<PAGE>

                     U.S. Securities and Exchange Commission
                              Washington, D.C. 20549

                                  Form 10-QSB/A

            |X|   Quarterly Report Pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934

                  For the quarterly period ended March 31, 2001

                                       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 000-22653

                  Comprehensive Medical Diagnostics Group, Inc.
        (Exact name of small business issuer as specified in its charter)

                                     Florida
         (State or other jurisdiction of incorporation or organization)

                                   65-0353816
                        (IRS Employer Identification No.)

           32 Nassau Street, Second Floor, Princeton, New Jersey 08542
                    (Address of principal executive offices)

                                  609-924-1001
                           (Issuer's telephone number)

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

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

                                  Yes |X| No |_|

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of March 31, 2001 the registrant
had issued and outstanding 20,665,369 shares of common stock.
<PAGE>

           Transitional Small Business Disclosure Format (check one);

                                 Yes |_| No |X|

Part I Financial Information

Item 1.     Financial Statements

Condensed Consolidated Balance Sheet as of March 31, 2001 (unaudited)         2

Condensed Consolidated Statements of Operations for the Nine Months
         Ended March 31, 2001 and 2000 (unaudited)                            3

Condensed Consolidated Statements of Cash Flows for the Nine Months
         Ended March 31, 2001 and 2000 (unaudited)                            4

Condensed Consolidated Statement of Stockholders' Equity for the
         Nine Months Ended March 31, 2001 (unaudited)                         6

Notes to the Financial Statements                                             7

Item 2.     Management's Discussion and Analysis or Plan of Operations

Part II.    Other Information

Signatures

<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
                      Condensed Consolidated Balance Sheet
                                 March 31, 2001

<TABLE>
<S>                                                                                             <C>
     Assets
Current Assets
     Cash                                                                                       $      5,771
     Accounts Receivable                                                                           4,949,780
     Note Receivable                                                                                  37,628
     Prepaid Expenses                                                                                230,797
                                                                                                ------------
          Total Current Assets                                                                     5,223,976

Property and Equipment, Net of $243.200 accumulated depreciation                                   1,665,062
Goodwill, Net of accumulated amortization of $99,906                                              10,039,270
Deferred Costs                                                                                       196,462
                                                                                                ------------
          Total Assets                                                                            17,124,770
                                                                                                ============

       Liabilities and Stockholders Equity
Current Liabilities
       Accounts Payable and Accrued Expenses                                                       1,492,696
       Income Taxes Payable                                                                          357,474
       Note Payable, Demand                                                                          236,182
       Current Portion of Acquisition Indebtedness                                                 4,026,084
       Current Portion of Long Term Debt                                                             221,685
       Current Portion of Capitalized Lease Obligations                                              139,365
       Notes Payable - Affiliates                                                                    928,508
                                                                                                ------------
           Total Current Liabilities                                                               7,401,994
       Promissory Notes Payable                                                                      123,063
       Acquisition Indebtedness, Less Current Portion                                              5,451,521
       Long Term Debt                                                                                109,320
       Capitalized Lease Obligations                                                                 304,839
       8% Convertible Notes Payable                                                                  431,086
       Deferred Taxes Payable                                                                      1,126,448
                                                                                                ------------
           Total Liabilities                                                                      14,948,271
Stockholders' Equity
       Series A Convertible Preferred Stock, $.001 par value, 30,000,000 shares authorized
           5,850,000 issued and outstanding                                                            5,850
       Common Stock, $.001 par value 50,000,000 shares authorized 20,668,694 shares issued
           and 20,665,369 shares outstanding                                                          20,668
       Additional Paid In Capital                                                                 12,441,379
       Treasury Stock, 3,325 shares at cost                                                          (64,941)
       Accumulated Deficit                                                                       (10,226,457)
                                                                                                ------------

           Total Stockholders' Equity                                                              2,176,499
                                                                                                ------------

       Total Liabilities and Stockholders' Equity                                               $ 17,124,770
                                                                                                ============
</TABLE>

See notes to the condensed consolidated financial statements.


                                                                               2
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
                 Condensed Consolidated Statements of Operations

<TABLE>
<CAPTION>
                                                               Three Months Ended              Nine Months Ended
                                                                    March 31                       March 31,
                                                           ---------------------------    ---------------------------
                                                               2001           2000            2001           2000
                                                           ------------    -----------    ------------    -----------
<S>                                                        <C>             <C>            <C>             <C>
Revenues                                                   $  2,161,140    $        --    $  3,610,543    $        --
                                                           ------------    -----------    ------------    -----------

Selling, General and Administrative Expenses                  2,316,409             --       4,933,129             --
Depreciation and Amortization                                   160,132             --         334,824             --
                                                           ------------    -----------    ------------    -----------
       Total                                                  2,476,541             --       5,267,953             --

Operating Loss                                                 (315,401)            --      (1,657,410)            --

Other Income/Expense
       Interest Expense                                        (132,594)            --        (274,333)            --
                                                           ------------    -----------    ------------    -----------

Loss From Continuing Operations                                (447,995)            --      (1,931,743)            --

Loss From Discontinued Operations (net of $0 tax effect)             --       (538,647)        (98,420)    (1,943,785)
                                                           ------------    -----------    ------------    -----------

Loss Before Minority Interest                                  (447,995)      (538,647)     (2,030,163)    (1,943,785)

Loss Applicable to Minority Interest                                 --        107,729              --        388,757
                                                           ------------    -----------    ------------    -----------

       Net Loss                                                (447,995)      (430,918)   $ (2,030,163)   $(1,555,028)
                                                           ============    ===========    ============    ===========

Net Loss Per Common Share from Continuing Operations       $       (.04)   $        --    $       (.18)   $        --

Net Loss Per Common Share from Discontinued
Operations                                                           --           (.07)           (.01)          (.25)
                                                           ------------    -----------    ============    -----------

Net Loss Per Common Share                                  $       (.04)   $      (.07)   $       (.19)   $      (.25)
                                                           ============    ===========    ============    ===========

Weighted Average Common Shares Outstanding                   10,464,431      6,473,125      10,464,431      6,316,831
                                                           ============    ===========    ============    ===========
</TABLE>

See notes to the condensed consolidated financial statements.


