<PAGE>   1

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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
(MARK ONE)
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

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

           FOR THE TRANSITION PERIOD FROM             TO

                         COMMISSION FILE NUMBER 1-13177

                                 INTEGRA, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      13-3605119
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)

              1060 FIRST AVENUE                                    19406
        KING OF PRUSSIA, PENNSYLVANIA                            (ZIP CODE)
   (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:  610-992-7000

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

<TABLE>
<CAPTION>
             TITLE OF EACH CLASS                 NAME OF EACH EXCHANGE ON WHICH REGISTERED
             -------------------                 -----------------------------------------
<S>                                            <C>
         COMMON STOCK, $.01 PAR VALUE                     AMERICAN STOCK EXCHANGE
</TABLE>

       SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:  NONE.

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period as the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  [X]  No  [ ]

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

     As of March 27, 2001, 10,138,552 shares of Common Stock, $.01 par value,
were outstanding, and the aggregate market value of the shares of Common Stock,
$.01 par value, held by non-affiliates of the registrant as of March 27, 2001
approximately 835. (Determination of stock ownership by non-affiliates was made
solely for the purpose of responding to this requirement and registrant is not
bound by this determination for any other purpose).

                      DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the documents, all or portions of which are incorporated by
reference herein, and the Part of the Form 10-K into which the document is
incorporated:

     Part III of this annual report on Form 10-K incorporates information by
reference from portions of the registrant's Proxy Statement to be filed with
respect to the 2001 Annual Meeting of Stockholders within 120 days after the end
of the fiscal year covered by this annual report on Form 10-K.

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<PAGE>   2

                                 INTEGRA, INC.

                                   FORM 10-K

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                     INDEX

<TABLE>
<S>       <C>                                                           <C>
PART I
Item 1.   Business....................................................    1
Item 2.   Properties..................................................   13
Item 3.   Legal Proceedings...........................................   13
Item 4.   Submission of Matters to a Vote of Security Holders.........   13
          Executive Officers of the Registrant........................
PART II
Item 5.   Market for Registrant's Common Stock and Related Stockholder
          Matters.....................................................   14
Item 6.   Selected Financial Data.....................................   15
Item 7.   Management's Discussion and Analysis of Results of
          Operations and Financial Condition..........................   16
Item 7a.  Quantitative and Qualitative Disclosures about Market
          Risk........................................................   24
Item 8.   Financial Statements and Supplementary Data.................   24
Item 9.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosures...................................   46
PART III
Item 10.  Directors and Executive Officers of the Registrant..........   46
Item 11.  Executive Compensation......................................   46
Item 12.  Security Ownership of Certain Beneficial Owners and
          Management..................................................   46
Item 13.  Certain Relationships and Related Transactions..............   46
PART IV
Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form
          8-K.........................................................   46
          Signatures..................................................   46
</TABLE>
<PAGE>   3

FORWARD LOOKING STATEMENTS

     This report contains forward-looking statements (within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended), representing
the Company's current expectations and beliefs concerning future events. When
used in this report, the words "believes," "estimates," "plans," "expects,"
"intends," "anticipates," and similar expressions as they relate to the Company
or its management are intended to identify forward-looking statements. The
actual results of the Company could differ materially from those indicated by
the forward-looking statements because of various risks and uncertainties
related to and including, without limitation, the Company's effective and timely
initiation and development of new client relationships and programs, the
maintenance of existing client relationships and programs (particularly since
the Company relies on two (2) customers to produce 63% of the Company's EAP and
Managed Behavioral Healthcare segment revenues), the successful marketing of the
Company's managed behavioral healthcare services, the achievement of
satisfactory levels of both gross and operating margins, the recruitment and
retention of qualified personnel, the continued enhancement of computer and
information technologies and operational and financial systems, changes in
competition, general economic conditions, costs of financing and leasing of
equipment, the adequacy of cash flows from operations and available financings
to fund capital needs and future growth, changes in governmental rules and
regulations applicable to the Company, the outcome of post-payment reviews of
the Company's billing to Medicare patients in long-term care facilities during
the period when the Company provided such services, purchase price adjustments,
indemnification provisions and contingent liabilities pertaining to the
Company's sale and exit of the outpatient operations, utilization and cost of
services under the Company's capitated contracts, the enforcement of contingent
liabilities for which the Company has established reserves and other risks set
forth in this report and in the Company's other filings with the Securities and
Exchange Commission. These risks and uncertainties are not entirely within the
ability of the Company to control. In many cases, the Company cannot predict the
risks and uncertainties that could cause actual results to differ materially
from those indicated by the forward-looking statements.

                                     PART I

ITEM 1.  BUSINESS.

GENERAL

     Integra, Inc. ("Integra" or the "Company") provides employee assistance
programs ("EAP") and managed behavioral healthcare services through full and
shared risk arrangements with managed care organizations, health plans and
employers typically on a capitated per member (employee) per month basis. In
addition, the Company provides an array of other behavioral health services
including: third party clinical case management and claims administration. At
December 31, 2000, Integra's contract service areas were principally
concentrated in Connecticut, Delaware, Georgia, Maryland, New Jersey, New York,
Pennsylvania, Rhode Island, Virginia and Tennessee. Integra was incorporated in
Delaware in 1991 under the name Apogee, Inc. and changed its name to Integra in
1998. The Company is listed on the American Stock Exchange and trades under the
symbol "IGR."

EAP AND MANAGED BEHAVIORAL HEALTHCARE MARKET

     Mental illness and substance abuse remain serious health problems in the
United States. In an effort to improve the clinical outcomes of treating these
illnesses and to handle care in a cost-effective manner -- employers, health
plans and managed care organizations have increasingly turned to Managed
Behavioral Healthcare companies ("MBHC").

     In a study by Open Minds (the central behavioral healthcare reference guide
produced by an industry research and consulting firm specializing in the
behavioral and social service fields), the total managed behavioral healthcare
market was approximately $209 million in 2000. This study estimated that
approximately 63% of all Americans with health insurance are enrolled in a
managed behavioral health plan --

                                        1
<PAGE>   4

excluding the number of individuals with behavioral health coverage through a
health maintenance organization (HMO) that opt to manage behavioral health
benefits without the assistance of a MBHC program.

     MBHC enrollment, based upon the Open Minds study, has increased
approximately 14% a year -- from 86.3 million in 1993 to the current 209 million
in 2000. Management believes that enrollment continues to grow due to:

     (i)  Privatization of government/public sector programs such as CHAMPUS and
          Medicaid

     (ii)  Continued emphasis on cost containment by employers and payers

     (iii) The inherent subjective nature of the diagnosis and treatment of
           mental health disorders

     (iv)  The advent of recent "parity" laws requiring that behavioral health
           conditions be treated on a par with other medical conditions

     (v)  Pressure upon employers to address the personal problems and needs of
          employees.

     Employee Assistance Programs (EAP), according to Open Minds 2000 survey,
has enrolled participants of 51 million for stand-alone EAP's and 15.5 million
for integrated MBH/EAP models. EAP business has risen 245% over the last six
years.

MANAGED BEHAVIORAL HEALTHCARE BUSINESS

     The managed behavioral healthcare business may be divided into four
categories of care. Based on the Open Minds studies, the following table
summarizes these categories as follows:

<TABLE>
<CAPTION>
                                                         BENEFICIARIES
                                                          IN MILLIONS
                                                        AS OF JANUARY 1         TOTAL
                                                        ----------------    ANNUAL GROWTH
CATEGORY OF CARE                                         2000      1999      BY CATEGORY
----------------                                        ------    ------    -------------
<S>                                                     <C>       <C>       <C>
Utilization Review/Case Management and Non-Risk Based
  Network Services....................................   79.8      74.1          7.7%
Risk-Based Network Services...........................   62.8      49.4         27.1%
Employee Assistance Programs Only.....................   51.0      43.0         18.6%
Integrated Programs MBHP/EAP..........................   15.5      15.6          (.1)%
                                                        -----     -----         ----
                                                        209.1     182.1         14.8%
                                                        =====     =====         ====
</TABLE>

     Integra offers programs and services in each of these categories. According
to a study conducted by Open Minds, risk-based network products and Employee
Assistance Programs are the most rapidly growing segments of the managed
behavioral healthcare industry. These product areas are the primary focus of
Integra's development efforts.

  Utilization Review/Case Management/Non-Risk-Based Network Services

     As part of its utilization review/case management/non-risk-based network
services, Integra provides managed care services which may include selecting,
credentialing and managing a network of providers (such as psychiatrists,
psychologists, social workers and hospitals), and performing utilization review,
claims administration and care management functions.

     In these arrangements, Integra does not assume financial responsibility for
the cost of providing treatment services. The third party payer remains
responsible for the cost of providing the treatment services rendered. The
Company categorizes its services within this segment of the managed behavioral
healthcare industry as Administrative Services Only (ASO) services.

  Risk-Based Network Services

     As part of its risk-based network services, Integra assumes all or a
portion of the responsibility for the cost of providing behavioral healthcare
treatment services. Specifically, under a risk-based payment arrangement,

                                        2
<PAGE>   5

Integra agrees to provide services in exchange for a fixed fee per member per
month that may vary depending on the profile of the beneficiary population, or
agrees to otherwise share the responsibility for providing all or some portion
of the treatment services at a specific cost per person.

     Under these arrangements, Integra not only approves and monitors a course
of treatment, but also arranges and pays for the provision of patient care
through its third party network providers. Contractually, Integra assumes the
financial risk for utilization and payment of services. As a result, Integra
must be proficient in contracting with, credentialing and managing a network of
specialized providers and facilities that covers the necessary continuum of
care.

  Employee Assistance Programs (EAP)

     An EAP is a worksite-based program designed to assist in the early
identification and resolution of productivity problems associated with
behavioral conditions or other personal concerns of employees and their
dependents. Under its EAPs, Integra's network providers or other affiliated
clinicians provide assessment and referral services to employee beneficiaries
and their dependents.

     These services consist of evaluating a patient's needs and, if indicated,
providing counseling and/or identifying an appropriate provider, treatment
facility or other resource for more intensive treatment services. EAP services
typically include consultation services, evaluation and referral services, and
employee education/outreach services.

     Integra's EAP contracts generally provide between three and eight sessions
of counseling. The Company believes that federal and state "drug-free workplace"
measures and Federal Occupational Health and Safety Act requirements, together
with the growing public perception of increased violence in the workplace, have
prompted many companies to implement EAPs.

     As reflected in the Open Minds studies, this is the fastest growing segment
of this market in recent years. Although EAPs originated as a support tool to
assist managers in dealing with troubled employees, payers increasingly regard
EAPs as an important component in the continuum of behavioral healthcare
services and to some extent as the portal for entry into all Company sponsored
health and benefit programs.

     Through its EAP program, Integra also offers a variety of workplace
intervention programs including crisis intervention services under which it will
provide on-site counseling to employees who are experiencing emotional distress
as a result of a severe workplace incident.

     Integra has been developing a larger portfolio of workplace related
programs as add on services to its EAP programs, including management
consultations, organizational development and other specialized training and
intervention programs.

     Emphasizing clinical data, Integra seeks to partner with companies focused
upon an integrated human resources strategic plan around the health and
productivity of its work force. Workplace interventions targeted by data review
and analysis can demonstrate a significant impact upon the costs of employment
as well as the business effectiveness of organizations. Integra has developed
such a data focus as a core competency.

  Integrated EAP/Managed Behavioral Healthcare Services

     EAPs are typically utilized in a preventive role and in facilitating early
intervention and brief treatment of behavioral healthcare and other employee
problems before more extensive treatment is required. In an effort to both
reduce costs and increase accessibility and ease of treatment, employers are
increasingly attempting to consolidate EAP and managed behavioral healthcare
services into a coordinated program. Consequently, Integra markets and sells EAP
in connection with its managed behavioral healthcare programs through
"integrated" product offerings. Integrated products offer employer's
comprehensive treatment services and management of all aspects of behavioral
healthcare.

     Although integrated EAP/Managed Behavioral Healthcare products are
currently only a small component of the overall industry, the Company expects
this market segment to eventually grow.

                                        3
<PAGE>   6

REIMBURSEMENT

     During 2000, all of the Company's net revenues were derived from the EAP
and Managed Behavioral Healthcare segment of which 52% of the revenues relate to
a contract which expires on December 31, 2001. The Company estimates that 100%
and 41% of its net revenues during 1999 and 1998, respectively, were derived
from the EAP and Managed Behavioral Healthcare segment. This increase is a
result of the Company's sale and the exit of its remaining patient service and
provider operations in May 1998 as well as the growth of the EAP and Managed
Behavioral Healthcare segment. In the past, through these former operations, a
significant percentage of the Company's revenues were received directly from
Medicare, Medicaid and CHAMPUS. Because of its exit of the patient service and
provider operations, the Company no longer bills these entities directly. The
Company's premium or managed care revenues are currently generated exclusively
from managed care companies and employers although the Company is pursuing
potential contracts with union trusts and government agencies.

MAJOR CUSTOMERS

     Two customers, HealthNow New York -- Blue Cross/Blue Shield of Western New
York and Fidelis Care of New York accounted for 52% and 11% of the Company's
2000 sales revenue respectively. The Company has been providing managed
behavioral healthcare services to HealthNow and Fidelis since January 1, 1999
and August 1, 1995 respectively. The Company's contracts with HealthNow and
Fidelis expire on December 31, 2001 and July 31, 2001 respectively. The Company
is actively pursuing a renewal of each contract.

BUSINESS STRATEGY

     Increase Enrollment in EAP and Managed Behavioral Healthcare Products.  The
Company believes it has an opportunity to increase covered lives in all its
Managed Behavioral Healthcare products. The Company believes its reputation for
high quality in-service delivery and clinical outcomes will further enhance its
ability to increase ASO and EAP covered lives with large corporate customers and
union trusts. According to Open Minds, EAP is the fastest growing segment in
recent years. The Company intends to build upon its experience in managing
programs for large corporate customers and to market integrated programs to the
Company's existing EAP customers and other prospective corporate clients. The
Company further believes that it has an opportunity to increase revenues,
earnings and cash flows from operations by increasing the number of lives
covered by its risk-based products. The Company has made investments in
management and systems infrastructure to position itself as a leading provider
of risk-based products for managed behavioral healthcare. Management believes
there will be a continuing shift to risk-based products. According to Open
Minds, industry enrollment in risk-based products grew from approximately 13.6
million in 1993 to approximately 63 million in 2000, representing a compound
annual growth rate of approximately 25%. The Company believes that the market
for risk-based products has grown and will continue to grow as payors attempt to
reduce their cost of providing behavioral healthcare while ensuring a high
quality of care and an appropriate level of access to care. The Company believes
enrollment in its risk-based products will increase through growth in new
covered lives and through some transition of covered lives in ASO and EAP
products to risk-based products.

     Sales and Marketing Personnel.  The Company has historically made limited
investments in sales and marketing. At December 31, 1999, the Company had 6
dedicated individuals in this department. During 2000, the Company increased
resources in this area to 12 individuals. The Company believes that this
increased investment in sales and marketing personnel, as well as related
increases in certain promotion expenditures will put the Company in a position
to generate strong internal revenue growth.

     Continue to invest in Clinical Outcomes Measures.  Management believes a
key differentiation of Integra from its competitors is the manner in which the
Company uses clinical patient data to make decisions about patient care.

     The Company's COMPASS(R) system is a patented, unique and scientifically
valid decision support system which tracks and evaluates the effectiveness of
behavioral healthcare concurrently with treatment, while at the same time
collecting information useful to case managers. The ability to use this
information,
                                        4
<PAGE>   7

congruent with treatment decisions for the patient will assist in lowering
behavioral healthcare costs to customers while maintaining or increasing
treatment effectiveness. Management believes COMPASS(R) is one of the only
systems which can "severity adjust" patient data, which is necessary for the
valid use of such data in providing therapist or program performance.

     Integra believes it is the one of the few organizations that can provide a
customer with a proven behavioral health outcomes management and decision
support system which allows for a seamless measure to manage a patient's
improvement (decline) across all behavioral health treatment settings. The
Company intends to continue to update and enhance this tool. Management also
believes that an opportunity exists for the Company to expand the use of this
strategy over the Internet (World Wide Web).

EAP AND MANAGED BEHAVIORAL HEALTHCARE CUSTOMERS

     General.  The following table sets forth the revenue for the year ended
December 31, 2000 in each of the Company's customer groups described below:

<TABLE>
<CAPTION>
                                                                                 PERCENT OF
                                                   COVERED        REVENUE          TOTAL
MARKET                                              LIVES      (IN THOUSANDS)     REVENUE
------                                            ---------    --------------    ----------
<S>                                               <C>          <C>               <C>
Health Plans and Managed Care Organizations.....    428,000       $13,845           52.4%
Workplace (Corporations and Labor Unions).......    680,000         9,770           36.9%
Public Sector...................................     42,000         2,814           10.7%
                                                  ---------       -------          -----
     Total......................................  1,150,000       $26,429          100.0%
                                                  =========       =======
</TABLE>

     Health Plans and Managed Care Organizations.  HMO contracts are full,
limited or shared risk contracts in which the Company generally accepts a fixed
fee per member per month from the HMO in exchange for providing a full or
specified range of behavioral healthcare services for a specific portion of the
HMO's beneficiaries. Although certain large HMOs provide their own managed
behavioral healthcare services, many HMOs "carve out" behavioral healthcare from
their general healthcare services and subcontract such services to managed
behavioral healthcare companies such as the Company.

     Corporations and Labor Unions.  Corporations and, to a lesser extent, labor
unions, account for a large number of the Company's contracts to provide managed
behavioral healthcare services and, in particular, EAP and integrated
EAP/Managed Behavioral Healthcare care services. The Company has structured a
variety of fee arrangements with corporate customers to cover all or a portion
of the responsibility of the cost of providing treatment services. In addition,
the Company operates a number of programs for corporate customers on an ASO
basis.

     Public Sector.  The Company provides EAP and Managed Behavioral Healthcare
services to Medicaid and Medicare recipients through subcontracts with HMOs
focused on these beneficiary populations. The Company expects that governmental
agencies will continue to implement a significant number of managed care
Medicaid programs through contracts with HMOs and that many HMOs will
subcontract with Managed Behavioral Healthcare organizations, such as the
Company, for behavioral healthcare services.

