired by the Company from Atlis Systems, Inc. in
exchange for 500,000 shares of the Company's Class A Common Stock. As a result,
Atlis Systems, Inc. owns approximately 4% of the issued and outstanding shares
of the Company's Class A Common Stock.

         On October 27, 2000, the Company settled the lawsuit for breach of
contract that is styled ATLIS SYSTEMS, INC. V. MID-ATLANTIC HOME HEALTH NETWORK,
INC. by paying Atlis Systems, Inc. $900,000 in cash and buying back the 500,000
shares of stock owned by Atlis Systems, Inc.

         When the Company acquired NNS, it also acquired Hunt Country Nursing
Services, Inc. The Company acquired HCNS from Oak Springs Nursing Home Limited
Liability Company, the Company's majority shareholder. The Company paid OSNHLLC
book value for all the issued and outstanding shares of HCNS, an amount equal to
approximately $1,000.

         The Company's business efforts are coordinated with those of other
entities related to, or controlled by, Oak Springs Nursing Home Limited
Liability Company.

         Oak Springs maintains a workers compensation policy which covers the
Company. The Company paid Oak Springs $288,638 and $253,892 during the years
ended December 31, 2001 and 2000, respectively, related to this policy.

         On May 1, 2001, Mid-Atlantic Home Health Network, Inc. (MAHN), the
holding company, entered into a five year contract with Oak Springs Nursing Home
(OSNH) to provide management services. OSNH is a 130 bed intermediate care
facility certified by Medicaid/Medicare located in Warrenton, Virginia. OSNH is
100% owned by OSNHLLC. Philip Warman, Chairman and CEO of MAHN is Assistant
Administrator of OSNH. MAHN is compensated for these services through a
management fee. The management fee is based on cost and is determined upon
completion of the Home Office cost report settlement which identifies the amount
due per Medicaid/Medicare regulations. The Home Office management fee
calculation takes into account all entities serviced by MAHN and only costs
allowable by Medicaid/Medicare are included. The Home Office cost report is due
May 31, 2002, five months after the end of the year. For the eight months of
service in 2001, $74,000 of expenses were directly allocated to OSNH. An
additional $142,000 was estimated for the allocation of MAHN overhead.

                                       23

<PAGE>

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

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

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

         The company did not file any reports on Form 8-K during the last year.

ASSIGNED
 NUMBER  DESCRIPTION
-------- -----------
(2)      Plan of acquisition, reorganization, arrangement, liquid, or
         succession:

(3)(i)   Articles of Incorporation

(3)(ii)  By-laws of the Company: Previously included with the Company's Form
         10-SB filed on April 30, 1998.

(4)      Instruments defining the rights of holders including indentures: None

(9)      Voting Trust Agreement: None

(10)     Material Contracts:

(11)     Statement regarding computation of per share earnings: Computations can
         be determined from the financial statements.

(16)     Letter on change in certifying accountant: None

(21)     Subsidiaries of the registrant: Previously included with the Company's
         Form 10-SB filed on April 30, 1998.

(24)     Power of Attorney: None

(27)     Financial Data Schedule: Included

(99)     Additional Exhibits: None

                                       24

<PAGE>

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

                                   SIGNATURES

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


         In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

DATED:   April 16, 2002

                                        MID-ATLANTIC HOME HEALTH NETWORK, INC.


                                        By     /S/ Philip V. Warman
                                          ----------------------------
                                                 PHILIP V. WARMAN
                                                 CHAIRMAN OF THE BOARD
                                                 AND CEO












                                       25