                                                                               3
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
           Condensed Consolidated Comparative Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                                       Nine Months Ended
                                                                                           March 31,
                                                                                  ---------------------------
                                                                                      2001           2000
                                                                                  ------------    -----------
<S>                                                                               <C>             <C>
Cash Flows from Operating Activities
       Operating Activities:
         Net Loss                                                                 $ (2,030,163)   $(1,555,028)
         Adjustments to Reconcile Net Loss to Net Cash Provided (Used) by
            Operating Activities
                Depreciation and Amortization                                          343,106        467,107
                Amortization of Debt Issuance Costs                                         --      1,151,431
                Exchange of preferred shares for common shares and net
                assets of businesses acquired                                        2,062,500             --
                Issuance of common shares as a result of note conversion               500,880             --
                Issuance of common shares pursuant to settlement agreement
                and forgiveness of indebtedness                                      1,125,000             --
                Compensation and Other Services Paid Through Issuance of Common
                Stock                                                                       --        190,312
                Loss Attributable to Minority Interest                                      --       (388,757)

Changes in Operating Assets and Liabilities
       Accounts Receivable                                                          (4,949,780)      (286,715)
       Inventories                                                                          --         98,831
       Other  Assets                                                                        --         28,308
       Other Current Assets                                                           (224,948)       123,254
       Accounts Payable and Accrued Expenses                                           963,293        232,642
       Current and Deferred Taxes Payable                                            1,483,922             --
                                                                                  ------------    -----------
         Net Cash (Used In) Provided By Operating Activities                          (726,190)        61,385
Cash Flows From Investing Activities
       Net Cash From Reverse Acquisition                                                    --         76,994
       Purchase of Property and Equipment                                           (1,908,262)            --
       Purchase of Goodwill                                                        (10,139,176)            --
       Deferred Costs                                                                 (196,462)            --
       Repayment of Convertible Note Payable                                          (498,914)            --
       Repayment of Acquisition Indebtedness                                           (82,700)            --
       Repayment of Long Term Debt                                                    (135,257)            --
       Repayment of Capitalized Lease Obligations                                      (45,278)            --
                                                                                  ------------    -----------
         Net Cash (Used In) Provided by Investing Activities                       (13,006,049)        76,994
Cash Flows From Financing Activities
       Capital Contribution                                                                 --            100
       Proceeds from Promissory Notes Payable                                          123,063             --
       Proceeds From Demand Note Payable, Demand                                       236,182             --
       Proceeds From Acquisition Indebtedness                                        9,560,305             --
       Proceeds From Long Term Debt                                                    466,262        (29,697)
       Proceeds From Capitalized Lease Obligations                                     489,482             --
       Proceeds From Notes Payable Affiliate                                           928,508             --
       Issuance of Common Shares                                                     1,924,191             --
                                                                                  ------------    -----------
         Net Cash Provided By Financing Activities                                  13,727,993        (29,597)
Net (Decrease) Increase in Cash                                                         (4,246)       108,782
Cash Beginning of Period                                                                10,017             --
                                                                                  ------------    -----------
Cash, End of Period                                                               $      5,771    $   108,782
                                                                                  ============    ===========
</TABLE>

See notes to the condensed consolidated financial statements.


                                                                               4
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
                 Condensed Consolidated Statement of Cash Flows

<TABLE>
<CAPTION>
                                                                                  Nine Months Ended
                                                                                       March 31,
                                                                              -------------------------
                                                                                 2001         2000
                                                                              ----------   -----------
<S>                                                                           <C>          <C>
Supplemental Disclosure of Cash Flow Information
       Interest Paid                                                          $   48,224   $    27,769
                                                                              ==========   ===========
       Income Taxes Paid                                                      $       --   $        --
                                                                              ==========   ===========

Supplemental Schedule of Non-Cash Investing and Finance Activities
       Issuance of 3,000,000 Preferred Shares for the Common Shares of
         The Comprehensive Medical Group, Ltd.                                 1,125,000            --
       Issuance of 2,500,000 Preferred Shares in Exchange for the Assets of
         CAT, a New York Limited Liability Company                               937,500            --
       Issuance of 250,000 Preferred Shares for Long Term Consulting
         Agreement                                                                93,750            --
       Issuance of 100,000 Preferred Shares as Incentive Compensation             37,500            --
       Issuance of 16,154,126 Common Shares Upon Conversion of 8%
         Convertible Note                                                        500,880            --
       Issuance of 843,373 Common Shares in Exchange for Forgiveness of
       Indebtedness                                                              700,000            --
       Issuance of 780,000 Common Shares for Consulting Service                  292,500            --
       Issuance of 300,000Common Shares Pursuant to Settlement Agreement
       and Forgiveness of Indebtedness                                           425,000            --
                                                                              ----------   -----------
         Total                                                                $4,112,130   $        --
                                                                              ==========   ===========
</TABLE>

See notes to the condensed consolidated financial statements.