EAP AND MANAGED BEHAVIORAL HEALTHCARE NETWORK

     The Company's EAP and Managed Behavioral Healthcare treatment services are
provided by a network of third party providers. The number and type of providers
in a particular area depend upon customer preference, geographic concentration
and demographic make-up of the beneficiary population in that area. Network
providers generally include a variety of specialized behavioral healthcare
personnel, such as psychiatrists, psychologists, licensed clinical social
workers, substance abuse counselors and other professionals.

     As of December 31, 2000, the Company had contractual arrangements covering
over 8,000 individual third party network providers. The Company's network
providers are independent contractors located throughout the local areas in
which the Company's customers' beneficiary populations reside. Network

                                        5
<PAGE>   8

providers work out of their own facilities and include individual practitioners
with a variety of healthcare licenses (e.g., physicians, psychologists, licensed
clinical social workers), individuals who are members of group practices or
other licensed centers or programs, inpatient psychiatric and substance abuse
hospitals, intensive outpatient facilities, partial hospitalization facilities
and community health centers. Network providers typically execute standard
contracts with the Company for which they are typically paid by the Company on a
fee-for-service basis. In some cases, network providers are paid on a "case
rate" basis, whereby the provider is paid a set rate for an entire course of
treatment, or through other risk sharing arrangements. A network provider's
contract with the Company typically has a three-year term, with automatic
renewal at the Company's option for successive terms.

COMPETITION

     The managed behavioral health business is highly competitive. The Company
competes with large insurance companies, HMOs, preferred provider organizations
(PPO), third party administrators (TPA), IPAs, multi-disciplinary medical groups
and other managed behavioral health companies.

     Many of the Company's competitors are significantly larger and have greater
financial, marketing and other resources than the Company, and some of the
Company's competitors provide a broader range of services. The Company may also
encounter substantial competition in the future from new market entrants.

     Many of the Company's customers that are managed care companies may, in the
future, seek to provide managed behavioral healthcare and EAP services to their
employees or subscribers directly, rather than by contracting with the Company
for such services.

     Because of competition, the Company does not expect to be able to rely on
price increases to achieve revenue growth and expects to continue experiencing
pressure on direct operating margins.

SALE AND EXIT OF OUTPATIENT OPERATIONS

     In December 1997, the Company announced its plans to exit outpatient
provider behavioral health group practice operations. In connection with this
plan, the Company entered into an Agreement of Purchase and Sale (the "Purchase
Agreement") to sell to PsychPartners, L.L.C., an Alabama limited liability
company, through two subsidiaries of PsychPartners, substantially all of the
assets of the outpatient provider behavioral health group practice business
(hereafter referred to as the "Sale"). Practices located in the Western region
of the United States were not included in the Sale and as a result, during 1998,
the Company sold, divested or shut down all of these remaining operations.

     On December 26, 1997, the Company entered into an agreement of Purchase and
Sale (the "Purchase Agreement") with PsychPartners MidAtlantic, Inc.,
PsychPartners, Inc., and PsychPartners, L.L.C. (collectively "PsychPartners" or
the "Purchasers"). Pursuant to the Purchase Agreement, the Company sold to the
Purchasers substantially all of the assets and business of the Company's
outpatient behavioral health provider business, which consisted of (i) all of
the capital stock of one of the subsidiaries of the Company (the "Subsidiary
Stock") operating two outpatient behavioral health practices and (ii)
substantially all of the assets (the "Assets") relating to 19 of the Company's
outpatient behavioral health practices (the 21 practices are collectively, the
"Practices").

     On May 14, 1998, at a Special Meeting of the Shareholders of the Company,
the shareholders approved and adopted the terms of the Purchase Agreement with
PsychPartners. Effective on May 18, 1998, the Company completed the Sale. The
purchase price paid at closing consisted of: (a) $26,400,000 in cash, (b) a
warrant contingently issuable to purchase 230,000 Common Units of PsychPartners,
L.L.C. at a purchase price of $.05 per Common Unit and (c) the assumption of
certain liabilities. The purchase price was subject to adjustment if the cash,
accounts receivable, deposits and prepaid expenses of the Practices were less
than the liabilities and future contingent payment obligations of the Practices.
The Company believed it appropriately reserved for any potential purchase price
adjustment. In March 1999, the Company made a payment to PsychPartners for
purchase price adjustments of approximately $94,000.

                                        6
<PAGE>   9

     In January 2000, PsychPartners filed for protection under Chapter 11 of the
Federal Bankruptcy Laws. As discussed in Note 3 of the Company's Notes to
Consolidated Financial Statements, the Company recorded a reserve of $1,700,000
at December 31, 1999 for potential exposures relating to certain leases assigned
in the Sale. During 2000 the Company recognized $440,000 of income which was
attributable to the amount by which previously provided reserves exceeded the
required lease settlement payments.

REGULATION

  General

     As a EAP and Managed Behavioral Healthcare services company, Integra is
currently subject to extensive and frequently changing government regulations.
These regulations are primarily concerned with licensure, conduct of operations,
financial solvency, standards of medical care provided, the dispensing of drugs,
the confidentiality of medical records of patients, and the direct employment of
psychiatrists, psychologists, and other licensed professionals by business
corporations. These various types of regulatory activity affect Integra's
business either by controlling its operations, restricting licensure of the
business entity or by controlling the reimbursement for services provided.
Generally, regulatory agencies have broad discretionary powers when granting,
renewing or revoking licenses or granting approvals. In addition, the time
necessary to obtain licenses varies from state to state. In certain cases, more
than one regulatory agency in each jurisdiction may assert that it has authority
over the activities of the Company. State licensing laws and other regulations
are subject to amendment and to interpretation by regulatory agencies with broad
discretionary powers. Any such licensure and/or regulation could require Integra
to modify its operations materially in order to comply with applicable
regulatory requirements and may have a material adverse effect on the Company's
business, financial condition or results of operations.

  State Insurance Laws

     To the extent that Integra operates or is deemed to operate in one or more
states as a prepaid limited health service organization, insurance company, HMO,
PPO, prepaid health plan, or other similar entity, it will be required to comply
with certain statutes and regulations that, among other things, may require it
to maintain minimum levels of deposits, capital, surplus, reserves or net worth,
and also may limit the ability of the Company and its subsidiaries to pay
dividends, make certain investments, and repay certain indebtedness. The
imposition of any such requirements could significantly increase the Company's
costs of doing business and could delay the Company's conduct or expansion of
its business in some areas. The licensure process under state insurance laws can
be lengthy and, unless the applicable state regulatory agency allows the Company
to continue to operate while the licensure process is ongoing, the Company could
experience a material adverse effect on its operating results and financial
condition while its licensure application is pending. Failure by Integra to
obtain or maintain required licenses typically also constitutes an event of
default under Integra's contracts with its customers. The loss of business from
one or more of Integra's major customers as a result of such an event of default
or otherwise could have a material adverse effect on Integra's business,
financial condition or results of operations.

     The National Association of Insurance Commissioners (the "NAIC") has
undertaken a comprehensive review of the regulatory status of entities arranging
for the provision of healthcare services through a network of providers that,
like the Company, may assume risk for the cost and quality of healthcare
services, but that are not currently licensed as an HMO or similar entity. As a
result of this review, the NAIC developed a "health organizations risk-based
capital" formula, designed specifically for managed care organizations, that
establishes a minimum amount of capital necessary for a managed care
organization to support its overall operations, allowing consideration for the
organization's size and risk profile. The NAIC initiative also may result in the
adoption of a model NAIC regulation in the area of health plan standards, which
could be adopted by individual states in whole or in part, and could result in
the Company being required to meet additional or new standards in connection
with its existing operations.

     Individual states have also recently adopted their own regulatory
initiatives that may subject entities such as the Company to regulation under
state insurance laws. These include, but are not limited to, requiring

                                        7
<PAGE>   10

licensure as an insurance company or HMO and requiring adherence to specific
financial solvency standards. Licensure as an insurance company, HMO or similar
entity could also subject the Company to regulations covering reporting and
disclosure, mandated benefits, and other traditional insurance regulatory
requirements. PPO regulations to which the Company may be subject to may require
the Company to register with a state authority and provide information
concerning its operations, particularly relating to provider and payor
contracting.

     Based on the information presently available to it, the Company does not
believe that the imposition of requirements related to maintaining certain types
of assets, prescribed levels of deposits, capital, surplus, reserves or net
worth, or complying with other regulatory requirements applicable to an
insurance company, HMO, PPO or similar operations, would have a material adverse
effect on the Company. Notwithstanding the foregoing, the imposition of such
requirements could increase the Company's costs of doing business and could
delay the Company's conduct or expansion of its business in some areas.

  Utilization Review/Third Party Administrator ("TPA") Laws

     Several of the states in which Integra conducts its business have enacted
legislation requiring organizations engaged in utilization review to register
and to meet certain operating standards. Utilization review regulations
typically impose requirements with respect to qualifications of personnel,
appeal procedures, confidentiality and other matters relating to utilization
review services. Integra is currently registered in Maryland, New York,
Pennsylvania, Tennessee and Texas for such services. Integra has been able to
comply with the applicable legislation without significant expense to date.
Integra may be required to comply with similar statutes if other states in which
it conducts its business impose such requirements or if the Company begins doing
business in a state which has such requirements.

     Several states have adopted statutes to regulate third party health claims
administrators, which may include aspects of the Company's business. These
statutes typically impose requirements with respect to the financial solvency
and operation of the administrator. The Company may be required to comply with
similar statutes if other states in which it conducts business impose such
requirements or if the Company begins doing business in a state which has such
requirements.

  ERISA

     Certain of the Company's services are subject to the provisions of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). ERISA
governs certain aspects of the relationship between employer-sponsored health
benefit plans and certain providers of services to such plans through a series
of complex statutes and regulations that are subject to periodic interpretation
by the Internal Revenue Service and the United States Department of Labor. In
general, these regulations impose, among other things, an obligation on Integra
to act as a fiduciary with respect to some of the health benefit plans it
provides services to. However, there is little direct authority governing the
application of ERISA to many of the activities and arrangements of managed
behavioral healthcare and substance abuse treatment companies such as those
operated by Integra.

     Certain federal courts have held that utilization review and third party
administrator licensure requirements are preempted by ERISA. ERISA preempts
state laws that mandate employee benefit structures or their administration, as
well as those that provide alternative enforcement mechanisms. The Company
believes that its utilization review and TPA activities performed for its
self-insured employee benefit plan customers in some states are exempt from
otherwise applicable state licensing or registration requirements based upon
federal preemption under ERISA and has relied on this general principle in
determining not to seek licensure for certain of its activities in some states.
Existing case law is not uniform on the applicability of ERISA preemption with
respect to state regulation of utilization review or TPA activities. There can
be no assurance that additional licensure will not be required with respect to
utilization review or TPA activities in certain states.

                                        8
<PAGE>   11

  Any Willing Provider Laws

     Several states have adopted, or are expected to adopt, "any willing
provider" laws. Such laws typically impose upon insurance companies, PPOs, HMOs
or other types of third party payors an obligation to contract with, or pay for
the services of, any healthcare provider willing to meet the terms of the
payor's contracts with similar providers. Compliance with any willing provider
laws could increase the Company's costs of assembling and administering provider
networks and could, therefore, have a material adverse effect on its operations.

  Provider Regulation

     Integra is also affected directly by regulations imposed upon healthcare
providers. The provision of behavioral healthcare treatment services by
psychiatrists, psychologists and other providers is subject to state regulation
with respect to the licensing of healthcare professionals. The Company believes
that the healthcare professionals who provide behavioral healthcare treatment on
behalf of, or under contracts with the Company, are in compliance with the
applicable state licensing requirements and current interpretations thereof;
however, there can be no assurance that changes in such state licensing
requirements or interpretations thereof will not adversely affect the Company's
existing operations or limit expansion. Additional licensure of clinicians who
provide telephonic assessment or stabilization services to individuals who are
calling from out-of-state may be required if such assessment or stabilization
services are deemed by regulatory agencies to be treatment provided in the state
of such individual's residence. The Company believes that any such additional
licensure could be obtained; however, there can be no assurance that such
licensing requirements will not adversely affect the Company's existing
operation or limit expansion.

     Regulations imposed upon healthcare providers also include provisions
relating to the conduct of, and ethics in, the practice of psychiatry,
psychology, social work and related mental healthcare professions, and, in
certain cases, the common law duty to warn others of danger or to prevent
patient self-injury. In addition, there are federal and state laws that require
providers of mental health or substance abuse treatment services to maintain the
confidentiality of treatment records and information with respect to such
patients. These laws generally specify the conditions under which
patient-specific information may be disclosed, and may be enforced through the
imposition of criminal fines and other penalties.

     The Health Insurance Portability and Accountability Act of 1996 ("HIPAA")
includes a provision that prohibits the wrongful disclosure of certain
"individually identifiable health information." HIPAA requires the Secretary of
the United States Department of Health and Human Services (the "Department") to
adopt standards relating to the transmission of such health information by
healthcare providers and healthcare plans. On December 28, 2000, the Department
issued final HIPAA privacy and confidentiality regulations. The regulations will
require the Company to adopt and implement certain administrative safeguard
policies and procedures to comply with the HIPAA regulations. The effective date
of the regulations is April 14, 2001. The Company cannot predict at the present
time the estimated cost to comply with these regulations. Under the regulations,
as presently stated, the Company would have 24 months after the effective date
of the final regulations to comply with the regulations. Although the Company
believes that such regulations do not at present materially impair the Company's
operations, there can be no assurance that such indirect regulation will not
have a material adverse effect on the Company in the future.

     In certain states, the employment of psychiatrists, psychologists and
certain other mental healthcare professionals by business corporations is a
permissible practice. However, other states have legislation or regulations or
have interpreted existing medical practice licensing laws to restrict business
corporations from providing mental health services or from the direct employment
of psychiatrists and, in a few states, psychologists and other mental healthcare
professionals. For example, various state boards of medical examiners have
regulations which prohibit psychiatrists, and in a few cases, psychologists,
from being employed by business corporations and only permit employment by
professional corporations. In addition, the laws of some states prohibit
psychiatrists, psychologists, or other behavioral healthcare professionals from
splitting fees with other persons or entities. Corporate practice and
fee-splitting statutes vary from state to state, and have seldom been recently
interpreted by the courts or regulatory agencies. Although the Company

                                        9
<PAGE>   12

believes it has appropriately structured its arrangements with healthcare
providers to comply with the relevant state statutes, there can be no assurance
that (i) governmental officials charged with responsibility for enforcing these
laws will not assert that the Company or certain transactions in which it is
involved are in violation of such laws, (ii) such state laws will ultimately be
interpreted by the courts in a manner inconsistent with the practices of the
Company or (iii) evolving interpretations of such state laws or the adoption of
other state laws or regulations will not make it necessary for the Company to
restructure certain of its arrangements.

  Customer Regulation

     Integra is indirectly affected by regulations imposed on its customers
which include, among other things, benefits mandated by statute, exclusions from
coverage prohibited by statute "parity" requirements, procedures governing the
payment and processing of claims, record keeping and reporting requirements,
requirements for and payment rates applicable to coverage of Medicare and
Medicaid beneficiaries, provider contracting and enrollee rights, and
confidentiality requirements. Any such direct and indirect regulation could have
a material adverse effect on the Company's business, financial condition or
results of operation.

  Government Pay

     Medicare.  Medicare is a federal health insurance program which provides
health insurance coverage for certain disabled persons, for persons aged 65 or
older and for certain persons with end stage renal disease. There are two
components to the Medicare program: Part A which covers inpatient services, home
healthcare and hospice care and Part B which covers physicians, other healthcare
professionals and outpatient services. Medicare is funded by both beneficiary
and federal contributions.

     Prior to the passage of the Balanced Budget Act of 1997, Medicare
beneficiaries could (i) receive services on a fee-for-service basis pursuant to
which Medicare generally pays providers based on a national fee schedule subject
to the applicable copayment or (ii) elect to enroll with a managed care
organization which had entered into a direct contract with Medicare whereby the
organization is paid a predetermined amount for each covered Medicare
beneficiary without regard to the frequency, extent or nature of services
delivered. The Balanced Budget Act of 1997 reformed Medicare in a number of
respects, including the phase out of existing Medicare risk contracts and the
creation of the Medicare+Choice program. The Medicare+Choice program allows
Medicare beneficiaries, in addition to traditional fee-for-service Medicare, to
have access to a wide array of private health plan choices beyond the previously
existing managed care arrangements. These additional plan options include
"Coordinated Care Plans" which include an HMO with or without point of service
option; a Provider-Sponsored Organization plan; a PPO plan; and a demonstration
Medical Savings Account project. Given the infancy of the Medicare+Choice
program, the Company cannot predict what effect, if any, the program will have
on the Company's future Medicare revenues. At present, the Company does not
directly bill the government for services under Medicare.

     Medicaid.  Medicaid is the state administered and state and federally
funded program which provides health insurance coverage for certain low-income
individuals. For qualified Medicare beneficiaries, "dual eligibles," the
Medicaid program pays the beneficiary's Part B premiums and may reimburse all
deductibles and copayment portions of the approved Medicare charge up to an
allowable amount established by each Medicaid program. The extent of actual
copayment contributions varies widely by state. Most Medicaid programs cover
behavioral healthcare services but may limit the number of approved visits per
year. There has been an increasing trend for Medicaid programs to contract with
managed care organizations to administer care and control costs for its
beneficiaries. In these situations, the Company and its providers must be
approved to participate on the select provider panel in order to treat patients.

     Government and other third-party payors' healthcare policies and programs
have been subject to changes in payment levels and payment methodologies during
past years, including determination of medical necessity for behavioral health
services. There can be no assurance that future changes will not reduce
reimbursement from those sources for behavioral healthcare services.

     Prior to the Sale and exit of the Patient Service and Provider segment, the
Company provided direct clinical services to some patients who were
beneficiaries of the federal Medicare and Medicaid programs. The
                                        10
<PAGE>   13

compensation received by the Company for such services was established by fee
schedules and other similar cost containment measures. In order to receive
Medicare reimbursement, the local operations of the Company's outpatient service
and provider business were required to be registered with Medicare as a group
provider. In addition, each individual provider had to be certified as an
independently practicing provider and be assigned an individual provider number.
The certification criteria, which are established by the Department of Health
and Human Services, are interpreted and administered by each state.

     Medicaid programs do not generally require certification of the Company or
its providers over and above the requirements of Medicare.

     Federal and some state laws impose restrictions on physicians', and, in a
few states, on psychologists' and other mental healthcare professionals',
referrals for certain designated health services to entities with which they
have financial relationships. The Company believes its outpatient service and
provider business operations were structured to comply with these restrictions
to the extent applicable.

     The Social Security Act imposes criminal and civil penalties upon persons
who make or receive kickbacks, bribes or rebates in connection with the Medicare
or Medicaid programs. These anti-fraud and abuse rules prohibit providers and
others from soliciting, offering, receiving or paying, directly or indirectly,
any remuneration in return for either making a referral for services or items or
ordering any services or items for which payment may be made under a federal
healthcare program. Upon conviction, violations of these rules may be punished
by fine of up to $25,000 or imprisonment for up to five years, or both. The
government may impose civil monetary penalties. In addition, the Medicare and
Medicaid Patient and Program Protection Act of 1987 imposes civil sanctions for
violation of these prohibitions, punishable by exclusion from the Medicare and
Medicaid program; such exclusion, if applied to Integra's operations, could
result in significant loss of reimbursement. Management knows of no such
violations and in addition under the Company's Medicare Compliance Program,
actively seeks to ensure full compliance with the law.

     In order to provide guidance with respect to the anti-kickback laws, the
Office of the Inspector General ("OIG") of the Department of Health and Human
Services has issued regulations outlining certain "safe harbor" practices, which
although potentially capable of including prohibited remuneration, would not be
prohibited if all applicable requirements are met. HCFA has issued similar
regulatory exceptions to the broad prohibition against physician self referral.
A relationship which fails to satisfy a safe harbor or exception is not
necessarily illegal, but could be scrutinized under a case-by-case analysis.
Legislation passed in late 2000 also resurrected the advisory opinion process,
under which the OIG and HCFA can provide their interpretation of whether a
particular arrangement violates anti-kickback or anti-self referral laws,
respectively. Since the anti-fraud and abuse laws have been broadly interpreted,
they affected the manner in which the Company could have acquired professional
practices and may affect the manner in which the Company markets its services
to, and contracts for services with, psychiatrists, psychologists, and other
mental healthcare professionals. Management considers and seeks to comply with
these regulations in planning its activities, and believes that its activities,
even if not within a recognized safe harbor or exception, do not violate the
anti-fraud and abuse statute.

  Budget Acts

     In August 1997, Congress enacted a Budget Act which included provisions
designed to reduce Medicare expenditures over the next five years by $115
billion, compared to projected Medicare expenditures before adoption of the
Budget Act. The five-year savings in projected Medicare payments to physicians
and hospitals would be achieved under the Budget Act by reduced fee-for-service
reimbursement and by changes in managed care programs designed to increase
enrollment of Medicare beneficiaries in managed care plans. The increase in
Medicare enrollment in managed care plans would be achieved in part by allowing
provider-sponsored organizations and preferred provider organizations to compete
with Medicare health maintenance organizations for Medicare enrollees. All of
these plans are potential customers of Integra.

     Prior to adoption of the 1997 Budget Act, states generally were prohibited
from requiring Medicaid recipients to enroll in managed care products that
covered only Medicaid recipients. The Medicaid-related provisions of the 1997
Budget Act gave states broad flexibility to require most Medicaid recipients to
enroll in
                                        11
<PAGE>   14

managed care products that only cover Medicaid recipients. The 1997 Budget Act
also allows states to limit the number of managed care organizations with which
the state will contract to deliver care to Medicaid beneficiaries. These changes
could have a positive impact on the Company's business, if they result in
increased enrollment of Medicaid beneficiaries in managed care organizations and
increased Medicaid spending on managed care. However, these changes also may
result in significant competition for such contracts.

     The Company cannot predict the effect of the Budget Acts, or other
healthcare reform measures that may be adopted by Congress or state
legislatures, on its managed care operations and no assurance can be given that
either the Budget Act or other healthcare reform measures will not have an
adverse effect on the Company.

  Other Legislation

     In the last five years, legislation has periodically been introduced at the
state and federal level providing for new regulatory programs and materially
revising existing regulatory programs. Any such legislation, if enacted, could
materially adversely affect the Company's business or financial condition or
results of operations. Such legislation could include both federal and state
bills affecting the Medicaid programs which may be pending in or recently passed
by state legislatures and which are not yet available for review and analysis.
Such legislation could also include proposals for national health insurance and
other forms of federal regulation of health insurance and healthcare delivery.
It is not possible at this time to predict whether any such legislation will be
adopted at the federal or state level, or the nature, scope or applicability to
the Company's business of any such legislation, or when any particular
legislation might be implemented. No assurance can be given that any such
federal or state legislation will not have a material adverse effect on the
Company.

     The Mental Health Parity Act of 1996 ("MHPA") requires employer sponsored
group health plans that provide both mental health benefits and medical/surgical
benefits to have the same aggregate lifetime and annual dollar limits for mental
health benefits as they do for medical and surgical benefits. MHPA is effective
for plan years beginning in 1998. Because MHPA does not affect the amount,
duration or scope of mental health benefits provided by a plan, other than
annual and lifetime dollar limits, or even require group health plans to provide
mental health benefits if they do not already, its impact on the Company's has
been negligible. For example, the MHPA parity requirement does not apply to a
plan if its application will raise plan costs by 1% or more. Another limitation
is the use of benefit design features, other than dollar limitations, for
controlling costs for mental health, such as limited visits or days of coverage,
requirements related to medical necessity, or prior authorization or referrals
by primary care physicians. Many states already have mental health parity laws
that vary with regard to coverage.

     Pending parity legislation, in Congress and numerous state legislatures,
would generally require health insurers to offer mental health coverage on equal
terms as their coverage of physical ailments. The Company cannot predict whether
these legislative initiatives will be passed or, if so, the effect on the
Company. However, the Company believes that, if legislation is enacted, many
affected group health plans will not be capable of administering mental health
plans. The Company is uniquely situated and skilled in this area to manage
mental health benefit plans and the effect of the enactment of any such
legislation may have a favorable impact on the operations of the Company.

PATENTS

     The Company's ComPass(R) decision support system is protected by a patent
in the United States which expires in 2013. The use of this outcome measurement
tool is an important aspect of how the Company differentiates its services in
the marketplace.

EMPLOYEES

     At December 31, 2000, the Company employed approximately 125 full time
equivalent employees. The Company has not experienced any significant difficulty
in filling open positions with qualified employees. None
                                        12
<PAGE>   15

of the Company's employees are represented by a labor union and the Company is
not aware of any current activities to organize any of its employees. Management
considers the relationship between the Company and its employees to be good.

ITEM 2.  PROPERTIES.

     The Company's principal executive office is located in approximately 27,000
square feet of leased facilities at 1060 First Avenue, King of Prussia,
Pennsylvania. See Note 14 of Notes to the Company's Consolidated Financial
Statements for information concerning the Company's leases for its office
facilities. The Company is currently negotiating a multi year extension of its
office facility lease which expires April 30, 2001. The Company does not
anticipate that it will experience any difficulty in renewing any such leases
upon their expiration or obtaining different space on comparable terms if such
leases are not renewed. The Company believes that these facilities are well
maintained and are of adequate size for present needs.

ITEM 3.  LEGAL PROCEEDINGS.

     From time to time, the Company is a party to certain claims, suits and
complaints which arise in the ordinary course of business. The following relate
to the Company's discontinued operations which were sold and exited in May 1998.

     In March 1998, the Company received notification that the Medicare
Intermediary in California had completed a post payment medical review of
billings previously submitted and paid between 1990 and 1994. Based upon the
results of their review, the Intermediary has requested a refund of
approximately $1,200,000. Services were denied primarily on the basis of medical
necessity and incomplete documentation. The Company fully reserved for the above
amount as of December 31, 1997. Hearings occurred in April, September and
November 2000 before an Administrative Law Judge and a decision is pending.

     Additionally, during 1998, the Company entered into a Corporate Integrity
Agreement (the "Agreement") with the Office of Inspector General of the United
States Department of Health and Human Services ("OIG") whereby the Company
agreed to undertake certain compliance obligations. The Company, as required
under the terms of the Agreement and with the assistance of outside auditors,
filed its first annual report with the OIG in December 1999. In April and May
2000 the Company exchanged information with the OIG with respect to its 1999
Filing. The OIG offered several suggestions for improvement of the Company's
Corporate Compliance Program that have been effected. In addition, the OIG
requested specific procedures be implemented in connection with the Company's
second Annual Report which was timely filed in November 2000. As of March 27,
2001, no response has been received from the OIG with respect to this report.
The Company believes that no reserve for potential liability was required at
December 31, 2000.

     In January 2000, PsychPartners filed for protection under Chapter 11 of the
Federal Bankruptcy Laws. (See "Restructuring Charges" for further disclosure of
the PsychPartners Chapter 11 bankruptcy filing).

     Although management believes that established reserves for the above
matters are sufficient, it is possible that the final resolution of these
matters may exceed the established reserves by an amount which could be material
to the Company's results of operations. Due to the nature of these matters the
Company cannot predict when these matters will be resolved. The Company does not
believe the ultimate outcome of these matters will have a material adverse
effect on the Company's overall financial condition, liquidity or operations.

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

     None:

                                        13
<PAGE>   16

  Executive Officers of the Company

     Certain information with respect to the executive officers of the Company
is set forth below:

<TABLE>
<CAPTION>
                                                                                    AGE AT
                                                                                 DECEMBER 31,
NAME                                      POSITION WITH THE COMPANY                  2000
----                                      -------------------------              ------------
<S>                              <C>                                             <C>
Eric E. Anderson, Ph.D.........  President, Chief Executive Officer and
                                 Director                                             49
Jack N. Brown..................  Chief Financial Officer                              46
</TABLE>

     ERIC E. ANDERSON, PH.D. has been President and Chief Executive Officer
since November 17, 1999. He has been a director and served as President and
Chief Operating Officer of the Company since October 1998. Dr. Anderson joined
the Company in June 1997 and served as President and Chief Executive Officer of
the Company's behavioral managed care operation until September 1998. From
January 1997 to June 1997, Dr. Anderson served as a consultant in the managed
behavioral health and information technology industries. From February 1994 to
December 1996, Dr. Anderson was an Executive Vice President and General Manager
for Medco Behavioral Care Corp. From May 1991 to January 1994, Dr. Anderson
served as Senior Vice President for College Health Enterprises. Prior to that he
managed the behavioral healthcare operation of PacifiCare. Dr. Anderson is a
licensed psychologist and has over twenty years of behavioral health experience.

     JACK N. BROWN, CPA, has been Chief Financial Officer since May 15, 2000.
Prior to joining the Company, Mr. Brown had served since September 1994 as Chief
Financial Officer of HomeCare Concepts of America, Inc. From August 1993 to
August 1994 Mr. Brown was Director of Tax Services for A.G. Epstein & Company.
From August 1990 until August 1993, Mr. Brown was Treasurer of Thera-Kinetics,
Inc. From 1975 to 1990 Mr. Brown was a CPA with Ernst & Young where he was last
a Partner in the Entrepreneurial Services Group.

     No family relationship exists between any of the directors or executive
officers of the Company. Executive officers serve at the discretion of the Board
of Directors.

                                    PART II

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

     The Company's common stock is quoted on the American Stock Exchange under
the symbol IGR. As of March 27, 2001, there were approximately 835 shareholders
of record. The Company included individual position listings when calculating
the number of shareholders. The following table sets forth the reported high and
low sales prices of the Company's common stock for the periods indicated.

<TABLE>
<CAPTION>
                                                              HIGH         LOW
                                                              ----         ---
<S>                                                           <C>          <C>
Fiscal Year Ended December 31, 1999
  First Quarter.............................................   1 11/16      1 1/16
  Second Quarter............................................   1 5/8        1 1/14
  Third Quarter.............................................   2 13/16      1 5/16
  Fourth Quarter............................................   2 1/8        1 1/4
Fiscal Year Ended December 31, 2000
  First Quarter.............................................   1 11/16       9/16
  Second Quarter............................................    15/16       9/16
  Third Quarter.............................................   1 3/8         1/2
  Fourth Quarter............................................   1 1/4         1/2
</TABLE>

     Over the past several years, the Company's common stock price has been
subject to significant volatility. If net revenues or earnings fail to meet
expectations of the investment community, there could be an immediate and
significant adverse impact on the trading price for the Company's common stock.

                                        14
<PAGE>   17

     No dividends have been declared on the common stock since the Company's
inception. The Company does not expect to declare any cash dividends in the
foreseeable future.

RECENT SALES OF UNREGISTERED SECURITIES

     (1) In May 1998, the Company issued warrants to purchase an aggregate of
400,000 shares of common stock at any time over a three year period at an
exercise price of $.05 per share to Abbingdon Venture Partners Limited
Partnership and Abbingdon Venture Partners Limited Partnership-II (collectively,
the "Investment Partnerships"). These warrants were issued in return for the
Investment Partnerships' commitment to guarantee additional financing for the
Company. Registration under the Securities Act of the warrants, and the shares
issuable upon the exercise of the warrants, was not required because such
securities were issued in a transaction not involving any "public offering"
within the meaning of Section 4(2) of the Securities Act, in reliance on Rule
506 under the Securities Act. Each of the Investment Partnerships was an
accredited investor and there was no general solicitation or general advertising
in connection with such issuance.

     The Investment Partnerships attempted to exercise these warrants in
December 1999. The Company is currently evaluating this matter with the
assistance of outside legal counsel.

     (2) In March 2000, the Board of Directors approved the issuance of a
warrant to purchase 50,000 shares of Common Stock to a Board member and
significant stockholder, as well as the conditional issuance of an additional
warrant to purchase 50,000 shares of Common Stock, with both issuances subject
to the approval of the Company's stockholders. The Company's stockholders
approved the issuances at the June 27, 2000 annual meeting of stockholders. The
warrant for the initial 50,000 shares of common stock was issued in connection
with a temporary line of credit of $2,000,000 (the line of credit expired on
March 1, 2001), which was extended to the Company by the stockholder/Board
member in March 2000. The conditional warrant was subsequently issued because
the Company was not able to obtain a line of credit from a financial institution
to replace the line of credit extended by the stockholder/Board member prior to
June 30, 2000. The warrants, which were granted on June 27, 2000 and June 30,
2000, respectively, each have a ten-year term and are exercisable at a price per
share equal to the fair market value of a share of Common Stock on the date the
warrants were granted ($.625 and $.6875, respectively).

ITEM 6.  SELECTED FINANCIAL DATA.

     The following selected financial data should be read in conjunction with
the Company's Consolidated Financial Statements and the accompanying Notes
presented elsewhere herein.

<TABLE>
<CAPTION>
                                                        YEARS ENDED DECEMBER 31,
                                    -----------------------------------------------------------------
                                       2000          1999          1998          1997         1996
                                    -----------   -----------   -----------   ----------   ----------
                                              (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                 <C>           <C>           <C>           <C>          <C>
INCOME STATEMENT DATA:
Net revenues(1)...................  $    26,429   $    25,455   $    32,569   $   70,144   $   78,727
Gross profit......................        7,962         8,695         9,021       15,942       18,640
Income (loss) from operations.....          948           497           590      (59,672)     (12,826)
Net income (loss).................        1,150           303          (935)     (61,218)     (13,594)
Basic and diluted net income
  (loss) per common share(2)......  $      0.11   $      0.03   $     (0.09)  $    (6.17)  $    (1.39)
Weighted average shares
  outstanding(2):
  Basic...........................   10,138,552    10,138,552    10,104,999    9,921,374    9,786,599
  Diluted.........................   10,806,675    10,532,109    10,104,999    9,921,374    9,786,599
</TABLE>

                                        15
<PAGE>   18

<TABLE>
<CAPTION>
                                                                 AS OF DECEMBER 31,
                                                   -----------------------------------------------
                                                    2000      1999      1998      1997      1996
                                                   -------   -------   -------   -------   -------
<S>                                                <C>       <C>       <C>       <C>       <C>
BALANCE SHEET DATA:
Current assets...................................  $ 3,122   $ 3,362   $ 4,016   $ 9,958   $16,445
Total assets.....................................   14,693    15,230    16,035    43,600    97,783
Current liabilities..............................    8,108     9,664     9,464    37,604    23,547
Total debt.......................................       --        --     1,663    14,700    12,808
Stockholders' equity.............................    6,425     5,270     4,962     4,713    65,181
</TABLE>

---------------
(1) Net revenues for 2000 and 1999 reflects premium revenue only in contrast to
    1998-1996 which reflects premium revenue and patient service revenue.

(2) Basic earnings per share includes no dilution and is computed by dividing
    income available to common shareholders by the weighted-average number of
    common shares outstanding for the period. Diluted earnings per share
    reflects the dilutive effect of all stock options, shares contingently
    payable in connection with certain acquisitions and convertible debentures.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS. (DOLLARS IN THOUSANDS)

OVERVIEW

     The Company provides EAP and Managed Behavioral Healthcare services through
full and shared risk arrangements with employers, health plans and managed care
organizations to perform behavioral health services on a capitated per member
per month basis. In addition, the Company provides an array of behavioral health
services including: employee assistance programs ("EAP's"), third party clinical
case management and claims administration. At December 31, 2000, Integra's
contract service areas were principally concentrated in Connecticut, Delaware,
Maryland, New Jersey, New York, Pennsylvania, Rhode Island, Virginia and
Tennessee.