                                                                               5
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Condensed Consolidated Statement of Stockholders' Equity
                        Nine Months Ended March 31, 2001

<TABLE>
<CAPTION>
                                                             Preferred Stock             Common Stock           Additional
                                                        ------------------------   -------------------------     Paid in
                                                          Shares       Amount        Shares        Amount        Capital
                                                        ----------   -----------   -----------   -----------   ------------
<S>                                                      <C>         <C>             <C>         <C>           <C>
Balance, June 30, 2000                                          --   $        --       263,493   $       263   $  6,855,063

Preferred Stock Issuances
   In Exchange for the Common Shares of
     The Comprehensive Medical Group, Ltd.               3,000,000         3,000            --            --      1,122,000
   In Exchange for the Assets of CAT, a New York
      Limited Liability Company                          2,500,000         2,500            --            --        935,000
   For Long-Term Consulting Agreement                      250,000           250            --            --         93,500
   As Incentive Compensation                               100,000           100            --            --         37,400
Common Stock Issuances
   Pursuant to Private Placement Offering                       --            --     2,106,024         2,106      1,745,894
   Resulting from Note Conversion                               --            --    16,154,126        16,158        484,722
   In Exchange for Forgiveness of Indebtedness                  --            --       843,373           843        699,157
   For Consulting Services                                      --            --       780,000           780        291,720
   Pursuant to Settlement Agreement and in
     Forgiveness of Indebtedness                                --            --       300,000           300        424,700
   Fees Incidental to Private Placement                         --            --       218,353           218           (218)
   Fees and Costs Incurred Incidental to
     Private Placement                                          --            --            --            --       (111,159)
   Commissions Paid Incidental to Private Placement             --            --            --            --       (181,650)
   Sale of Warrants                                             --            --            --            --         45,250
Net Loss                                                        --            --            --            --             --
                                                        ----------   -----------   -----------   -----------   ------------
                                                         5,850,000   $     5,850    20,665,369   $    20,668   $ 12,441,379
Balance, March 31, 2001                                 ==========   ===========   ===========   ===========   ============

<CAPTION>
                                                                            Treasury Stock
                                                        Accumulated     ----------------------
                                                           Deficit       Shares       Amount          Total
                                                        ------------    --------    -----------    -----------
<S>                                                     <C>                <C>      <C>            <C>
Balance, June 30, 2000                                  $ (8,196,294)      3,325    $   (64,941)   $(1,405,909)

Preferred Stock Issuances
   In Exchange for the Common Shares of
     The Comprehensive Medical Group, Ltd.                        --          --             --      1,125,000
   In Exchange for the Assets of CAT, a New York
      Limited Liability Company                                   --          --             --        937,500
   For Long-Term Consulting Agreement                             --          --             --         93,750
   As Incentive Compensation                                      --          --             --         37,500
Common Stock Issuances
   Pursuant to Private Placement Offering                         --          --             --      1,748,000
   Resulting from Note Conversion                                 --          --             --        500,880
   In Exchange for Forgiveness of Indebtedness                    --          --             --        700,000
   For Consulting Services                                        --          --             --        292,500
   Pursuant to Settlement Agreement and in
     Forgiveness of Indebtedness                                  --          --             --        425,000
   Fees Incidental to Private Placement                           --          --             --             --
   Fees and Costs Incurred Incidental to
     Private Placement                                            --          --             --       (111,159)
   Commissions Paid Incidental to Private Placement               --          --             --       (181,650)
   Sale of Warrants                                               --          --             --         45,250
Net Loss                                                  (2,030,163)         --             --     (2,030,163)
                                                        ------------    --------    -----------    -----------
                                                        $(10,226,457)      3,325    $   (64,941)   $ 2,176,499
Balance, March 31, 2001                                 ============    ========    ===========    ===========

</TABLE>

See notes to the condensed consolidated financial statements.


                                                                               6
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

NATURE OF BUSINESS

      Comprehensive Medical Diagnostics Group, Inc. ("Medical Diagnostics") was
      incorporated in Florida on August 17, 1992. Prior to June 30, 2000 its
      financial statements included the continuing operations of its wholly
      owned subsidiaries, Industrial Fabrication & Repair, Inc. ("IFR") and
      PeopleFirst Staffing LLC ("PeopleFirst"). On September 7, 1999 Medical
      Diagnostics and PeopleFirst consummated certain transactions pursuant to a
      Share Exchange Agreement whereby PeopleFirst became an 80% subsidiary of
      Medical Diagnostics. The Exchange was treated for accounting purposes as a
      "purchase business combination" and a "reverse acquisition" effective as
      of September 1, 1999 in which Medical Diagnostics was the legal acquirer
      and PeopleFirst was the accounting acquirer.

      On April 29, 2000 Medical Diagnostics discontinued the operations of IFR
      and on June 29, 2000 discontinued the administrative services operations
      and commenced a liquidation of the remaining assets and liabilities of
      PeopleFirst (see DISCONTINUED OPERATIONS).

      As further explained below (see BUSINESS ACQUISITIONS), as a result of the
      acquisitions discussed therein, Medical Diagnostics has changed its focus
      and strategy to concentrate on becoming a provider of medical treatment,
      diagnostic testing and ancillary services to the long-term healthcare
      business sector and the medical community at large.

UNAUDITED FINANCIAL STATEMENTS

      In the opinion of management, the accompanying unaudited condensed
      consolidated financial statements reflect all adjustments, consisting of
      normal recurring accruals, necessary to present fairly the financial
      position of Comprehensive Medical Diagnostics Group, Inc. and its
      subsidiaries (collectively, the "Company") as of March 31, 2001 and their
      results of operations, changes in stockholders' equity and cash flows for
      the nine months ended March 31, 2001 and 2000. Certain terms used herein
      are defined in the audited consolidated financial statements of the
      Company as of June 30, 2000 and for the years ended June 30, 2000 and 1999
      (the "Audited Financial Statements") included in the Company's Annual
      Report on Form 10-KSB (the "Form 10KSB") for the year ended June 30, 2000
      that was previously filed with the United States Securities and Exchange
      Commission (the "SEC"). Pursuant to rules and regulations of the SEC,
      certain information and disclosures normally included in financial
      statements prepared in accordance with generally accepted accounting
      principles have been condensed or omitted from these consolidated
      financial statements unless significant changes have taken place since the
      end of the most recent fiscal year. Accordingly, these unaudited condensed
      consolidated financial statements should be read in conjunction with the
      Audited Financial Statements and the other information also included in
      the Form 10-KSB.

      The results of the Company's operations for the nine months ended March
      31, 2001 and 2000 are not necessarily indicative of the results of
      operations for the full year ending June 30, 2001.