SALE AND DIVESTITURE OF PATIENT SERVICE AND PROVIDER SEGMENT

     In December 1997, the Company announced its plans to exit and divest its
outpatient provider behavioral health group practice operations. The Company
entered into an agreement to sell substantially all of the assets of the
outpatient behavioral practice business (the "Sale"), except for practices
located in the Western region of the United States which the Company sold or
shut down. The Sale was completed effective May 18, 1998 and resulted in the
divestiture by the Company of substantially all the assets and business of the
Company's outpatient behavioral health practices. As of December 31, 1997, the
outpatient behavioral health practice business accounted for approximately
eighty-four percent (84%) of the assets of the Company (before the impact of the
write down of assets and the impact of the restructuring charges), and for the
year ended December 31, 1997, approximately eighty-three percent (83%) of the
Company's net revenues. As a result of the Sale, the Company is significantly
smaller in terms of revenues and assets.

EAP AND MANAGED BEHAVIORAL HEALTHCARE

     Prior to 1994, the Company was not a direct provider of managed behavioral
healthcare services. During 1994, the Company acquired the Integra managed
behavioral healthcare company which at the time was principally a regional
provider of employee assistance programs. Subsequent to the acquisition of
Integra, the Company continued to invest in additional systems and management
infrastructure and began actively seeking full-risk capitation arrangements with
health plans and other managed care organizations. With the completion of the
above-mentioned Sale and exit of the outpatient provider behavioral health group
practice operations, the Company elected to change the name of the parent
company from Apogee, Inc. to Integra, Inc. The Company believes the Integra name
is well established and respected in the behavioral health market. As indicated
elsewhere this business segment has grown significantly since its acquisition,
and in particular since 1997.

                                        16
<PAGE>   19

SEGMENT REPORTING

     Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information" ("SFAS No. 131"), was adopted
by the Company for 1998. This standard requires disclosure of segment
information on the same basis used internally for evaluating segment performance
and deciding how to allocate resources to segments. The Company's operating
segments are organized by product line. During 2000 and 1999, the Company had
only one operating segment, EAP and Managed Behavioral Healthcare, for purposes
of SFAS No. 131. During 1998, the Company had two segments: (1) EAP and Managed
Behavioral Healthcare and (2) Patient Service and Provider (see Note 13 of the
Notes to the Company's Consolidated Financial Statements for a financial
presentation of the Company's segments).

     As noted above and further explained in Notes 1 and 3 of the Notes to the
Company's Consolidated Financial Statements, the Company has exited all business
lines except for EAP and Managed Behavioral Healthcare. The strategic decision
to exit the Patient Service and Provider segment was made by the Company's Board
of Directors in December 1997 and was substantially completed during 1998.
Segment information for the Patient Service and Provider segment in 1998
reflects the results of operations of these practices essentially through the
date of the Sale to PsychPartners in May 1998. The Company did not have Patient
Service and Provider businesses in operation after 1998.

     The Company's continuing EAP and Managed Behavioral Healthcare segment
provides managed behavioral healthcare services through full and shared risk
arrangements with employers, health plans and managed care organizations. The
Company's revenues are primarily generated through capitated contracts. Revenues
are generated entirely in the United States. Approximately 79% of this segment's
revenues were generated by seven (7) customers of which 53% and 10% come from
two specific health plan customers, respectively.

RESULTS OF OPERATIONS

     The Company's Consolidated Financial Statements include the accounts of the
Company and all wholly owned and beneficially owned subsidiaries. All
significant intercompany accounts and transactions, including management fees,
have been eliminated.

     With regard to the Patient Service and Provider segment which was
completely exited in 1998, because of corporate practice of medicine laws in
certain states in which the Company operated, the Company did not own the
professional corporations which operated the professional and clinical aspects
of the behavioral health provider operations in those states, but instead had
the contractual right to designate, in its sole discretion and at any time, the
licensed professional who was the owner of the capital stock of the professional
corporation at a nominal cost ("Nominee Arrangements"). In addition, the Company
entered into exclusive long-term management services agreements ("Management
Services Agreements") with the professional corporations.

     Through the Nominee Arrangements, the Company had a significant long-term
financial interest in the affiliated practices and, therefore, according to
Emerging Issues Task Force No. 97-2 "Application of FASB Statement No. 94,
Consolidation of All Majority-Owned Subsidiaries, and APB Opinion No. 16,
Business Combinations, to Physician Practice Management Entities and Certain
Other Entities with Contractual Management Arrangement," the Company
consolidated the results of the affiliated practices with those of the Company.
Because the Company must present consolidated financial statements, net revenues
are presented in the accompanying Consolidated Statements of Operations. With
the Sale and exit of the Company's provider operations, the Company has
transferred its rights under the Management Services Agreements, or terminated
those relationships.

                                        17
<PAGE>   20

     The following table sets forth, for the periods indicated, operating
results of the Company:

<TABLE>
<CAPTION>
                                                          YEARS ENDED DECEMBER 31,
                                                        -----------------------------
                                                         2000       1999       1998
                                                        -------    -------    -------
                                                           (DOLLARS IN THOUSANDS)
<S>                                                     <C>        <C>        <C>
Net revenues:
  Premium revenue.....................................  $26,429    $25,455    $13,368
  Patient service revenue.............................       --         --     19,201
                                                        -------    -------    -------
          Total net revenues..........................   26,429     25,455     32,569
                                                        -------    -------    -------
Cost of revenues:
  Premium service costs...............................   18,467     16,760      7,955
  Patient service costs...............................       --         --     15,593
                                                        -------    -------    -------
          Total cost of revenues......................   18,467     16,760     23,548
                                                        -------    -------    -------
Gross profit..........................................    7,962      8,695      9,021
Selling and administrative expenses...................    6,784      6,510      6,260
Provision for doubtful accounts.......................      176         --      1,221
Amortization of intangible assets and excess cost over
  fair value of net assets acquired...................      494        488        950
Restructuring and other charges, net..................     (440)     1,200
                                                        -------    -------    -------
Income from operations................................  $   948    $   497    $   590
                                                        =======    =======    =======
</TABLE>

  EAP and Managed Behavioral Healthcare Segment Revenue

     Premium revenue for the EAP and Managed Behavioral Healthcare segment is
essentially comprised of the Company's portfolio of agreements with health
plans, managed care organizations and employers to provide inpatient and
outpatient behavioral health services. Revenues are primarily generated through
capitated managed behavioral health and employee assistance programs. The fees
are defined by contract and are primarily calculated on a fixed per member per
month fee. Revenues under these contracts are recorded in the month for which
the member is entitled to services. Generally, these membership contracts are on
a one to three year basis and are subject to various cancellation provisions
which are typical to industry practice. This segment had approximately
1,150,000, 1,200,000, and 800,000 covered lives at December 31, 2000, 1999 and
1998, respectively.

     The Company estimates the cost of providing services under these
agreements, including a reserve for services incurred, but not reported, based
upon authorized services, past claim payment experience for member groups,
patient census data and other facts. The Company typically does not subcapitate
the risk of providing services under these contracts, but arranges discounted
fee-for-service rates with independent inpatient and outpatient behavioral
health providers, which the Company manages.

     Under capitated contracts, the Company is responsible for ensuring
appropriate access to care and bears the risk for utilization levels and pricing
of the cost of services performed under these contracts. The Company believes
the future revenues under these contracts will exceed the costs of services it
will be required to provide under the terms of the contracts. An underestimation
in the utilization or price of services for these contracts could result in
material losses to the Company. Historically, Integra has managed these
capitated contracts profitably. The Company maintains no re-insurance against
the risk of loss under these contracts.

     EAP and Managed Behavioral Healthcare premium revenue for 2000 increased
3.8% to $26,429 from $25,455 in 1999. This increase was primarily a result of a
net increase in membership for the capitated contracts. Premium revenue for 1999
increased 90% to $25,455 from $13,368 in 1998. This increase was the result of
the Company securing a capitated-based contract covering over 400,000 lives with
a health plan in New York.

                                        18
<PAGE>   21

  Patient Service and Provider Segment Revenue

     Revenue for the Patient Service and Provider segment was reported when
earned at the time of service at the estimated amounts to be realized through
payments from patients, third party payors and others for services rendered.
Third party reimbursement was initially billed at "usual, customary and
reasonable" market rates. Aggregate billings were adjusted when recorded to
reflect the estimated amounts realizable from third party payors based on the
Company's historical experience and contractual rates established with the
payors. Patient service revenue represented billings of the Company's operations
other than its EAP and Managed Behavioral Healthcare segment. As stated above,
the Company exited all Patient Service and Provider segment operations as of
December 31, 1998.

     Patient service revenue for 1998 was $19,201. The Sale of the eastern
outpatient operations was completed on May 18, 1998. The remaining outpatient
operations were shut down or sold during the first quarter of 1998. No revenue
from this segment was recognized in 1999 and 2000. The Company does not expect
to reenter this segment in the foreseeable future.

  Cost of Revenues

     EAP and Managed Behavioral Healthcare segment cost of revenues increased in
2000 to $18,467 from $16,760 in 1999. This increase was primarily a result of an
additional investment by the Company in internal clinical and claims personnel
as well as increased utilization by an increasing population of contract
members. EAP and Managed Behavioral Healthcare segment cost of revenues
increased in 1999 to $16,760 from $7,955 in 1998. This increase is primarily a
result of a large contract which began coverage on January 1, 1999.

     Patient Service and Provider segment costs of revenues for 1998 were
$15,593. No patient service revenues or costs were generated in 1999 and 2000 or
are expected in the future.

  Selling and Administrative Expenses

     Selling and administrative expenses are primarily comprised of corporate
office, sales and administration. Selling and administrative expenses increased
to $6,784 in 2000 from $6,632 in 1999 as a result of increased investments in
information systems personnel, consultants and information systems related
depreciation. Selling and administrative expenses increased to $6,632 in 1999
from $6,260 in 1998 as a result of costs incurred in connection with severance
payments made to certain former officers of the Company.

  Provision for Doubtful Accounts

     In 2000, the Company's provision for doubtful accounts of $176 was largely
attributable to a billing dispute with one customer. The Company made no
provision in 1999. The Company's EAP and Managed Behavioral Healthcare segment
has historically had minimal provision for doubtful accounts. In 1998, the
Company established a provision of $1,221 primarily attributable to the
outpatient provider operation.

  Amortization of Intangible Assets and Excess Cost Over Fair Value of Net
Assets Acquired

     Amortization of intangible assets and excess cost over fair value of net
assets acquired was $494 and $488 in 2000 and 1999 respectively. Amortization of
intangible assets and excess costs over fair value of net assets decreased to
$488 in 1999 from $950 in 1998. This decrease is a result of the Sale and exit
of the outpatient operations in 1998.

  Write Down of Assets

     The Company applies Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of" ("SFAS 121"), which established accounting standards for the
impairment of long-lived assets, certain identified intangible assets and
goodwill related to those assets to be held and used and for long-lived assets
and certain intangible assets to be disposed of. In accordance with SFAS 121,
the Company reviews the realizability of long-lived assets, certain intangible
assets and goodwill whenever events or circumstances occur that indicate
recorded costs
                                        19
<PAGE>   22

may not be recoverable. The Company also reviews the overall recoverability of
goodwill based primarily on estimated future undiscounted cash flows.

     If over the remaining useful life of such assets, the expected undiscounted
future cash flows are less than the carrying amount of such assets, the Company
recognizes an impairment loss for the difference between the carrying amount of
the assets and their estimated fair value. In estimating future cash flows, the
Company uses a combination of recent operating results, financial forecasts and
budgets, and management estimates and assumptions of factors such as growth and
potential future changes when determining whether an asset is impaired, and in
measuring assets that are impaired, the Company groups assets by geographic
region. The geographic region is the level at which the Company contracts with
managed care payors, deploys administrative and clinical resources and
consolidates back office operations. In addition, patients and Company providers
often use clinic locations interchangeably within a geographic region.

  Restructuring and Other Charges

     This charge is comprised of the following:

<TABLE>
<CAPTION>
                                                               YEARS ENDED
                                                              DECEMBER 31,
                                                             ---------------
                                                             2000      1999
                                                             -----    ------
<S>                                                          <C>      <C>
Restructuring charges......................................     --    $1,700
  Long-term care and provider billing reserves.............     --       200
  Change in estimate (restructuring of $440 and $266 in
     2000 and 1999 respectively, provider billing of $434
     in 1999)..............................................   (440)     (700)
                                                             -----    ------
                                                             $(440)   $1,200
                                                             =====    ======
</TABLE>

  Restructuring Charges

     In January 2000, PsychPartners filed for protection under Chapter 11 of the
Federal Bankruptcy Laws. Based on discussions with PsychPartners personnel, as
well as developments in the bankruptcy court, the Company understands that
PsychPartners intends to discontinue all future operations and liquidate all
existing assets to satisfy outstanding obligations. Under the terms of the
Purchase Agreement, PsychPartners assumed responsibility for all facility leases
associated with the practices sold. While the Company obtained assignment
letters for many of those leases, due to the nature of both real estate and
bankruptcy laws, it is possible that the Company will be responsible for a
portion of those remaining lease obligations. The Company has engaged special
counsel and is evaluating its exposure with regard to this matter on an ongoing
basis. The Company estimates that there were approximately 35 open leases with
approximately $2,500 in remaining payments under the lease terms, not including
certain fees and expenses, for which the Company may be responsible. The Company
intends to aggressively pursue resolution of this matter in terms most favorable
to the Company. The Company recorded a charge of $1,700 at December 31, 1999,
for this potential exposure. During 2000 the Company paid $228 relating to both
lease obligations and legal costs in connection with the settlement of ten
leases. In connection with the settlement of these leases, during 2000, the
Company recognized $440 in income to the extent that the amounts previously
reserved exceeded the required settlement payments.

     In addition to the lease exposure described above, PsychPartners defaulted
on certain deferred contingent purchase price obligations which were part of the
original acquisition agreements for practices previously purchased by Integra.
These liabilities were assumed by PsychPartners under the terms of the Purchase
Agreement. The Company believes that it has no remaining responsibility for
these obligations, however, the individuals associated with these practices may
choose to assert a claim against the Company. At December 31, 2000, the Company
had not established a reserve for these amounts which it estimates may aggregate
to $1,000. The Company intends to vigorously contest any claims related to this
matter.

     In December 1997, the Company recorded a provision for restructuring of
$14,200 pertaining to the Company's decision to divest the outpatient provider
group practices operations that were not sold to

                                        20
<PAGE>   23

PsychPartners, and to reorganize corporate office functions to reflect the exit
from the outpatient business. As of December 31, 2000, $1,558 of the initial
restructuring reserve of $14,200 remained and is principally related to ongoing
potential obligations of the Company with respect to various contract
termination costs.

     As part of its ongoing evaluation of these restructuring reserves, at June
30, 1999, the Company determined, based upon its assessment of all remaining
open matters at that time, that the Company was over-accrued for these matters
by $266. This change in estimate was offset by additional restructuring reserves
of $1,700 recorded in the fourth quarter 1999 relating to the lease exposure as
a result of PsychPartners' Chapter 11 bankruptcy filing as discussed above.

     The following summarizes the Company's restructuring activity:

<TABLE>
<CAPTION>
                           RESTRUCTURE                                         RESTRUCTURE                           RESTRUCTURE
                            BALANCE AT       1999       CHANGE IN   AMOUNTS     BALANCE AT    CHANGE IN   AMOUNTS     BALANCE AT
                           DECEMBER 31,   RESTRUCTURE   ESTIMATE    UTILIZED   DECEMBER 31,   ESTIMATE    UTILIZED   DECEMBER 31,
                               1998        PROVISION      1999      IN 1999        1999         2000      IN 2000        2000
                           ------------   -----------   ---------   --------   ------------   ---------   --------   ------------
<S>                        <C>            <C>           <C>         <C>        <C>            <C>         <C>        <C>
Contract termination
  costs..................     $1,344        $1,700        $(266)     $(494)       $2,284        $(440)     $(286)       $1,558
Employee severance
  costs..................         77            --           --        (77)           --           --         --            --
                              ------        ------        -----      -----        ------        -----      -----        ------
                              $1,421        $1,700        $(266)     $(571)       $2,284        $(440)     $(286)       $1,558
                              ======        ======        =====      =====        ======        =====      =====        ======
</TABLE>

  Long-term Care and Provider Billing Reserves

     During 1996, the Company established a $1,300 reserve in connection with
the notification by the Office of the Inspector General of the Department of
Health and Human Services ("OIG") and the Department of Justice ("DOJ") that
certain of the Company's Medicare Part B and related co-insurance billings
previously submitted for services to Medicare patients in long-term care
facilities in Florida were being reviewed. The Company reached a tentative
agreement to settle this civil matter for $3,000 in December 1997. Accordingly,
the Company recorded an additional reserve of $1,700 at December 31, 1997. The
Company also reserved $1,400 against the suspended accounts receivable with the
Florida Intermediary. In October 1998, the Company executed a final settlement
agreement with the OIG and the DOJ, which resolved all of the claims against the
Company relating to this matter. The terms of this settlement included a
repayment of approximately $3,000 which the Company made during 1998.
Additionally, during 1998, the Company entered into a Corporate Integrity
Agreement (the "Agreement") with the OIG whereby the Company agreed to undertake
certain compliance obligations. The Company, as required under the terms of the
Agreement and with the assistance of outside auditors, filed its first annual
report with the OIG in December 1999. In April and May 2000 the Company
exchanged information with the OIG with respect to its 1999 Filing. The OIG
offered several suggestions for improvement of the Company's Corporate
Compliance Program, which suggestions have been implemented. In addition, the
OIG requested specific procedures to be implemented in connection with the
Company's second Annual Report which was timely filed in November 2000. As of
March 27, 2001, no response has been received from the OIG with respect to this
report. The Company believes that no reserve for potential liability was
required at December 31, 2000.

     In March 1998, the Company received notification that the Medicare
Intermediary in California completed a post payment medical review of billings
previously submitted and paid between 1990 and 1994. Based on the results of
their review, the Intermediary has requested a refund of approximately $1,200.
Services were denied primarily on the basis of medical necessity and incomplete
documentation. The Company fully reserved for the above amount as of December
31, 1997. Hearings have taken place in April, September and November 2000 before
an Administrative Law Judge and a decision is pending.