BUSINESS ACQUISITIONS

      Cardiovascular Laboratories Holding, Inc.

      As of July 27, 2000 the Company, through its wholly owned subsidiary,
      Cardiovascular Laboratories Holding, Inc. ("CLH") acquired the assets and
      assumed the liabilities of Cardiovascular, LLC ("CLI") which, on May 31,
      2000 acquired the assets (including inventory, equipment, machinery, and
      contractual and other rights and certain accounts receivable) and assumed
      certain liabilities of Cardiovascular Laboratories, Inc. of PA ("CLP").
      The transaction between CLI and CLP closed in escrow, which escrow was
      maintained after the closing between CLH and CLI, pending the assignment
      and assumption of certain equipment leases and financing contracts by CLH.


                                                                               7
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

      As consideration for the acquisition of CLI, CLH assumed CLI's obligations
      under a seller note to CLP to pay $684,000 over a period of three years
      subject to reduction should certain monthly revenue levels not be attained
      and also assumed CLI's obligations under certain leases, financing
      agreements and trade obligations.

      CLH specializes in the provision of non-invasive cardiovascular imaging
      and the turnkey management of fixed sight vascular and ecocardiographic
      ultrasound laboratories.

      Comprehensive Medical Group, Ltd.

      As of July 25, 2000, the Company entered into an Agreement and Plan of
      Reorganization with The Comprehensive Medical Group, Ltd ("CMG"). The
      Company issued 3,000,000 shares of its Series A Convertible Preferred
      Stock to CMG's shareholders in exchange for all issued and outstanding
      stock of CMG.

      CMG intends to provide health and wellness management services for
      employee assistance programs, human resource departments and labor unions;
      and to design and operate a kiosk based point of purchase medical
      marketing program called "The Wellness Shop"; and to design and operate a
      website called "Leaseonlife.com" to provide interactive health and
      wellness analysis, treatment content and management tools.

      Diagnostic Management Group Holdings, Inc.

      As of August 2, 2000, the Company through its wholly owned subsidiary,
      Diagnostic Management Group Holdings, Inc. ("DMG") acquired the assets of
      CAT, a New York limited liability company.

      The purchase price for CAT's assets was $1,100,000 in cash and 2,500,000
      shares of the Company's Series A Convertible Preferred Stock. DMG acquired
      all inventory equipment, machinery, contractual and other rights, and
      certain accounts receivable, also assuming certain equipment leases and
      trade payables.

      DMG manages the operation of a medical diagnostic cardiological and
      neurological testing services and tele-medicine of CAT - ECG PC, a New
      York professional corporation.

      Diagnostic Health Systems, Inc. (DHS)

      As of January 1, 2000 the Company through its wholly owned subsidiary
      Diagnostic Management Group Holdings, Inc. acquired all of the issued and
      outstanding stock of DHS in exchange for $4,700,000 consisting of a cash
      payment of $1,500,000, assumption of certain DHS liabilities in the amount
      of $500,000 and notes payable to DHS's former shareholders in the amount
      of $2,700,000. Additionally, the Company is obligated to pay DHS's former
      shareholders 92.5% of accounts receivable ($4,421,505 at the date of
      closing) actually collected by the Company at the rate of $150,000 per
      month commencing in June, 2001.

      DHS owns and manages a mobile diagnostic testing center which delivers
      mobile x-ray radiology and cardiovascular services to long term care
      facilities, nursing homes and state institutions.

DISCONTINUED OPERATIONS

      On April 1, 2000 the Company discontinued its manufacturing operations by
      agreeing to sell IFR back to its previous owner in exchange for 3,325
      shares of the Company's common stock with a fair value of approximately
      $64,941 (or $19.53 per share). The shares reacquired have been reflected
      as treasury stock in the accompanying condensed consolidated balance
      sheet. On June 29, 2000, the Board of Directors, and a majority of the
      stockholders of the Company approved the adoption of a plan to effectively
      (i) discontinue the administrative services operations of PeopleFirst
      through the return of the right to operate its business to its previous
      owners in exchange for their agreement to relieve the Company of all
      obligations arising from such operations and (ii) liquidate the remaining
      assets and liabilities of PeopleFirst. Accordingly,


                                                                               8
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

      the results of the Company's manufacturing and administrative services
      operations are reported, and as to 1999 reclassified, as a loss from
      discontinued operations in the accompanying condensed consolidated
      statement of operations.

Revenue and loss from discontinued operations was as follows:

                                                           Nine Months Ended
                                                        -----------------------
                                                        March 31,    March 31,
                                                          2001          2000
                                                        --------    -----------
      Revenue                                           $     --    $ 3,170,814
                                                        --------    -----------

      Loss from discontinued operations                 $(98,420)   $(1,943,785)
                                                        ========    ===========

      Net Loss                                          $(98,420)   $(1,555,028)
                                                        ========    ===========

PROPERTY AND EQUIPMENT

      Property and equipment, at cost, consists of the following


      Operating equipment                                             $1,714,047
      Website and kiosk software and equipment                           133,598
      Office equipment                                                    50,150
      Vehicles                                                            10,467
                                                                      ----------
          Subtotal                                                     1,908,262
      Less accumulated depreciation and amortization                     243,200
                                                                      ----------
          Total                                                       $1,665,062
                                                                      ==========

      Depreciation expense charged to operations for the nine month periods
      ended March 31, 2001 amounted to $122533.

GOODWILL

      During the nine month period ended March 31, 2001 the Company acquired
      substantially all of the assets of CAT and CLI subject to the assumption
      of certain indebtedness; as well as all of the issued and outstanding
      stock of CMG. The excess cost over net book value of assets acquired as a
      result of these acquisitions aggregated $10,139,176 and is comprised as
      follows:

<TABLE>
<S>                                                                            <C>
CLI
    Assumption of a non-interest bearing seller note of $684,000 payable
    originally over a 36 month period (extended to a 48 month period
    effective October, 2000) and subject to adjustment if certain future
    monthly revenue levels are not attained, after a present value
    discount of 10%                                                            $    510,710
    Assumption of liabilities in excess of net book value of assets
    acquired                                                                        383,756
    Capitalized costs and fees incidental to the transaction                         70,151
                                                                               ------------
             Subtotal                                                          $    964,617
                                                                               ------------
</TABLE>


                                                                               9
<PAGE>

<TABLE>
<S>                                                                            <C>
CAT
    Cash                                                                       $  1,100,000
    Issuance of 2,500,000 shares of the Company's Series A Convertible
    Preferred Stock with an estimated fair value of $.375 per share at the
    time of issuance                                                                937,500
    Capitalized costs and fees incidental to the transaction                         15,311
    Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
       Notes to the Condensed Consolidated Financial Statements


    Less: Amount allocable to fair market in excess of net book value of
             property and equipment acquired                                       (750,000)
                                                                               ------------
             Subtotal                                                          $  1,302,811
                                                                               ------------
CMG
    Issuance of 3,000,000 shares of the Company's Series A Convertible
    Preferred Stock with an estimated fair value of $.375 per share at time
    of issuance                                                                $  1,125,000
    Assumption of liabilities in excess of net book value of assets acquired        634,858
    Capitalized costs and fees incidental to the transaction                          5,000
                                                                               ------------
             Subtotal                                                             1,764,858
                                                                               ------------

DHS
    Notes Payable                                                                 8,700,000
    Less: Net Book Value of Assets Acquired                                      (2,593,110)
                                                                               ------------
             Subtotal                                                             6,106,890
                                                                               ------------

             Total                                                             $ 10,139,176
                                                                               ============
</TABLE>

      The Company is amortizing goodwill over a 40 year period. Amortization for
      the nine months ended March 31, 2001 amounted to $87,188.

      NOTES PAYABLE DEMAND

      The Company through its subsidiary, CLH agreed to assume certain demand
      loan obligations of CLP. Pursuant thereto, there are outstanding advances
      under a loan commitment which permits borrowings as determined by a
      percentage of CLH's qualifying accounts receivable, up to a maximum
      limitation of $1,000,000. Such borrowings bear interest at the lenders
      defined prime rate plus 2.25%. Repayments under the loan are via a lock
      box agreement which provides for the receipt and processing of accounts
      receivable. The outstanding balance under this financing arrangement was
      $236,182 at March 31, 2001.

ACQUISITION INDEBTEDNESS

<TABLE>
<S>                                                                                       <C>
     Acquisition indebtedness is comprised of the following:
         Non-interest bearing seller note payable in the original principal
         amount of $684,000 incurred upon the acquisition of CLI's net assets
         and payable originally over a 36 month period (modified to $5,000 per
         month effective February, 2001) without interest and subject to
         adjustment if certain future monthly revenue levels are not attained.            $   611,521
         Remaining cash consideration due incidental to the acquisition of
         CAT's net assets                                                                     150,000
         Amounts due CAT sellers consisting of uncollected and unremitted
         accounts receivable existing on the transaction date                                  16,084
</TABLE>


                                                                              10
<PAGE>

<TABLE>
<S>                                                                                       <C>
         Note payable to 5761 Holdings Corp. bearing interest at the rate of 14%
         per annum, due July 1, 2001 and secured by all unencumbered accounts
         receivable of the Company                                                          1,500,000

         Note payable to former shareholders of DHS in the original principal               2,700,000
         amount of $2,700,000 incurred upon the acquisition of all issued and
         outstanding stock of DHS and bearing interest at the rate of 5% per
         annum payable $300,000 on March 1, 2001, $400,000 six months
         thereafter and $500,000 in each of the four quarters thereafter
</TABLE>


         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

<TABLE>
         <S>                                                                             <C>
         Pursuant to the acquisition agreement, sellers may elect to receive
         common shares of the Company at a cost of $1.00 per common share Note
         payable to former shareholders of DHS in the original principal amount
         of $4,000,000, which sum represents 92.5% of DHS accounts receivable
         at the date of acquisition, payable at the rate of $150,000 per month
         without interest commencing June, 2001. This obligation is subject to
         reduction to the extent that actual collections are in an amount lesser
         than that existing at March 31, 2001 ($4,421,505) to the extent of
         92.5% thereby                                                                      4,000,000
         The Company agreed to assume up to $500,000 of income tax related
         obligations of DHS                                                                   500,000
                                                                                          -----------

                  Total                                                                     9,477,605
         Less current portion                                                               4,026,084
                                                                                          -----------
                                                                                          $ 5,451,521
                                                                                          ===========
</TABLE>

     The aggregate amount of future principal repayments at March 31, 2001 is as
follows:


         Year ending March 31
-------------------------------------------------------------
                2002                                             $ 4,026,084
                2003                                               3,131,521
                2004                                               1,760,000
                2005                                                 560,000
                                                                 -----------
                Total                                            $ 9,477,605
                                                                 ===========

LONG TERM DEBT

     The Company, through its subsidiary CLH, has agreed to assume certain
     long-term debt of CLP which, at March 31, 2001 consists of the following:

<TABLE>
<S>                                                                                  <C>
       Term loan payable in monthly installments of $2,075, including interest
       at 13.7% through October 16, 2001                                             $   17,656
       Term loan payable in monthly installments of $1,908, including interest
       at 9.0% through June 1, 2001                                                       5,689
       Equipment loan payable in monthly installments of $13,640, including
       interest at 10.675% through September 29, 2002                                   214,313

       Equipment loan payable in monthly installments of $402 including
       interest at 9.65% through November 24, 2002                                        7,402
       Equipment loan payable in monthly installments of $456, including
       interest at 10.84% through December 30, 2004                                      16,796
       Equipment loan payable in monthly installments of $434, including
       interest at 9.95% through January 28, 2005                                        16,247
       Equipment loan payable in monthly installments of $415, including
       interest at 9.95% through February 3, 2003                                         8,323
</TABLE>


                                                                              11
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

<TABLE>
<S>                                                                                  <C>
       Equipment loan payable in monthly installments of $394, including
       interest at 8.18% through February 1, 2003                                         8,029
       Term loan payable in monthly installments ranging from $2,500 to
       $3,500, including interest at 11% through May, 2002                               36,550
                                                                                      ---------
                                                                                        331,005
       Less current portion                                                             221,685
                                                                                      ---------
       Long-term debt                                                                $  109,320
                                                                                      =========
</TABLE>

     The loans are secured by liens on equipment and accounts receivable of CLH.