     In April 1998, the Company received notice that the Office of the Attorney
General of the State of New York ("the State") was conducting an audit of the
New York Medicaid billings of one of the outpatient provider operations with
which it had an Administrative Services Agreement. The State was investigating
whether the Company had any liability arising from the operation of, and its
relationship with that provider. In October 1998, the Company terminated its
agreements with that provider. In May 1999, the Company reached a settlement
agreement with the State which resolves all claims against the Company relating
to this

                                        21
<PAGE>   24

matter. Terms of the settlement included a total payment of $382 plus $18 of
interest. These amounts were fully accrued at December 31, 1999 and were paid in
full during 2000.

     During the first half of 1999, the Company received notification of
potential Medicaid program billing issues in Nevada in connection with services
performed at the Company's former Nevada outpatient group practice subsidiaries
which were sold by the Company at the end of 1997. Upon further review of the
Company's former Nevada Medicaid billings, the Company determined that certain
Nevada Medicaid billings of these former outpatient practices were not in
accordance with Medicaid program regulations. In accordance with the Company's
full disclosure policy, the Company disclosed this matter to the Nevada Medicaid
program. In December 1999, the Company entered into a settlement agreement with
the State of Nevada which resolved all claims against the Company relating to
this matter. Terms of the settlement included a total payment of $455 plus
interest at a simple rate of 7%. The Company paid the first installment payment
of $228 in December 1999. The remaining installments were paid in June 2000 and
January 2001 which had been previously accrued.

     As part of its ongoing evaluation of the above mentioned reserves, at June
30, 1999, the Company determined, based on its assessment of all remaining
matters at that time, that the Company was over accrued for these matters by
$434. The change in estimate was partially offset by additional billing reserves
of $200 recorded in the fourth quarter 1999 relating to the settlement of the
Nevada matter discussed above.

     Although management believes that established reserves for the above
matters are sufficient, it is possible that the final resolution of these
matters may exceed the established reserves by an amount which could be material
to the Company's results of operations. Due to the nature of these matters the
Company cannot predict when these matters will be resolved. The Company does not
believe the ultimate outcome of these matters will have a material adverse
effect on the Company's overall financial condition, liquidity or operations.

  Interest Expense-Related Party

     In order to provide for additional financing if the Sale to PsychPartners
did not occur in 1998, the Company entered into an agreement with certain
investment partnerships (the "Investment Partnerships"), which were significant
stockholders of the Company and were managed by Foster Management Company, an
affiliated party, to obtain their commitment to guarantee an additional $7,000
of financing. This additional financing amount represented the Company's
estimated additional cash needs during 1998 for contingent payments, seller
notes and restructuring related activities.

     Under the terms of the agreement, in return for their guarantee, the
Investment Partnerships were to receive the following: (i) a commitment fee of
2% of the guaranteed amount; (ii) a draw down fee of 2% on Bank borrowings in
excess of $15,000; (iii) an unused commitment fee of  1/2% per annum; and (iv)
warrants to purchase 400,000 shares of common stock of the Company at a purchase
price of $0.05 per share (the "Integra Warrant") or, in the event the Sale was
not consummated, a transaction fee of $3,500 payable on April 30, 1999. With the
Sale completed, the cost to the Company of this guarantee was $1,020 of which
$140 was paid in cash to the Investment Partnerships. The remaining portion
represents a non-cash charge of approximately $880, which is the difference
between the exercise price of the Warrant and the fair market value of the
underlying common stock of the Company on the closing date of the Sale to
PsychPartners. These charges have been recorded as interest expense in the
Company's results of operations for the year ended December 31, 1998.

     In March 2000, the Board of Directors approved the issuance of a warrant to
purchase 50,000 shares of Common Stock to a Board member and significant
stockholder, as well as the conditional issuance of an additional warrant to
purchase 50,000 shares of Common Stock, with both issuances subject to the
approval of the Company's stockholders. The Company's stockholders approved the
issuances at the June 27, 2000 stockholders meeting. The warrant for the initial
50,000 shares of common stock was issued in connection with a temporary line of
credit of $2,000 (the line of credit expired on March 1, 2001), which was
extended to the Company by the stockholder/Board member in March 2000. The
conditional warrant was subsequently issued because the Company was not able to
obtain a line of credit from a financial institution to replace the
                                        22
<PAGE>   25

line of credit extended by the stockholder/Board member prior to June 30, 2000.
The warrants, which were granted on June 27, 2000 and June 30, 2000,
respectively, each have a ten-year term and are exercisable at a price per share
equal to $.625, which was the fair market value of a share of Common Stock on
the date the warrants were granted ($.625 and $.6875, respectively). Generally
accepted accounting principles call for the cost of the warrants to be treated
as interest expense and accordingly $5 has been recognized for 2000.

     During the fourth Quarter of 2000, the significant stockholder advanced
$300 which was repaid prior to December 31, 2000. Interest of $4 was paid with
respect to this advance.

  Liquidity and Capital Resources

     Net cash provided by operations was $1,268 in 2000, compared to net cash
provided by operations of $1,331 in 1999. Cash provided is primarily a result of
the income incurred in 2000 reduced by the cash used for restructuring-related
payments. Cash and cash equivalents increased to $812 at December 31, 2000 from
$706 at December 31, 1999. The December 31, 1999 balance was $1,746 less than
the amount of cash and cash equivalent of $2,452 at December 31, 1998 primarily
as a result of principal payout on long term obligations. Capital expenditures
have been consistent over the years with $1,005, $936, and $948 being spent in
2000, 1999 and 1998 respectively.

     In May 1998, the Company completed the sale of its eastern outpatient
operations to PsychPartners. Net proceeds from the Sale were primarily used to
repay bank debt, fund acquisition notes and contingent consideration, settle the
Florida Medicare review and fund other restructuring costs (see above).

     As further discussed in Note 9 of the Notes to the Company's Consolidated
Financial Statements as of December 31, 1999, the Company was in default of
certain covenants contained in its credit facility with PNC Bank (the
"Facility"), principally related to capital expenditures for computer equipment.
There were no borrowings outstanding under the Facility at December 31, 1999.
The Company was not able to obtain a waiver from the Bank, and the Bank
subsequently withdrew the Facility. In order to meet potential cash flow demands
through December 31, 2000, the Company obtained a commitment from a significant
stockholder to advance the Company up to $2,000 through March 1, 2001 (refer to
Note 19 of the Notes to the Company's Consolidated Financial Statements for
discussion of the terms of the commitment). There were no amounts outstanding as
of December 31, 2000 with respect to this commitment.

     In order to meet potential cash flow demands through December 31, 2001, the
Company, in March 2001, obtained a commitment from a significant shareholder to
advance up to $1,000 through March 2002.

     At December 31, 2000 the Company had a working capital deficit of $4,988.
The deficit was attributable to accrued liabilities of $2,897 that pertain to
the exit of the outpatient provider behavioral group practice business and
reserves established for long-term care and other provider billing matters.
Although these amounts are classified as current due to their nature, the
Company does not expect that all of these amounts will require payment in the
next year. The remainder of the Company's accounts payable and accrued
liabilities, $1,890, is operating in nature.

     As further discussed in Note 9 of the Notes to the Company's Consolidated
Financial Statements, in December 2000, the Company entered into a credit
facility with a local bank that allows for up to $500 (increased to $650 in
March 2001) in borrowings subject to a formula based upon eligible accounts
receivable.

     The Company believes that the cash flow generated by the Company's
operations, together with its existing cash and credit available from its bank
and significant stockholder will be sufficient to meet the Company's cash
requirements in 2001.

     As further discussed in Note 12 of the Notes to the Company's Consolidated
Financial Statements of Notes to the Company's Consolidated Financial
Statements, a contract with a customer representing approximately 52% of
revenues will terminate on December 31, 2001.

                                        23
<PAGE>   26

     The Company's current ratio, working capital and debt to equity ratio are
set forth below for the dates indicated:

<TABLE>
<CAPTION>
                                                     DECEMBER 31,    DECEMBER 31,
                                                         2000            1999
                                                     ------------    ------------
<S>                                                  <C>             <C>
Current Ratio......................................     .38:1           .35:1
Working Capital deficit............................    $(4,988)        $(6,302)
Debt to Equity.....................................       --              --
</TABLE>

  Inflation

     A significant portion of the Company's operating expenses have been subject
to inflationary increases, including clinical and administrative salaries and
rent expense. Based upon management's assessment, the Company has historically
been unable to substantially offset inflationary increases through price
increases but believes the Company has somewhat mitigated the effect by
expanding services and increasing operating efficiencies. There can be no
assurance that the Company will be able to offset future inflationary increases
in expenses, if any, which would result in a dilutive impact on the Company's
future earnings. However, management is actively exploring a variety of
E-commerce and Internet based strategies to reduce potential future operating
costs and gain the benefit of potential efficiencies through the use of
appropriate technology.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     Not applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Consolidated Balance Sheets as of December 31, 2000 and
  December 31, 1999.........................................   25
Consolidated Statements of Operations For the Years Ended
  December 31, 2000, 1999, and 1998.........................   26
Consolidated Statements of Changes in Stockholders' Equity
  For the Years Ended December 31, 2000, 1999, and 1998.....   27
Consolidated Statements of Cash Flows For the Years Ended
  December 31, 2000, 1999, and 1998.........................   28
Notes to Consolidated Financial Statements..................   29
Report of Independent Accountants...........................   45
Schedule II Valuation of Qualifying Accounts................   50
</TABLE>

                                        24
<PAGE>   27

                                 INTEGRA, INC.

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                2000         1999
                                                              ---------    ---------
                                                              (DOLLARS IN THOUSANDS,
                                                                EXCEPT SHARE DATA)
<S>                                                           <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $    812     $    706
  Assets restricted for the settlement of unpaid claims.....     1,000        1,000
  Accounts receivable, net of allowance for doubtful
     accounts...............................................       605        1,170
  Other accounts receivable.................................       359          187
  Other current assets......................................       346          299
                                                              --------     --------
       Total current assets.................................     3,122        3,362
Property and equipment, net.................................     1,902        1,859
Intangible assets and excess cost over fair value of net
  assets acquired, net......................................     9,669       10,009
                                                              --------     --------
                                                              $ 14,693     $ 15,230
                                                              ========     ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  1,054     $    277
  Medical claims payable....................................     3,321        3,385
  Accrued expenses and other current liabilities............     3,733        6,002
                                                              --------     --------
       Total current liabilities............................     8,108        9,664
Deferred income tax liability...............................       160          296
                                                              --------     --------
          Total liabilities.................................     8,268        9,960
                                                              --------     --------
Commitments and contingencies
Stockholders' equity:
  Common stock, $.01 par value, 20,000,000 shares
     authorized; issued and outstanding 10,138,552..........       101          101
  Capital in excess of par value............................    87,513       87,508
  Accumulated deficit.......................................   (81,189)     (82,339)
                                                              --------     --------
          Total stockholders' equity........................     6,425        5,270
                                                              --------     --------
                                                              $ 14,693     $ 15,230
                                                              ========     ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        25
<PAGE>   28

                                 INTEGRA, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                     ---------------------------------------------------------
                                                          2000                 1999                 1998
                                                     ---------------      ---------------      ---------------
                                                      (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S>                                                  <C>                  <C>                  <C>
Net revenues:
  Premium revenue..................................    $   26,429           $   25,455           $   13,368
  Patient service revenue..........................                                                  19,201
                                                       ----------           ----------           ----------
     Total net revenues............................        26,429               25,455               32,569
                                                       ----------           ----------           ----------
Cost of revenues:
  Premium service costs............................        18,467               16,760                7,955
  Patient service costs............................                                                  15,593
                                                       ----------           ----------           ----------
     Total cost of revenues........................        18,467               16,760               23,548
                                                       ----------           ----------           ----------
Gross profit.......................................         7,962                8,695                9,021
Selling and administrative expenses................         6,784                6,632                6,260
Restructuring and other charges....................          (440)               1,200
Provision for doubtful accounts....................           176                                     1,221
Amortization of intangible assets and excess cost
  over fair value of net assets acquired...........           494                  488                  950
                                                       ----------           ----------           ----------
Income from operations.............................           948                  375                  590
Non-operating expenses:
  Interest expense -- related party................             9                                     1,040
  Interest income..................................           (75)
  Interest expense.................................                                 26                  363
                                                       ----------           ----------           ----------
Income (loss) before income taxes..................         1,014                  349                 (813)
Provision (benefit) for income taxes...............          (136)                  46                  122
                                                       ----------           ----------           ----------
Net income (loss)..................................    $    1,150           $      303           $     (935)
                                                       ==========           ==========           ==========
Basic and diluted net income (loss) per common
  share............................................    $     0.11           $     0.03           $    (0.09)
                                                       ==========           ==========           ==========
Weighted average shares outstanding:
  Basic............................................    10,138,552           10,138,552           10,104,999
                                                       ==========           ==========           ==========
  Diluted..........................................    10,806,675           10,532,109           10,104,999
                                                       ==========           ==========           ==========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        26
<PAGE>   29

                                 INTEGRA, INC.

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                        COMMON SHARES      CAPITAL IN
                                      ------------------   EXCESS OF    ACCUMULATED     DEFERRED
                                      NUMBER   PAR VALUE   PAR VALUE      DEFICIT     COMPENSATION   TOTAL
                                      ------   ---------   ----------   -----------   ------------   ------
                                                                 (IN THOUSANDS)
<S>                                   <C>      <C>         <C>          <C>           <C>            <C>
Balance at December 31, 1997........  10,029     $100       $86,349      $(81,707)        (29)       $4,713
Common stock issued in connection
  with acquisitions.................     110        1           279                                     280
Issue of warrants for financing
  guarantee.........................                            880                                     880
Amortization of deferred
  compensation......................                                                       24            24
Net loss............................                                         (935)                     (935)
                                      ------     ----       -------      --------         ---        ------
Balance at December 31, 1998........  10,139      101        87,508       (82,642)         (5)        4,962
Amortization of deferred
  compensation......................                                                        5             5
Net income..........................                                          303                       303
                                      ------     ----       -------      --------         ---        ------
Balance at December 31, 1999........  10,139      101        87,508       (82,339)         --         5,270
Issue of warrants for financing
  guarantee.........................                              5                                       5
Net Income..........................                                        1,150                     1,150
                                      ------     ----       -------      --------         ---        ------
Balance at December 31, 2000........  10,139     $101       $87,513      $(81,189)         --        $6,425
                                      ======     ====       =======      ========         ===        ======
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        27
<PAGE>   30

                                 INTEGRA, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                 YEARS ENDED DECEMBER 31,
                                                              ------------------------------
                                                               2000       1999        1998
                                                              -------    -------    --------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
  Net income (loss).........................................  $ 1,150    $   303    $   (935)
  Adjustments to reconcile net income (loss) to net cash
     provided by operations:
     Depreciation and amortization..........................    1,426      1,248       1,487
     Loss on abandonment of equipment.......................       31         --          --
     Provision for doubtful accounts........................      176         --       1,221
     Deferred tax provision.................................     (136)       (60)         10
     Non cash portion of asset write down, restructuring and
       other charges........................................     (440)     1,200          --
     Issue of warrant for financing guarantee...............        5         --         880
     Changes in assets and liabilities, net of effects of
       businesses acquired:
       (Increase) in assets restricted for the settlement of
          unpaid claims.....................................       --     (1,000)         --
       (Increase) decrease in accounts receivable...........      217       (323)         33
       (Increase) decrease in other current assets..........      (45)      (161)       (284)
       (Decrease) increase in accounts payable..............      777       (317)     (1,425)
       (Decrease) increase in reserve for unpaid claims.....      (64)        --          --
       Increase (decrease) in accrued expenses and other
          current liabilities...............................   (1,829)       383      (5,340)
       (Decrease) increase in other assets and other
          liabilities.......................................       --         58         (26)
                                                              -------    -------    --------
       Net cash provided by (used in) operating
          activities........................................    1,268      1,331      (4,399)
                                                              -------    -------    --------
Cash flows from investing activities:
  Payments for acquisition of businesses, net of cash
     acquired of $8 in 1998.................................       --         --        (491)
  Additional payments for businesses acquired in prior
     years..................................................     (157)      (591)     (4,527)
  Net proceeds from disposition of businesses...............       --         --      23,642
  Purchases of property and equipment.......................   (1,005)      (936)       (948)
                                                              -------    -------    --------
     Net cash (used in) provided by investing activities....   (1,162)    (1,527)     17,676
                                                              -------    -------    --------
Cash flows from financing activities:
  Proceeds from issuance of notes payable...................       --         --       3,950
  Principal payments on long-term obligations...............       --     (1,550)    (16,929)
                                                              -------    -------    --------
     Net cash (used in) financing activities................        0     (1,550)    (12,979)
                                                              -------    -------    --------
Net (decrease) increase in cash and cash equivalents........      106     (1,746)        298
Cash and cash equivalents at beginning of period............      706      2,452       2,154
                                                              -------    -------    --------
Cash and cash equivalents at end of period..................  $   812    $   706    $  2,452
                                                              =======    =======    ========
Supplemental disclosures of cash flow information:
  Interest paid.............................................  $     4    $    77    $    813
                                                              =======    =======    ========
  Income taxes paid.........................................  $     4    $   210    $    137
                                                              =======    =======    ========
</TABLE>

   The accompanying notes are an integral part of these financial statements.
                                        28
<PAGE>   31

                                 INTEGRA, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

NOTE 1 -- ORGANIZATION AND OPERATION

     Integra, Inc. ("Integra" or the "Company"), a Delaware corporation, was
formed to provide behavioral health services and commenced operations on March
15, 1991. Until 1998 the Company was called Apogee, Inc. Apogee purchased
substantially all of the assets of Integra, Inc. in 1994. The Company today
provides employee assistance programs ("EAP") and managed behavioral health
services through full and shared risk arrangements with employers, health plans
and managed care organizations. At December 31, 2000, Integra's contract service
areas were principally concentrated in Connecticut, Delaware, Maryland, New
Jersey, New York, Pennsylvania, Rhode Island, Virginia and Tennessee.