     The aggregate amount of future principal repayments at March 31, 2001 is as
follows:


                   Years Ending March 31,
                            2002                         $ 221,685
                            2003                            98,832
                            2004                            10,488
                                                         ---------
      Total                                              $ 331,005
                                                         =========

CAPITALIZED LEASE OBLIGATIONS

      The Company through it's subsidiary CLH, agreed to assume obligations
      under the provisions of three long-term leases entered into in 1999. In
      addition, the Company, through it's subsidiary DHS, agreed to assume
      obligations under the provisions of various long-term leases of medical
      equipment entered into by DHS prior to acquisition. For financial
      reporting purposes, minimum lease payments relating to the equipment have
      been capitalized. The leases expire between March 1, 2003 and January 31,
      2005. The leased property under capital leases by CLH as of September 30,
      2000 were acquired at the pre-acquisition amortized cost of $340,274, and
      have accumulated amortization of $14,132 and a net book value of $326,142.
      Amortization of the lease property is included in depreciation expenses.

      The future minimum lease payments under capital lease and the net present
      value of the future minimum lease payments at March 31, 2001 are as
      follows:

       Total minimum lease payments                                   $ 538,558
       Amount representing interest                                     (94,354)
       Present value of net minimum Lease payments                      444,204
       Current portion                                                  139,365
                                                                      ---------
       Long-term capital lease obligation                             $ 304,839
                                                                      =========

8% CONVERTIBLE NOTE PAYABLE

      Prior to July 14, 2000, the Company had outstanding three 8% Convertible
      Promissory Notes, dated March 3, 1999 in the aggregate principal amount of
      $819,000 ("Convertible Notes") and one 8% Promissory Note having a
      principal amount of $81,000 ("Non-Convertible Note"). The Company was in
      default as to the above notes and interest of $30,000 was due.


                                                                              12
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

      The terms and conditions of the Convertible Notes were amended and
      restated in a Note Reformation Agreement dated as of July 14, 2000 and new
      Convertible Notes were issued reflecting a total balance of $930,000,
      extending the maturity date to June 30, 2003 and amending and modifying
      the conversion terms of the Convertible Note. Additionally, the Non-
      Convertible Notes was cancelled.

      Subsequently, the Amended and Restated Convertible Notes were sold by the
      note holder to a group of investors.

      As of March 31, 2001 certain convertible note holders exercised their
      conversion rights resulting in the Company's issuance of 16,154,126 common
      shares and thereby reducing the principal balance of the 8% Convertible
      Note to $431,086.

PREFERRED STOCK

      The Company is authorized to issue 30,000,000 shares of $.0001 par value
      preferred stock. As of December 31, 2000 the company has issued and
      outstanding 5,850,000 shares of Series A Preferred Stock; such shares have
      voting rights equal to those of common shareholders, have priority in
      liquidation over common shareholders, have no stated dividend requirements
      and may each be converted into one common share.

      Incidental to the acquisition of CAT and CMG (see BUSINESS ACQUISITIONS)
      the Company issued 5,500,000 shares of Series A Preferred Stock which, in
      the opinion of management had a fair value at the time of issuance of
      $.375 per share.

      Additionally, the Company has issued 250,000 shares of Series A Preferred
      Stock pursuant to a long-term consulting agreement and 100,000 shares of
      Series A Preferred Stock as incentive compensation to an officer of the
      Company; such issuances, in the opinion of management, having a fair value
      at the time of issuance of $.375 per share.

COMMON STOCK

      The Company is authorized to issue 50,000,000 $.001 par value common
      shares.

      Through March 31, 2001 the Company has issued 2,949,397 common shares in
      exchange for cash consideration of $1,748,000 and debt forgiveness of
      $700,000 which issuance was made pursuant to a private placement to
      accredited investors, which is exempt from registration under Regulation D
      of the Securities Act of 1933, as amended. Additionally, the Company
      issued 218,353 common shares and incurred fees, costs and commissions
      amounting to $292,809 incidental to such issuances.

      Through March 31, 2001 the Company has issued 16,154,126 common shares
      pursuant to the Company's conversion of a portion of the 8% Convertible
      Preferred Notes resulting in a principal reduction of $468,194.

      Pursuant to a certain Termination and Settlement Agreement, the Company
      issued 300,000 common shares in exchange for forgiveness of $425,000.

      The Company has entered into consultancy agreements whereby 780,000 common
      shares have been rendered in exchange for services to be provided through
      June 30, 2001. It is management's opinion that the fair value of such
      common shares issued is $.375 per share.


                                                                              13
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

WARRANTS

      On February 6, 2001 the Company sold warrants to purchase 500,000 common
      shares for $45,250. The warrants expire on July 31, 2001 and have an
      exercise price equal to the lesser of $1.00 per share or 80% of the
      average of the lowest three bid prices for the Company's stock during the
      thirty day period prior to exercise.

INCOME TAXES

      As of December 31, 2000 the Company had net operating loss carryforwards
      of approximately $26,000,000. These net operating loss carryforwards are
      available to reduce future taxable income and will expire at various dates
      through 2021. Due to the uncertainties relating to, among other things,
      changes in the ownership of the Company which occurred in September of
      1999 and July of 2000, as well as the disposition and acquisition of
      various subsidiaries, and the extent and timing of its future taxable
      income, the Company has offset the deferred tax assets attributable to
      potential benefits of approximately $7,200,000 from the utilization of
      those net operating loss carryforwards by an equivalent valuation
      allowance.