     In December 1997, the Company announced its plans to exit and divest its
outpatient provider behavioral health group practice operations operated under
the brand Apogee. The Company entered into an agreement to sell substantially
all of the assets of the outpatient provider behavioral health practice business
(the "Sale"), except for practices located in the Western region of the United
States which the Company sold or shut down. The Sale was completed effective May
18, 1998 and resulted in the divestiture by the Company of substantially all the
assets and business of the Company's outpatient behavioral health practices. As
of December 31, 1997, the outpatient practice business accounted for
approximately eighty-four percent (84%) of the assets of the Company (before the
impact of the write down of assets and the impact of the restructuring charges)
and for the year ended December 31, 1997, approximately eighty-three percent
(83%) of the Company's net revenues. As a result of the Sale, the Company is
significantly smaller in terms of revenues and assets. The Sale is further
described in Note 3 below.

     In July 1998, the Company announced it received approval from its
shareholders to change the name of the Company from Apogee, Inc. (AMEX: APG) to
Integra, Inc. (AMEX: IGR). The change reflects the Company's decision to focus
on the Integra EAP and Managed Behavioral Healthcare segment. The Company
believes the new name is well established and respected in the EAP and managed
behavioral health marketplace as a result of a long history of service contracts
in this segment under the Integra name.

NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of consolidation

     The Consolidated Financial Statements include the accounts of the Company
and all wholly owned and beneficially owned subsidiaries. All significant
intercompany accounts and transactions, including management fees, have been
eliminated.

     With regard to the Patient Service and Provider segment, because of
corporate practice of medicine laws in certain states in which the Company
operated, the Company did not own the professional corporations which operated
the professional and clinical aspects of the behavioral health provider
operations in those states. Instead, the Company had the contractual right to
designate, at its sole discretion and at any time, the licensed professional who
was the owner of the capital stock of the professional corporation at a nominal
cost ("Nominee Arrangements"). In addition, the Company entered into exclusive
long-term management services agreements ("Management Services Agreements") with
the professional corporations.

     Through the Nominee Arrangements, the Company had a significant long-term
financial interest in the affiliated practices and, therefore, according to
Emerging Issues Task Force No. 97-2 "Application of FASB Statement No. 94,
Consolidation of All Majority-Owned Subsidiaries, and APB Opinion No. 16,
Business Combinations, to Physician Practice Management Entities and Certain
Other Entities with Contractual Management Arrangement", the Company
consolidated the results of the affiliated practices with those of the Company.
Because the Company must present consolidated financial statements; net revenues
are presented in the accompanying Consolidated Statements of Operations. With
the Sale and exit of the Company's

                                        29
<PAGE>   32
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

provider operations in 1998, the Company has either transferred its rights under
the Management Services Agreements or terminated those relationships, or in
other ways discontinue its involvement in such operations.

  Reclassification

     Certain prior year amounts have been reclassified to conform to the current
year presentation.

  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, liabilities, revenues
and expenses. Actual results could differ from those estimates.

  Cash and cash equivalents

     Cash and cash equivalents include cash on hand and short-term investments
with original maturities of 90 days or less.

  Assets restricted for the settlement of unpaid claims

     At December 31, 2000 and 1999, $1,000 of interest-bearing cash was held for
the payment of claims under the terms of a managed care contract and was
classified as an asset restricted for the settlement of unpaid medical claims on
the balance sheet.

  Allowance for doubtful accounts

     The Company establishes an allowance for doubtful accounts based upon
factors surrounding the credit risk of specific payors, historical trends and
other information. Management believes the allowance for doubtful accounts is
adequate to provide for normal credit losses.

  Revenue recognition

     Premium revenue pertains to the Company's EAP and Managed Behavioral
Healthcare segment and is primarily generated by capitated managed behavioral
health and employee assistance programs. The fees are defined by contract and
are primarily calculated on a fixed per-member per-month fee. Capitated revenues
are recorded and typically received in the month for which the member is
entitled to services (see Note 14 below). Such premium revenues are adjusted on
a monthly basis based on actual membership levels.

     Patient service revenue was reported when earned at the time of service at
the estimated amounts to be realized through payments from patients, third party
payors and others for services rendered. Third party reimbursement was initially
billed at "usual, customary and reasonable" market rates. When recorded,
aggregated billings were adjusted to reflect the estimated amounts realizable
from third party payors based on the Company's historical experience and
contractual rates established with the payors. Patient service revenue
represented billings of the Company's Patient Service and Provider segment. With
the discontinuance of these operations during 1998, no significant future
billings are anticipated.

  Property and equipment

     Property and equipment are stated at cost less accumulated depreciation and
amortization. Additions and betterments are capitalized and maintenance and
repairs are charged to current operations. Internal-use software is capitalized
in accordance with AICPA Statement of Position 98-1. The cost of assets retired
or otherwise disposed of and the related accumulated depreciation and
amortization are removed from the

                                        30
<PAGE>   33
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accounts and the gain or loss on such dispositions is reflected in current
operations. Depreciation is provided using the straight-line method. Estimated
useful lives of the assets are:

<TABLE>
<S>                                               <C>
Furniture and fixtures..........................  5 to 7 years
Office equipment................................  3 to 5 years
Computer hardware and software..................  3 to 5 years
</TABLE>

  Long lived and intangible assets

     Identifiable assets and liabilities acquired in connection with business
combinations accounted for under the purchase method are recorded at their
respective fair values. Deferred taxes have been recorded to the extent of
differences between the fair value and the tax basis of the assets acquired and
liabilities assumed. The excess of the purchase price over the fair value of
tangible net assets acquired is amortized on a straight-line basis over the
estimated useful life of the intangible assets. Allocation of intangible assets
between identifiable intangibles and goodwill was performed by Company
management with the assistance of independent appraisers. The Company amortizes
the excess of cost over fair value of assets acquired over 25 years.

     Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121"), which
establishes accounting standards for the impairment of long-lived assets,
certain identified intangible assets and goodwill related to those assets to be
held and used and for long-lived assets and certain intangible assets to be
disposed of. In accordance with SFAS 121, the Company reviews the realizability
of long-lived assets, certain intangible assets and goodwill whenever events or
circumstances occur which indicate recorded cost may not be recoverable.

     If the expected future cash flows (undiscounted) are less than the carrying
amount of such assets, the Company recognizes an impairment loss for the
difference between the carrying amount of the assets and their estimated fair
value. When appropriate, in estimating future cash flows for determining whether
an asset is impaired, and in measuring assets that are impaired, assets are
grouped by geographic region.

  Financial instruments

     The carrying value of cash and cash equivalents, accounts receivable and
payable and accrued liabilities approximates fair value due to the short-term
maturities of these assets and liabilities.

  Medical Claims Payable

     This liability relates to amounts owed for healthcare services authorized
or incurred and not yet paid by the Company. Medical claims payable are
estimated based upon authorized healthcare services, past claim payment
experience for member groups, patient census data and other factors. While the
Company believes the estimate of this liability is adequate, actual results
could differ from such estimates. The Company utilizes an actuarial consultant
to review and evaluate the adequacy of certain of these reserves.

  Income taxes

     The Company accounts for certain items of income and expense in different
time periods for financial reporting and income tax purposes. Provisions for
deferred income taxes are made in recognition of such temporary differences,
where applicable. A valuation allowance is established against deferred tax
assets unless the Company believes it more likely than not that the benefit will
be realized.

                                        31
<PAGE>   34
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Earnings per share

     Basic earnings per share includes no dilution and is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share reflects the
dilutive effect of all stock options and warrants, shares contingently payable
in connection with certain acquisitions and convertible debentures. The
difference between the basic average number of shares outstanding and the
diluted average number of shares outstanding at December 31, 2000 is due to the
treasury stock method calculation of the impact of unexercised stock options
granted under the Company's stock option plan and warrants issued in 1998 in
connection with a financing guarantee made by certain investment partnerships
which were significant stockholders of the Company which is discussed further in
Note 19. The computation of dilutive earnings per share excludes approximately
348,000, 261,000, and 678,000 for 2000, 1999, and 1998, respectively, of common
stock equivalents because their inclusion would have been anti-dilutive in the
periods presented.

  Recent Accounting Pronouncements

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement for financial position and measure those
instruments at fair value. SFAS No. 137, issued by the FASB in July 1999,
establishes a new effective date for SFAS No. 133. This statement, as amended by
SFAS No. 137, is effective for all fiscal quarters of fiscal years beginning
after June 15, 2000 and is therefore effective for the Company beginning with
its fiscal quarter ending March 31, 2001. In June 2000, FASB issued SFAS No.
138, "Accounting for Certain Derivative Instruments and Hedging Activities -- an
amendment of FASB Statement No. 133," SFAS No. 138 addresses a limited number of
issues causing implementation difficulties for SFAS No. 133. SFAS No. 138 is
required to be adopted concurrently with SFAS No. 133 and is therefore effective
for the Company beginning with its fiscal quarter ending March 31, 2001.
Management does not believe that these pronouncements will have a material
effect on the Company's consolidated financial statements.

     In March 2000, the FASB issued interpretation No. 44, or Fin 44 "Accounting
for Certain Transactions Involving Stock Compensation," which is an
interpretation of Accounting Principles Board Opinion No. 25, or APB Opinion 25.
This interpretation, which clarifies the definition of an employee
noncompensatory plan, accounting consequences of various modifications to
previously fixed stock options or awards and the exchange of stock compensation
awards in a business combination. The adoption of FIN 44 did not have an impact
on the Company's consolidated financial statements.

NOTE 3 -- SALE OF OUTPATIENT BUSINESS TO PSYCHPARTNERS, LLC

     On December 26, 1997, the Company entered into an agreement of Purchase and
Sale (the "Purchase Agreement") with PsychPartners MidAtlantic, Inc.,
PsychPartners, Inc., and PsychPartners, LLC (collectively "PsychPartners" or the
"Purchasers"). Pursuant to the Purchase Agreement, the Company sold to the
Purchasers substantially all of the assets and business of the Company's
outpatient behavioral health provider business, which consisted of (i) all of
the capital stock of one of the subsidiaries of the Company (the "Subsidiary
Stock") operating two outpatient behavioral health practices and (ii)
substantially all of the assets (the "Assets") relating to 19 of the Company's
outpatient behavioral health practices (the 21 practices are collectively, the
"Practices").

     On May 14, 1998, at a Special Meeting of the Shareholders of the Company,
the shareholders approved and adopted the terms of the Purchase Agreement with
PsychPartners. Effective on May 18, 1998, the Company completed the Sale. The
purchase price paid at closing primarily consisted of: (a) $26,400 in cash, and
(b) the assumption of certain liabilities.
                                        32
<PAGE>   35
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In January 2000, PsychPartners filed for protection under Chapter 11 of the
Federal Bankruptcy Laws. Based on discussions with PsychPartners personnel, as
well as developments in the bankruptcy court, the Company understands that
PsychPartners intends to discontinue all future operations and liquidate all
existing assets to satisfy outstanding obligations. Under the terms of the
Purchase Agreement, PsychPartners assumed responsibility for all facility leases
associated with the practices sold. While the Company obtained assignment
letters for many of these leases, due to the nature of both real estate and
bankruptcy laws, it is possible that the Company will be responsible for a
portion of these remaining lease obligations. The Company engaged special
counsel to evaluate its exposure in this matter on an ongoing basis. The Company
initially estimated that there were approximately 35 open leases with
approximately $2,500 in remaining payments under the lease terms, not including
certain fees and expenses, for which the Company may be responsible. The Company
intends to aggressively pursue resolution of this matter in terms most favorable
to the Company. The Company recorded a charge of $1,700 at December 31, 1999,
for this potential exposure. During 2000 the Company paid $228 relating to both
lease obligations and legal costs in connection with this matter. In December
2000, in connection with the settlement of ten of these leases, the Company
recognized $440 in income to the extent that the amount previously reserved
exceeded the required settlement payments.

     In addition to the above lease exposure, PsychPartners defaulted on certain
deferred contingent purchase price obligations which were part of the original
acquisition agreements for practices previously purchased by Integra. These
liabilities were also assumed by PsychPartners under the terms of the Purchase
Agreement. The Company believes it has no remaining responsibility for these
obligations, however, the individuals associated with these practices may choose
to assert a claim against the Company. At December 31, 2000, the Company has not
established a reserve for these amounts which it estimates may aggregate to
$1,000. The Company intends to vigorously contest any claims related to this
matter should they arise.

NOTE 4 -- LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 2000 the Company had a working capital deficit of $4,988.
The deficit is primarily attributable to accrued liabilities of $2,897 that
pertain to the exit of the outpatient provider behavioral group practice
business and reserves established for long-term care and other provider billing
matters. Although these amounts are classified as current due to their nature,
the Company does not expect that all of these amounts will require payment in
the next year. The remainder of the Company's accounts payable and accrued
liabilities, $1,890, is operating in nature.

     In order to meet cash flow demands through December 31, 2000, the Company
obtained a commitment from a significant stockholder to advance up to $2,000
through March 1, 2001 (refer to Note 19 of the Notes to the Company's
Consolidated Financial Statements for discussion of the terms of the
commitment). There were no amounts outstanding as of December 31, 2000 with
respect to this commitment.

     In December 2000, the Company entered into a credit facility with a local
bank that allows for up to $500 (subsequently increased to $650 in March 2001
with an extended maturity date of May 31, 2002) in borrowings subject to a
formula based upon eligible accounts receivable.

     In order to meet potential cash flow demands through December 31, 2001, the
Company, in March 2001, obtained a commitment from this same stockholder to
advance up to $1,000 through March 2002.

     The Company believes that the cash flow generated by the Company's
operations, together with its existing cash and credit available from its bank
and significant stockholder will be sufficient to meet the Company's cash
requirements in 2001.

     As further discussed in Note 12 of the Notes to the Company's Consolidated
Financial Statements of Notes to the Company's Consolidated Financial
Statements, a contract with a customer representing approximately 52% of
revenues expires on December 31, 2001.

                                        33
<PAGE>   36
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5 -- ACCOUNTS RECEIVABLE

     Accounts receivable consist of the following:

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                              --------------
                                                              2000     1999
                                                              ----    ------
<S>                                                           <C>     <C>
Premium revenue receivables.................................  $826    $1,241
Less: Allowance for doubtful accounts.......................   221        71
                                                              ----    ------
                                                              $605    $1,170
                                                              ====    ======
</TABLE>

NOTE 6 -- BUSINESS ACQUISITIONS

     During 1998, the Company acquired one business. The acquisition was
accounted for using the purchase method of accounting. The results of operations
of the acquired practice is included in the Consolidated Financial Statements
from the date of acquisition.

     In connection with certain acquisitions, the Company entered into
contractual arrangements whereby additional shares of the Company's common stock
and cash may be issued to former owners of acquired companies upon attainment of
specified financial criteria. The number of shares of common stock to be issued
cannot be determined until the earn-out periods expire and the attainment of
criteria is established. If such criteria are attained, but not exceeded, the
Company will be obligated to make cash payments. Under the terms of the Purchase
and Sale Agreement with PsychPartners, the Company's obligation for contingent
consideration for periods subsequent to the closing date for the practices
acquired was assumed by PsychPartners. (See Note 3.)

     The Company paid $150, $591, and $4,527 in cash and issued 0, 0, and
109,227 shares of common stock in 2000, 1999, and 1998, respectively, in
connection with businesses acquired in prior years. This consideration was
accounted for as additional goodwill.

NOTE 7 -- PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
                                                               DECEMBER 31,
                                                             ----------------
                                                              2000      1999
                                                             ------    ------
<S>                                                          <C>       <C>
Furniture, fixtures and leasehold improvements.............  $  427    $  380
Office equipment...........................................     237       231
Computer hardware..........................................   1,255     1,080
Computer software..........................................   2,436     1,761
                                                             ------    ------
                                                              4,355     3,452
Less: Accumulated depreciation.............................   2,453     1,593
                                                             ------    ------
                                                             $1,902    $1,859
                                                             ======    ======
</TABLE>

     Computer Software includes $358 of costs capitalized in 2000 pursuant to
SOP 98-1. There were no costs capitalized in 1999.

     Depreciation expense was $864, $760, and $537 for 2000, 1999, and 1998,
respectively.

                                        34
<PAGE>   37
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8 -- INTANGIBLE ASSETS

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                           ------------------
                                                            2000       1999
                                                           -------    -------
<S>                                                        <C>        <C>
Excess cost over fair value of net assets acquired.......  $11,814    $11,661
Covenants not to compete.................................       39         39
                                                           -------    -------
                                                            11,853    $11,700
Less: Accumulated amortization...........................    2,184      1,691
                                                           -------    -------
                                                           $ 9,669    $10,009
                                                           =======    =======
</TABLE>

NOTE 9 -- BORROWINGS

     In October 1998, the Company entered into an agreement with PNC Bank,
National Association ("PNC Bank") to establish a revolving credit facility for
up to a maximum of $10,000. Borrowings available under this facility were
primarily based on the Company's earnings before interest, income taxes,
depreciation and amortization, subject to various financial and non-financial
covenants; and secured by substantially all of the assets of the Company.

     In December 2000, the Company entered into a credit facility with a local
bank that allows for up to $500 (subsequently increased to $650 in March 2001)
in borrowings based upon eligible accounts receivable. Interest at prime plus
1 1/2% is due on a monthly basis. There were no borrowings outstanding as of
December 31, 2000. The loan is collateralized by substantially all of the assets
of the Company and expires on May 31, 2002. The credit facility requires the
Company to comply with certain financial covenants including achieving minimum
levels of net income and net worth. The Company is in compliance with these
covenants at December 31, 2000.

     See Note 19, Related Party Transactions, for a discussion of borrowings
associated with a significant shareholder.