      Upon the acquisition of DHS, the Company assumed liabilities for current
      and deferred taxes in the amounts of $357,474 and $1,126,448,
      respectively.

      Also, for the above reasons, no credit for income taxes is included in the
      accompanying condensed consolidated statements of operations for the six
      month periods ended December 31, 2000 and December 31, 1999 respectively.

EARNINGS (LOSS) PER SHARE

      The Company presents "basic" earnings (loss) per common share and, if
      applicable, "diluted" earnings per common share pursuant to the provisions
      of Statement of Financial Accounting Standards No. 128, "Earnings per
      Share" Basic earnings (loss) per common share is calculated by dividing
      net income or loss applicable to common stock by the weighted average
      number of common shares outstanding during each period. The calculation of
      diluted earnings per common share is similar to that of basic earnings per
      common share, except that: (i) the denominator is increased to include the
      number of additional common shares that would have been outstanding if all
      potentially dilutive common shares, such as those issuable upon the
      assumed exercise of stock options and warrants and the conversion of notes
      or preferred shares had been issued during the period and (ii) the
      numerator is adjusted to eliminate interest on convertible notes and
      convertible preferred dividend requirements.

      Diluted per share amounts have not been presented in the accompanying
      condensed consolidated statements of operations because the Company had a
      net loss for the nine month periods ended March 31, 2001 and 2000,
      respectively and, accordingly, the effects of the assumed conversion of
      all of the Company's outstanding convertible notes, and the assumed
      exercise of all of the Company's outstanding warrants and the application
      of the treasury stock method, would have been anti-dilutive.

CONCENTRATIONS OF CREDIT RISK AND MAJOR CUSTOMERS

      Financial instruments that potentially subject the Company to
      concentrations of credit risk consist principally of cash and trade
      accounts receivable. The Company maintains its cash balances with major
      financial institutions that have high credit ratings. At times, such
      balances may exceed Federally insured limits.

      The Company generally extends credit to its customers (which include third
      party payors), all of whom are located in the northeastern United States.
      Management of the Company closely monitors the extension of credit to
      customers while maintaining allowances for potential credit losses. During
      the nine month periods ended March 31, 2001 and 2000, no customer
      accounted for more than 10% of the Company's revenues. Generally, the
      Company does not have a significant receivable from any single customer
      and, accordingly, management does not believe that the Company was exposed
      to any significant credit risk at March 31, 2001.


                                                                              14
<PAGE>

         Comprehensive Medical Diagnostics Group, Inc. and Subsidiaries
            Notes to the Condensed Consolidated Financial Statements

OPERATING LEASE COMMITMENTS

      On September 1, 1999, CMG entered into a twenty-one month sublease for the
      period September 1, 1999 through June 30, 2001 for 4,500 square feet of
      office space. The rent is $4,200 per month and is not subject to further
      increases.

      On March 10, 1999, CAT entered into an amended ten year lease for the term
      March 10, 1999 through March 31, 2009, for 7,000 square feet of laboratory
      and office space.

      DHS has non-cancellable operating leases for its fleet of automobiles that
      extend over the next three to five years, with a total annual lease
      expense of approximately $150,000.

      DHS has the following rental commitments for office space.

      To B & G Realty Company, an affiliated company, for its New Jersey office
      building under a fifteen year lease expiring on December 31, 2010. Future
      minimum lease payments are approximately as follows:

                                                                       Base Rent
                                                                      ----------
     April 1, 2000 - December 31, 2000                                $       --
     January 1, 2001 - December 31, 2003                                 138,600
     January 1, 2004 - December 31, 2006                                 172,800
     January 1, 2007 - December 31, 2010                                 240,000
                                                                      ----------
       Total minimum future rental payments                           $  551,400
                                                                      ==========

     DHS has a lease in Dayton Manor, New Jersey for office space on a
month-to-month basis at $400 per month.

     DHS had a lease in New York City, for office space on a month-to-month
     basis at $725 per month which expired on April 30, 2000. The new lease
     began on May 1, 2000, and expires on April 30, 2002. Future minimum lease
     payments are approximately as follows:

                      2000                                           $     --
                      2001                                              7,986
                      2002                                              3,568
                                                                     --------
                      Total minimum future rental payments           $ 11,554
                                                                     ========

     DHS has an option to renew for another year at an annual rental of $11,340

     DHS has a lease in Garner, North Carolina, beginning September 1, 1999, and
     expiring on August 31, 2001. Future minimum lease payments are
     approximately as follows:

                      2000                                          $     --
                      2001                                             3,000
                                                                    --------
                                                                    $  3,000
                                                                    ========

     The lease contains an option to renew for another year at an annual rental
of $7,500.


13
<PAGE>

Management's Discussion and Analysis or Plan of Operations

      The following discussion regarding the Company and its business and
      operations contains "forward-looking statements" within the meaning of the
      Private Securities Litigation Reform Act 1995. Such statements consist of
      any statement other than a recitation of historical fact and can be
      identified by the use of forward-looking terminology such as "may,"
      "expect," "anticipate," "estimate" or "continue" or the negative thereof
      or other variations thereon or comparable terminology. The reader is
      cautioned that all forward-looking statements are necessarily speculative
      and there are certain risks and uncertainties that could cause actual
      events or results to differ materially from those referred to in such
      forward looking statements. The Company does not have a policy of updating
      or revising forward- looking statements and thus it should not be assumed
      that silence by management of the Company over time means that actual
      events are bearing out as estimated in such forward looking statements.

      The following discussion should be read in conjunction with the condensed
      consolidated financial statements and notes appearing elsewhere in this
      report.

Overview

      Comprehensive Medical Diagnostics Group, Inc. ("Medical Diagnostics") was
      originally incorporated in Florida on August 17, 1992 as American Risk
      Management Group, Inc. It's name was changed to Comprehensive Medical
      Diagnostic Group, Inc. on August 20, 2000.