NOTE 10 -- INCOME TAXES

     The components of the provision for income tax expense for 2000, 1999, and
1998 are as follows:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                              ------------------------
                                                               2000     1999     1998
                                                              ------    -----    -----
<S>                                                           <C>       <C>      <C>
Current:
  Federal...................................................     --       --       --
  State.....................................................     --      106      112
                                                              -----     ----     ----
                                                                  0      106      112
                                                              -----     ----     ----
Deferred:
  Federal...................................................   (150)      --       --
  State.....................................................     14      (60)      10
                                                              -----     ----     ----
                                                               (136)     (60)      10
                                                              -----     ----     ----
                                                              $(136)    $ 46     $122
                                                              =====     ====     ====
</TABLE>

                                        35
<PAGE>   38
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Deferred tax assets (liabilities) comprise the following:

<TABLE>
<CAPTION>
                                                             DECEMBER 31,
                                                         --------------------
                                                           2000        1999
                                                         --------    --------
<S>                                                      <C>         <C>
Net operating loss carryforwards.......................    15,157    $ 15,684
Accruals and reserves not currently deductible for tax
  purposes.............................................     1,306       2,207
                                                         --------    --------
Gross deferred tax assets..............................    16,463      17,891
Valuation allowance....................................   (15,663)    (16,826)
                                                         --------    --------
Total deferred tax assets..............................       800       1,065
Temporary differences pertaining to amortization and
  depreciation.........................................      (960)     (1,361)
                                                         --------    --------
Net deferred tax liabilities...........................  $   (160)   $   (296)
                                                         ========    ========
</TABLE>

     The reconciliation of the federal statutory tax rate to the effective tax
rate is as follows:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                              -------------------------
                                                              2000      1999      1998
                                                              -----     -----     -----
<S>                                                           <C>       <C>       <C>
Federal statutory tax rate..................................    34%       34%      (34)%
State income taxes, less related federal tax benefit........     1        13        10
Non-deductible amortization of excess cost over fair value
  of net assets acquired....................................     1         1         9
Business expense disallowance...............................     1         1         1
Adjustment to valuation allowance...........................   (50)      (36)       29
                                                               ---       ---       ---
                                                               (13)%      13%       15%
                                                               ===       ===       ===
</TABLE>

     At December 31, 2000, the Company had net operating loss carryforwards for
federal income tax purposes of approximately $38,000. Their use is limited to
future taxable earnings of the Company and, as specified in the Internal Revenue
Code, use of certain of the net operating loss carryforwards is limited as they
were acquired by the Company in a purchase of the stock of other companies. The
carryforwards expire in varying amounts through 2020. A valuation reserve has
been established against the potential future benefit of the net operating loss
carryforwards.

NOTE 11 -- RESTRUCTURING AND OTHER CHARGES

<TABLE>
<CAPTION>
                                                               YEARS ENDED
                                                              DECEMBER 31,
                                                             ---------------
                                                             2000      1999
                                                             -----    ------
<S>                                                          <C>      <C>
Restructuring charges......................................     --    $1,700
Long-term care and provider billing reserves...............     --       200
Change in estimate (restructuring of $440 and $266 in 2000
  and 1999 respectively, provider billing of $434 in
  1999)....................................................   (440)     (700)
                                                             -----    ------
                                                             $(440)   $1,200
                                                             =====    ======
</TABLE>

  Restructuring charges

     In January 2000, PsychPartners filed for protection under Chapter 11 of the
Federal Bankruptcy Laws. Based on discussions with PsychPartners personnel, as
well as developments in the bankruptcy court, the Company understands that
PsychPartners intends to discontinue all future operations and liquidate all
existing assets to satisfy outstanding obligations. Under the terms of the
Purchase Agreement, PsychPartners assumed

                                        36
<PAGE>   39
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

responsibility for all facility leases associated with the practices sold. While
the Company obtained assignment letters for many of these leases, due to the
nature of both real estate and bankruptcy laws, it is possible that the Company
will be responsible for a portion of these remaining lease obligations. The
Company has engaged special counsel and is evaluating its exposure in this
matter on an ongoing basis. The Company initially estimated that there were
approximately 35 open leases with approximately $2,500 in remaining payments
under the lease terms, not including certain fees and expenses for which the
Company may be responsible. The Company intends to aggressively pursue
resolution of this matter in terms most favorable to the Company. The Company
recorded a charge of $1,700 at December 31, 1999, for this potential exposure.
During 2000 the Company paid $228 relating to both lease obligations and legal
costs in connection with this matter. In connection with the settlement of ten
of these leases during 2000, the Company recognized $440 in income to the extent
that the amounts previously reserved exceeded the required settlement payments.

     In addition to the above lease exposure, PsychPartners defaulted on certain
deferred contingent purchase price obligations which were part of the original
acquisition agreements for practices previously purchased by Integra. These
liabilities were also assumed by PsychPartners under the terms of the Purchase
Agreement. The Company believes it has no remaining responsibility for these
obligations, however, the individuals associated with these practices may choose
to assert a claim against the Company. At December 31, 1999, the Company has not
established a reserve for these amounts which it estimates may aggregate to
$1,000. The Company intends to vigorously contest any claims related to this
matter.

     In December 1997, the Company recorded a provision for restructuring of
$14,200 pertaining to the Company's decision to divest the outpatient provider
group practices operations that were not sold to PsychPartners, and to
reorganize corporate office functions to reflect the exit from the outpatient
business. As of December 31, 2000, $526 of the initial restructuring reserve of
$14,200 remained and is principally related to ongoing potential obligations of
the Company with respect to various contract termination costs.

     As part of its ongoing evaluation of these restructuring reserves, at June
30, 1999, the Company determined, based on its assessment of all remaining open
matters at that time, that the Company was over-accrued for these matters by
$266. This change in estimate was offset by additional restructuring reserves of
$1,700 recorded in the fourth quarter 1999 relating to the lease exposure as a
result of PsychPartners' Chapter 11 bankruptcy filing as discussed above.

     The following summarizes the Company's restructuring activity:

<TABLE>
<CAPTION>
                           RESTRUCTURE                                         RESTRUCTURE                           RESTRUCTURE
                            BALANCE AT       1999       CHANGE IN   AMOUNTS     BALANCE AT    CHANGE IN   AMOUNTS     BALANCE AT
                           DECEMBER 31,   RESTRUCTURE   ESTIMATE    UTILIZED   DECEMBER 31,   ESTIMATE    UTILIZED   DECEMBER 31,
                               1998        PROVISION      1999      IN 1999        1999         2000      IN 2000        2000
                           ------------   -----------   ---------   --------   ------------   ---------   --------   ------------
<S>                        <C>            <C>           <C>         <C>        <C>            <C>         <C>        <C>
Contract termination
  costs..................     $1,344        $1,700        $(266)     $(494)       $2,284        $(440)     $(286)       $1,558
Employee severance
  costs..................         77            --           --        (77)           --           --         --            --
                              ------        ------        -----      -----        ------        -----      -----        ------
                              $1,421        $1,700        $(266)     $(571)       $2,284        $(440)     $(286)       $1,558
                              ======        ======        =====      =====        ======        =====      =====        ======
</TABLE>

  Long-term care and provider billing reserves

     During 1996, the Company established a $1,300 reserve in connection with
the notification by the Office of the Inspector General of the Department of
Health and Human Services ("OIG") and the Department of Justice ("DOJ") that
certain of the Company's Medicare Part B and related co-insurance billings
previously submitted for services to Medicare patients in long-term care
facilities in Florida were being reviewed. The Company reached a tentative
agreement to settle this civil matter for $3,000 in December 1997. Accordingly,
the Company recorded an additional reserve of $1,700 at December 31, 1997. The
Company also reserved $1,400 against the suspended accounts receivable with the
Florida Intermediary. In October 1998, the Company executed a final settlement
agreement with the OIG and DOJ, which resolved all of the claims

                                        37
<PAGE>   40
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

against the Company relating to this matter. The terms of this settlement
included a repayment of approximately $3,000 which the Company made during 1998.
Additionally, during 1998, the Company entered into a Corporate Integrity
Agreement (the "Agreement") with the OIG whereas the Company agreed to undertake
certain compliance obligations. The Company, as required under the terms of the
Agreement and with the assistance of outside auditors, filed its first annual
report with the OIG in December 1999. In April and May 2000 the Company
exchanged information with the OIG with respect to its 1999 Filing. The OIG
offered several suggestions for improvement of the Company's Corporate
Compliance Program that have been effected. In addition, the OIG requested
specific procedures to be implemented in connection with the Company's second
Annual Report which was timely filed in November 2000. As of March 27, 2001, no
response has been received from the OIG with respect to this report. The Company
believes that no reserve for potential liability is required at December 31,
2000.

     In March 1998, the Company received notification that the Medicare
Intermediary in California completed a post payment medical review of billings
previously submitted and paid between 1990 and 1994. Based on the results of
their review, the Intermediary has requested a refund of approximately $1,200.
Services were denied primarily on the basis of medical necessity and incomplete
documentation. The Company fully reserved for the above amount in 1997 and the
reserve remains outstanding at December 31, 2000. Hearings have taken place in
April, September and November 2000 before an Administrative Law Judge and a
decision is pending.

     In April 1998, the Company received notice that the Office of the Attorney
General of New York State ("the State") was conducting an audit of the New York
Medicaid billings of one of the outpatient provider operations with which it had
an Administrative Services Agreement. The State was investigating whether the
Company had any liability arising from the operation of, and its relationship
with that provider. In October 1998, the Company terminated its agreements with
that provider. In May 1999, the Company reached a settlement agreement with the
State which resolve all claims against the Company relating to this matter.
Terms of the settlement included a total payment of $382 plus $18 of interest.
These amounts were fully accrued at December 31, 1999 and were paid in full
during 2000.

     During the first half of 1999, the Company received notification of
potential Medicaid program billing issues in Nevada in connection with services
performed at the Company's former Nevada outpatient group practice subsidiaries
which were sold by the Company at the end of 1997. Upon further review of the
Company's former Nevada Medicaid billings, the Company determined that certain
Nevada Medicaid billings of these former outpatient practices were not in
accordance with Medicaid program regulations. In accordance with the Company's
full disclosure policy, the Company disclosed this matter to the Nevada Medicaid
program. In December 1999, the Company reached a settlement agreement with the
State of Nevada which resolved all claims against the Company relating to this
matter. Terms of the settlement included a total payment of $455 plus interest
at a simple rate of 7%. The Company paid the first installment payment of $228
in December 1999. The remaining installments were paid in June 2000 and January
2001 which had been previously accrued.

     As part of its ongoing evaluation of the above mentioned reserves, at June
30, 1999, the Company determined, based on its assessment of all remaining
matters at that time, that the Company was over accrued for these matters by
$434. This change in estimate is partially offset by additional billing reserves
of $200 recorded in the fourth quarter 1999 relating to the settlement of the
Nevada matter discussed above.

     Although management believes that established reserves for the above
matters are sufficient, it is possible that the final resolution of these
matters may exceed the established reserves by an amount which could be material
to the Company's results of operations. Due to the nature of these matters the
Company cannot predict when these matters will be resolved. The Company does not
believe the ultimate outcome of these matters will have a material adverse
effect on the Company's overall financial condition, liquidity or operations.
                                        38
<PAGE>   41
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 12 -- MAJOR CUSTOMERS

     Certain of the Company's at risk contracts account for a significant
percentage of sales volume, as follows:

<TABLE>
<CAPTION>
                                                          2000    1999    1998
                                                          ----    ----    ----
<S>                                                       <C>     <C>     <C>
HealthNow New York -- Blue Cross/Blue Shield of Western
  New York..............................................   52%     50%     --
Fidelis Care of New York................................   11%     10%     10%
</TABLE>

     The Company's contract with HealthNow expires on December 31, 2001, while
the contract with Fidelis Care expires on July 31, 2001.

NOTE 13 -- SEGMENT REPORTING

     Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an Enterprise and Related Information," ("SFAS 131"), was adopted by
the Company in 1998. This standard requires disclosure of segment information on
the same basis used internally for evaluating segment performance and deciding
how to allocate resources to segments. The Company's operating segments are
organized by product line. During 2000 and 1999, the Company had only one
operating segment, EAP and Managed Behavioral Healthcare, for purposes of SFAS
No. 131. During 1998, the Company had two segments: EAP and Managed Behavioral
Healthcare and Patient Service and Provider. Accordingly, segment information
below is presented only for those periods in which the Company operated more
than one segment.

     As further explained in Notes 1 and 3 above, the Company has exited all
business lines except for EAP and Managed Behavioral Healthcare. The strategic
decision to exit the Patient Service and Provider segment was made by the
Company's Board of Directors in December 1997 and was substantially completed
during 1998. Segment information for the Patient Service and Provider segment in
1998 reflects the results of these operations essentially through the date of
the Sale to PsychPartners in May 1998. The Company had no remaining Patient
Service and Provider businesses in operation during 2000 and 1999 and management
expects to have none on a going forward basis.

     The Company's continuing EAP and Managed Behavioral Healthcare segment
provides managed behavioral healthcare services through full and shared risk
arrangements with employers, health plans and managed care organizations. The
Company's revenues are primarily generated through capitated contracts. See Note
12 for additional explanation of these contracts. Revenues are generated
entirely in the United States. Approximately 79% of this segment's revenues were
generated by seven (7) customers. The Company believes this concentration of
revenue over a small customer base is fairly consistent with industry trends
though management expects to continue diversification of its customer base.

     In general, the accounting policies of the segments are the same as those
described in Note 2, Summary of Significant Accounting Policies. The Company
evaluates the performance of its segments based on profit or loss from
operations before interest and income tax expense. The Company does not allocate
corporate expenses, interest income/expense and non-recurring charges such as
restructuring and asset writedowns for management reporting purposes.
Unallocated assets consist principally of cash and cash equivalents, other
account receivables and other assets.

                                        39
<PAGE>   42
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
                                                          EAP AND
                                                          MANAGED       PATIENT
                                                         BEHAVIORAL   SERVICE AND
                         1998                            HEALTHCARE    PROVIDER     CORPORATE    TOTAL
                         ----                            ----------   -----------   ---------   -------
<S>                                                      <C>          <C>           <C>         <C>
Net revenues...........................................   $13,368       $19,201      $    --    $32,569
Depreciation and amortization..........................       871           616           --      1,487
Income (loss) from operations..........................     2,632           400       (2,442)       590
Assets.................................................    12,594                      3,441     16,035
</TABLE>

NOTE 14 -- COMMITMENTS AND CONTINGENCIES

  Operating leases

     The Company leases office facilities as well as equipment under
noncancellable operating leases which require future minimum annual rentals as
follows:

<TABLE>
<S>                                                           <C>
2001........................................................   250
2002........................................................    59
2003........................................................    59
2004........................................................    19
2005........................................................     7
</TABLE>

     Certain of the leases contain renewal options and escalation clauses which
require payments of additional rent to the extent of increases in related
operating costs. Rent expense was $520, $494, and $1,540 for the years ended
December 31, 2000, 1999, and 1998, respectively. The Company is currently
negotiating a multi-year extension of its office facility lease which expires on
April 30, 2001.

     The other lease obligations pertain to clinics and locations shut down and
exited for which the Company is currently in the process of negotiating
subleases or buyouts for these locations. In connection with the Sale to
PsychPartners, lease obligations associated with the clinics sold were assumed
by PsychPartners. The Company obtained assignments from the landlords for most
of these locations. In certain cases, Integra is still contingently liable in
the event of default by PsychPartners. Under the Agreement of Purchase and Sale,
Integra is indemnified by PsychPartners for these obligations.

     PsychPartners filed for Chapter 11 bankruptcy in January 2000. As further
discussed in Note 3, the Company may have contingent exposure under these leases
and has recorded a liability of $1,028 at December 31, 2000.

  Capitated contracts

     The Company has a portfolio of agreements with managed care organizations
and corporations to provide EAP and managed behavioral healthcare programs.
Revenues are primarily generated by capitated managed behavioral health and
employee assistance programs. The fees are defined by contract and are primarily
calculated on a fixed per member/employee per month fee. Revenues under these
contracts are recorded in the month for which the member/employee is entitled to
services. Generally, these membership contracts are on a one to three years
basis and are subject to various cancellation provisions which are typical to
industry practice. Integra's EAP and Managed Behavioral Healthcare segment had
approximately 1,150,000, 1,200,000, and 800,000 covered lives at December 31,
2000, 1999, and 1998, respectively. Premium revenues in the Company's EAP and
Managed Behavioral Healthcare segment were approximately 100% of the Company's
total net revenues in 2000 and 1999, and 41% in 1998.

     The Company estimates the cost of providing services under these
agreements, including a reserve for services incurred, but not reported, based
upon authorized services, past claim payment experience for

                                        40
<PAGE>   43
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

member groups patient census data and other factors. The Company typically does
not subcapitate the risk of providing services under these contracts, but
arranges discounted fee-for-service rates with independent inpatient and
outpatient behavioral health providers, which the Company manages.

     Under capitated contracts, the Company is responsible for ensuring
appropriate access to care and bears the risk for utilization levels and pricing
of the cost of services performed under these contracts. The Company believes
the future revenues under these contracts will exceed the costs of services it
will be required to provide under the terms of the contracts. An underestimation
in the utilization or price of services for these contracts could result in
material losses to the Company. Historically, Integra has managed these
capitated contracts profitably. The Company maintains no re-insurance against
the risk of loss under these contracts.

     Effective January 1, 1999, the Company implemented coverage of a full-risk
capitated contract with a health plan currently covering over 420,000 members.
Profitability under this contract will depend upon the Company's ability to
manage the utilization of services within the premiums received. An
underestimation in the expected utilization of services for this contract could
result in a material loss to the Company. The Company utilizes an actuarial
consultant to review and evaluate the adequacy of certain of its reserves
pertaining to unpaid claims.

  Corporate Integrity Agreement

     During 1998, the company entered into a Corporate Integrity Agreement (the
"Agreement") with the Office of Inspector General of the United States
Department of Health and Human Services ("OIG") whereby the Company agreed to
undertake certain compliance obligations. The Company, as required under the
terms of the Agreement and with the assistance of outside auditors, filed its
first annual report with the OIG in December 1999. In April and May 2000 the
Company exchanged information with the OIG with respect to its 1999 Filing. The
OIG offered several suggestions for improvement of the Company's Corporate
Compliance Program that have been effected. In addition, the OIG requested
specific procedures to be implemented in connection with the Company's second
Annual Report which was timely filed in November 2000. As of March 27, 2001, no
response has been received from the OIG with respect to this report. The Company
believes that no reserve for potential liability is required at December 31,
2000.

  Legal Proceedings

     The Company is subject to legal proceedings and claims that have arisen in
the ordinary course of its business and have not been finally adjudicated, which
include malpractice claims covered under the Company's insurance policy. In the
opinion of management, the outcome of these actions will not have a material
effect on the financial position or results of operations of the Company.

NOTE 15 -- OTHER CURRENT ASSETS

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                              ------------
                                                              2000    1999
                                                              ----    ----
<S>                                                           <C>     <C>
Prepaid insurance...........................................  $142    $101
Prepaid medical claims......................................     0     255
Other.......................................................   204     196
                                                              ----    ----
                                                              $346    $552
                                                              ====    ====
</TABLE>

                                        41
<PAGE>   44
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 16 -- ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                              ----------------
                                                               2000      1999
                                                              ------    ------
<S>                                                           <C>       <C>
Salaries and vacation.......................................  $  389    $  451
Restructuring costs.........................................   1,558     2,284
Long-term care and provider billing reserves................   1,339     1,935
Other.......................................................     447     1,332
                                                              ------    ------
                                                              $3,733    $6,002
                                                              ======    ======
</TABLE>

NOTE 17 -- MANDATORILY REDEEMABLE PREFERRED STOCK

     The Company's Board of Directors may, without further action of the
Company's stockholders, direct the issuance of shares of redeemable preferred
stock. Satisfaction of dividend preferences on preferred stock would reduce the
amount of funds available for the payment of dividends on the Company's common
stock. Holders of preferred stock would be entitled to preference payments in
the event of any liquidation, dissolution or winding-up of the Company. At
December 31, 2000, 10,000 of such shares were authorized and none were issued.

NOTE 18 -- BENEFIT PLANS

  Stock Option Plan

     Effective April 19, 1994, the Company's Board of Directors ratified and
approved the establishment of an employee stock option plan (the "1994 Plan")
under which options to purchase up to 400,000 shares of the Company's common
stock may be granted to employees, officers and directors. Each option granted
under the 1994 Plan must be exercised within a fixed period which may not exceed
10 years and may not be for a price which is less than the fair market value on
the date of grant. Options granted vest over four years and, at December 31,
2000, the weighted average remaining contractual life of the outstanding options
was four years.

     The following summarizes the activity of the 1994 stock option plan:

<TABLE>
<CAPTION>
                                                     YEARS ENDED DECEMBER 31,
                                           --------------------------------------------
                                               2000            1999            1998
                                           ------------    ------------    ------------
<S>                                        <C>             <C>             <C>
Options:
  Outstanding at beginning of year.......       280,500         278,000         151,950
  Granted................................            --          20,000         217,500
  Exercised..............................            --              --              --
  Canceled...............................        55,000          17,500          91,450
                                           ------------    ------------    ------------
  Outstanding at end of year.............       225,000         280,500         278,000
                                           ============    ============    ============
Option Price Per Share Ranges:
  Outstanding at beginning of year.......  $1.25-$12.25    $1.25-$12.25    $3.25-$14.75
  Granted................................            --           $1.25    $1.88-$ 2.25
  Exercised..............................            --              --              --
  Outstanding at end of year.............         $2.25    $1.25-$12.25    $1.88-$12.25
  Options exercisable at end of year.....        56,250          67,875          78,600
  Exercisable option price ranges........         $2.25    $1.25-$12.25    $1.88-$12.25
  Options available for grant at end of
     year under the 1994 Stock Option
     Plan................................       175,000         119,500         122,000
                                           ============    ============    ============
</TABLE>

                                        42
<PAGE>   45
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     During 1999, the Company's Board of Directors ratified and approved the
establishment of an employee stock option plan (the "1999 Plan") under which
options to purchase up to 1,000,000 shares of the Company's common stock may be
granted to employees, officers, consultants and directors. The plan was approved
by shareholders in the June 2000 shareholders meeting. Each option granted under
the 1999 Plan must be exercised within a fixed period which may not exceed 10
years and may not be for a price which is less than the fair market value on the
date of grant. Options granted vest over various periods, as determined by the
Compensation Committee of the Company's Board of Directors. At December 31, 1999
no options under the 1999 Plan were granted. During 2000 the following plan
activity took place:

<TABLE>
<CAPTION>
                                                                2000
                                                              --------
<S>                                                           <C>
Options:
  Outstanding at beginning of year..........................         0
  Granted...................................................   824,000
  Exercised.................................................        --
  Canceled..................................................    25,000
                                                              --------
  Outstanding at end of year................................   794,000
                                                              ========
Option Price Per Share Ranges:
  Outstanding at beginning of year..........................        --
  Granted...................................................  $   .625
  Exercised.................................................        --
  Outstanding at end of year................................  $   .625
  Options exercisable at end of year........................   323,500
  Exercisable option price ranges...........................  $   .625
  Options available for grant at end of year under the 1999
     Stock Option Plan......................................   206,000
                                                              ========
</TABLE>

     The Company has adopted the disclosure-only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"), but applies Accounting Principles Board Opinion No.
25 and related interpretations in accounting for the Plan. The table below sets
forth the pro forma information as if the Company had adopted the compensation
recognition provisions of SFAS 123:

<TABLE>
<CAPTION>
                                                               YEARS ENDED DECEMBER 31,
                                                              --------------------------
                                                               2000      1999      1998
                                                              ------    ------    ------
<S>                                                           <C>       <C>       <C>
Increase (decrease) to:
  Net income (loss).........................................  $(120)    $ (46)    $  59
  Net income (loss) per share...............................  $(.01)    $(.00)    $(.01)
Assumptions:
  Expected life (years).....................................    4.0       4.0       4.0
  Risk-free interest rate...................................    6.1%      5.1%      4.7%
  Volatility................................................   69.1%     58.2%     34.0%
  Dividend yield............................................    N/A       N/A       N/A
</TABLE>

     The weighted average fair value of the stock options, calculated using the
Black-Scholes option pricing model, granted in 2000, 1999, and 1998 were $0.36,
$0.62, and $0.75 respectively.

                                        43
<PAGE>   46
                                 INTEGRA, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Retirement Plan

     The Company has a defined contribution 401(k) plan covering substantially
all of its employees. In general, eligible employees may contribute up to 15% of
their compensation to this plan. During 2000 and 1999, employee contributions
were matched at the rate of 30% of the first 6% of employee contributions.
During 1998 employee contributions were matched at 15%. Company matching
contributions were $44, $46, and $96 for 2000, 1999, and 1998 respectively.

NOTE 19 -- RELATED PARTY TRANSACTIONS

     A significant stockholder and member of the Board of Directors of the
Company committed to advance up to $2,000 through March 1, 2001 to fund working
capital deficits of the Company. The Company issued warrants to purchase 100,000
shares of the Company's common stock in exchange for the commitment. The
warrants have a ten year term and are exercisable at an average price per share
of $.656, which was the fair market value of the stock on the date the warrants
were granted.

     During the fourth Quarter of 2000, the significant stockholder advanced
$300 which was repaid prior to December 31, 2000. Interest of $4 was paid with
respect to this advance.

     In order to meet potential cash flow demands through December 31, 2001, the
Company, in March 2001, obtained a commitment from this same stockholder to
advance up to $1,000 through March 2002.

     Commencing July 1993 through 1999, the Company leased space from an
affiliated entity. The rent under this lease was equal to the amount paid by the
affiliated party under the leasehold agreement and was $121 and $128 for 1999
and 1998 respectively. In addition, the Company provided services under an
Employee Assistance Plan to an affiliated entity. The revenues from this
contract were $301 and $560 in 1999 and 1998, respectively.

     In order to provide for additional financing if the sale of the group
practice division in 1998 did not occur, the Company entered into an agreement
with certain investment partnerships (the "Investment Partnerships"), which were
significant stockholders of the Company and were managed by Foster Management
Company, an affiliated party, to obtain their commitment to guarantee an
additional $7,000 of financing. This additional financing amount represented the
Company's estimated additional cash needs during 1998 for contingent payments,
seller notes and restructure related activities.

     Under the terms of the agreement, in return for their guarantee the
Investment Partnerships were to receive the following: (i) a commitment fee of
2% of the guaranteed amount; (ii) a draw down fee of 2% on Bank borrowings in
excess of $15,000; (iii) an unused commitment fee of  1/2% per annum; and (iv)
warrants to purchase 400,000 shares of common stock of the Company at a price of
$0.05 per share (the "Integra Warrant") or, in the event the Sale was not
consummated, a transaction fee of $3,500 payable on April 30, 1999. With the
Sale completed, the cost to the Company of this guarantee was $1,020 of which
$140 was paid in cash to the Investment Partnerships. The remaining portion
represents a non-cash charge of approximately $880, which is the difference
between the exercise price of the Integra Warrant and the fair market value of
the underlying common stock of the Company on the closing date of the Sale to
PsychPartners. These charges were recorded as interest expense in the Company's
results of operations for the year ended December 31, 1998.

     The Investment Partnership attempted to exercise these warrants in December
1999 and such exercise was rejected by the Company. The Company is continuing to
evaluate this matter with the assistance of outside legal counsel.

                                        44
<PAGE>   47

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholders and Board of Directors of
  Integra, Inc.

In our opinion, the consolidated financial statements listed in the accompanying
index appearing under Item 14(a)(1) on page 67 present fairly, in all material
respects, the financial position of Integra, Inc. and its subsidiaries (the
"Company") at December 31, 2000 and 1999, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 2000, in conformity with accounting principles generally accepted in the
United States. In addition, in our opinion, the financial statement schedule
listed in the accompanying index appearing under Item 14(a)(2) present fairly,
in all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. These financial
statements and financial statement schedule are the responsibility of the
Company's management; our responsibility is to express an opinion on these
financial statements and financial statement schedule based on our audits. We
conducted our audits of these statements in accordance with auditing standards
generally accepted in the United States, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.

/s/ PricewaterhouseCoopers LLP

Philadelphia, PA
March 30, 2001

                                        45
<PAGE>   48

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

     None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     Information regarding the Company's executive officers is contained in Part
I under "Item 1. Business -- Executive Officers of the Company." Information
regarding directors will be contained in the Company's definitive Proxy
Statement (the "Proxy Statement") for its 2001 Annual Meeting of Stockholders
under the caption "Election of Directors" and is incorporated herein by
reference. Information regarding compliance with Section 16(a) of the Securities
Exchange Act of 1934 will be set forth under the caption "Compliance with
Section 16(a) of the Exchange Act" in the Proxy Statement.

ITEM 11.  EXECUTIVE COMPENSATION.

     For the information concerning this Item, see the tables and text under the
captions "Matters Concerning Directors" and "Executive Compensation" to be
contained in the Proxy Statement, which information is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     For the information concerning this Item, see the table and text under the
caption "Security Ownership of Certain Beneficial Owners and Management" to be
contained in the Proxy Statement, which information is incorporated herein by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     For the information concerning this Item, see the text under the caption
"Certain Transactions" to be contained in the Proxy Statement, which information
is incorporated herein by reference.

                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

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

        1. Financial Statements

<TABLE>
<CAPTION>
                        DESCRIPTION                           PAGE
                        -----------                           ----
<S>                                                           <C>
Consolidated Balance Sheets as of December 31, 2000 and
  December 31, 1999.........................................   25
Consolidated Statements of Operations for the Years Ended
  December 31, 2000, 1999 and 1998..........................   26
Consolidated Statements of Changes in Stockholders' Equity
  for the Years Ended December 31, 2000, 1999, and 1998.....   27
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998..........................   28
Notes to Consolidated Financial Statements..................   29
Report of Independent Accountants...........................   45
</TABLE>

        2. Financial Statement Schedule

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Schedule II Valuation and Qualifying Accounts...............   50
</TABLE>

     (b) Current Reports on Form 8-K:

        None.
                                        46
<PAGE>   49

     (c) The following is a list of exhibits filed as part of this Annual Report
on Form 10-K:

<TABLE>
<C>       <S>
  2(a)    Agreement of Purchase and Sale ("PsychPartners Purchase
          Agreement") dated as of December 26, 1997 by and among
          PsychPartners, L.L.C., PsychPartners, Inc., PsychPartners
          MidAtlantic, Inc., the Company and certain subsidiaries of
          the Company (incorporated by reference to the Company's
          Current Report on Form 8-K dated December 26, 1997).
  2(b)    Extension Letter with respect to PsychPartners Purchase
          Agreement (incorporated by reference to the Company's
          Current Report on Form 8-K dated May 19, 1998).
  2(c)    First Amendment to PsychPartners Purchase Agreement dated
          May 14, 1998 (incorporated by reference to the Company's
          Current Report on Form 8-K dated May 19, 1998).
  2(d)    Second Amendment to PsychPartners Purchase Agreement dated
          as of May 18, 1998 (incorporated by reference to the
          Company's Current Report on Form 8-K dated May 19, 1998).
  3(a)    Certificate of Incorporation of the Company, as amended to
          date (incorporated by reference to Exhibit 3 to the
          Company's Current Report on Form 8-K dated July 17, 1998).
  3(b)    By-Laws of the Company as amended and restated as of October
          2, 1998 (incorporated by reference to Exhibit 3(b) to the
          Company's Annual Report on Form 10-K for the year ended
          December 31, 1998).
  4(a)    Warrant to Purchase 50,000 shares of Integra, Inc. common
          stock issued by the Company to Charles Henri-Weil dated June
          27, 2000.(1)
  4(b)    Warrant to Purchase 50,000 shares of Integra, Inc. common
          stock issued by the Company to Charles Henri-Weil dated June
          30, 2000.(1)
 10(a)    Stock Option Plan (incorporated by reference to Exhibit 4 to
          the Company's Registration Statement on Form S-1
          (Registration No. 33-78034) filed with the Commission on
          April 22, 1994).(2)
 10(b)    Integra, Inc. 1999 Stock Option Plan (incorporated by
          reference to the Company's Registration Statement on Form
          S-8 (Registration No. 333-46710) filed with the Commission
          on September 27, 2000).(2)
 10(c)    Separation Agreement dated November 12, 1999 and between the
          Company and Lawrence M. Davies (incorporated by reference to
          Exhibit 10(j) to the Company's Annual Report on Form 10-K
          for the year ended December 31, 1999).(2)
 10(d)    Separation Agreement dated November 12, 1999 and between the
          Company and Mark D. Gibson (incorporated by reference to
          Exhibit 10(k) to the Company's Annual Report on Form 10-K
          for the year ended December 31, 1999).(2)
 10(e)    Employment Agreement dated November 17, 1999 and between the
          Company and Eric E. Anderson, Ph.D. (incorporated by
          reference to Exhibit 10(l) to the Company's Annual Report on
          Form 10-K for the year ended December 31, 1999).(2)
 10(f)    Loan Commitment dated March 23, 2000 and between the Company
          and Charles Henri-Weil (incorporated by reference to Exhibit
          10(m) to the Company's Annual Report on Form 10-K for the
          year ended December 31, 1999).
 10(g)    Loan Commitment dated March 26, 2001 between the Company and
          Charles Henri-Weil.(1)
   21     Subsidiaries of the Company.(1)
   23     Consent of Independent Accountants.(1)
</TABLE>

---------------
(1) Filed herewith.

(2) Management contract or compensatory plan or arrangement required to be filed
    or incorporated as an exhibit.

* Copies of exhibits filed with this Annual Report on Form 10-K or incorporated
  by reference herein do not accompany copies hereof for distribution to
  stockholders of the Company. The Company will furnish a copy of any such
  exhibits to any stockholder requesting the same for a nominal charge to cover
  duplicating costs.

                                        47
<PAGE>   50

                                   SIGNATURES

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

Dated: March 30, 2001                     INTEGRA, INC.

                                          By: /s/ JACK N. BROWN
                                            ------------------------------------
                                            Jack N. Brown
                                            Chief Financial Officer

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

<TABLE>
<S>                                                      <C>
Dated: March 30, 2001                                    /s/ ERIC E. ANDERSON, PH.D.
                                                         --------------------------------------------------------
                                                         Eric E. Anderson, Ph.D.
                                                         Chief Executive Officer and Director
                                                         Principal Executive Officer

Dated: March 30, 2001                                    /s/ SHAWKAT RASLAN
                                                         --------------------------------------------------------
                                                         Shawkat Raslan
                                                         Chairman of the Board and Director

Dated: March 30, 2001                                    /s/ ELLIOT SAINER
                                                         --------------------------------------------------------
                                                         Elliot Sainer
                                                         Director

Dates: March 30, 2001                                    /s/ CHARLES HENRI WEIL
                                                         --------------------------------------------------------
                                                         Charles Henri Weil
                                                         Director

Dated: March 30, 2001                                    /s/ JACK N. BROWN
                                                         --------------------------------------------------------
                                                         Jack N. Brown
                                                         Chief Financial Officer
                                                         Principal Financial and Accounting Officer
</TABLE>

                                        48
<PAGE>   51

ACCOUNTANTS REPORT ON SCHEDULES

     None.

                                        49
<PAGE>   52

                                                                     SCHEDULE II

                                 INTEGRA, INC.

                       VALUATION AND QUALIFYING ACCOUNTS
                 YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                     BALANCE AT   ADDITIONS                    BALANCE AT
                                                     BEGINNING    CHARGED TO                      END
DESCRIPTION                                          OF PERIOD     EXPENSES    DEDUCTIONS(A)   OF PERIOD
-----------                                          ----------   ----------   -------------   ----------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                                  <C>          <C>          <C>             <C>
Year ended December 31, 2000:
  Allowance for doubtful accounts..................   $    71      $   176        $             $   247
  Deferred tax asset valuation allowance...........    16,826       (1,163)                      15,663
Year ended December 31, 1999:
  Allowance for doubtful accounts..................        73           --            --             73
  Deferred tax asset valuation allowance...........    17,098         (272)           --         16,826
Year ended December 31, 1998:
  Allowance for doubtful accounts..................     7,348        1,221         8,496             73
  Deferred tax asset valuation allowance...........    16,349          749            --         17,098
</TABLE>

---------------
(A) Write off of accounts deemed uncollectible including balances sold.

                                        50
<PAGE>   53

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
  NO.                            NAME OF DOCUMENT
-------                          ----------------
<C>        <S>
  10(g)    Loan Commitment dated March 26, 2001 between the Company and
           Charles Henri-Weil.(1)
  21       Subsidiaries of the Company.(1)
  23       Consent of Independent Accountants.(1)
</TABLE>

---------------
(1) Filed herewith.