      The Company was originally formed to seek acquisitions or business
      opportunities, to the extent permitted by its assets, in various business
      sectors throughout the United States. Pursuant to this strategy, the
      Company bought and sold several businesses over the last few years.

      The Company has changed its focus and strategy and will concentrate on
      becoming a provider of medical treatment, diagnostic testing and ancillary
      services to the long-term health care business sector and the medical
      community at large. The Company will also attempt to position itself to
      become an internet provider of health care content and services.

      In order to implement its focus and strategy the Company recently
      completed four acquisitions as follows:

      Cardiovascular Laboratories Holding, Inc.

            As of July 27, 2000 the Company, through its wholly owned
            subsidiary, Cardiovascular Laboratories Holding, Inc. ("CLH")
            acquired the assets and assumed the liabilities of Cardiovascular,
            LLC ("CLI") which, on May 31, 2000 acquired the assets (including
            inventory, equipment, machinery, and contractual and other rights
            and certain accounts receivable) and assumed certain liabilities of
            Cardiovascular Laboratories, Inc. of PA ("CLP"). The transaction
            between CLI and CLP closed in escrow, which escrow was maintained
            after the closing between CLH and CLI, pending the assignment and
            assumption of certain equipment leases and financing contracts by
            CLH.

            As consideration for the acquisition of CLI, CLH assumed CLI's
            obligations under a seller note to CLP to pay $684,000 over a period
            of three years subject to reduction should certain monthly revenue
            levels not be attained and also assumed CLI's obligations under
            certain leases, financing agreements and trade obligations.

            CLH specializes in the provision of non-invasive cardiovascular
            imaging and the turnkey management of fixed sight vascular and
            ecocardiographic ultrasound laboratories.


                                                                              14
<PAGE>

      Comprehensive Medical Group, Ltd.

            As of July 25, 2000, the Company entered into an Agreement and Plan
            of Reorganization with The Comprehensive Medical Group, Ltd.
            ("CMG"). The Company issued 3,000,000 shares of its Series A
            Convertible Preferred Stock to CMG's shareholders in exchange for
            all issued and outstanding stock of CMG.

            CMG intends to provide health and wellness management services for
            employee assistance programs, human resource departments and labor
            unions; and to design and operate a kiosk based point of purchase
            medical marketing program called "The Wellness Shop"; and to design
            and operate a website called "Leaseonlife.com" to provide
            interactive health and wellness analysis, treatment content and
            management tools.

      Diagnostic Management Group Holdings, Inc.

            As of August 2, 2000, the Company through its wholly owned
            subsidiary, Diagnostic Management Group Holdings, Inc. ("DMG")
            acquired the assets of CAT, a New York limited liability company.

            The purchase price for CAT's assets was $1,100,000 in cash and
            2,500,000 shares of the Company's Series A Convertible Preferred
            Stock. DMG acquired all inventory equipment, machinery, contractual
            and other rights, and certain accounts receivable, also assuming
            certain equipment leases and trade payables.

            DMG manages the operation of a medical diagnostic cardiological and
            neurological testing services and tele- medicine of CAT - ECG PC, a
            New York professional corporation.

      Diagnostic Health Systems, Inc. (DHS)

            As of January 1, 2000 the Company through its wholly owned
            subsidiary Diagnostic Management Group Holdings, Inc. acquired all
            of the issued and outstanding stock of DHS in exchange for
            $4,700,000 consisting of a cash payment of $1,500,000 assumption of
            certain DHS liabilities in the amount of $500,000 and notes payable
            to DHS's former shareholders in the amount of $2,700,.000.
            Additionally, the Company is obligated to pay DHS's former
            shareholders 92.5% of amounts receivable $4,421,505 at the date of
            closing) actually collected by the Company at the rate of $150,000
            per month commencing in June, 2001.

            DHS owns and manages a mobile diagnostic testing center which
            delivers mobile x-ray, radiology and cardiovascular services to long
            term care facilities, nursing homes and state institutions.

      Additionally the Company discontinued certain operations as follows:

            On April 1, 2000 the Company discontinued its manufacturing
            operations by agreeing to sell it's subsidiary Industrial
            Fabrication & Repair, Inc. ("IFR") back to its previous owner in
            exchange for 3,325 shares of the Company's common stock with a fair
            value of approximately $64,941 (or $19.53 per share). The shares
            reacquired have been reflected as treasury stock in the accompanying
            condensed consolidated balance sheet. On June 29, 2000, the Board of
            Directors, and a majority of the stockholders of the Company
            approved the adoption of a plan to effectively (i) discontinue the
            administrative services operations of PeopleFirst Staffing LLC
            (PeopleFirst) through the return of the right to operate its
            business to its previous owners in exchange for their agreement to
            relieve the Company of all obligations arising from such operations
            and (ii) liquidate the remaining assets and liabilities of
            PeopleFirst.

            The condensed consolidated statement of operations includes the
            operations of CLH, CMG, DMG and DHS from the respective effective
            dates that they were acquired by the Company. The results of
            operations IFR and PeopleFirst are reported as losses from
            discontinued operations.


                                                                              15
<PAGE>

Pro Forma

      The following discussion includes the results of operations for the nine
      months ended March 31, 2001 and 2000 as though both the acquisitions and
      dispositions described above had been consummated on July 1, 1999.

      During the nine months ended March 31, 2001, consolidated revenues
      increased by approximately $400,000 or 22% from approximately $1,800,000
      for the nine months ended March 31, 2000 to approximately $$1,400,000 for
      the nine months ended March 31, 2001.

      Operating costs for the nine months ended March 31, 2001 increased
      approximately $$1,000,000 or 53% from approximately $1,900,000 for the six
      months ended March 31, 2000 to approximately $2,900,000 for the nine
      months ended March 31, 2001 This increase is attributable to an increases
      in kiosk and website development costs, administrative expenses and
      expenses related to changes in the Company's focus and direction.

      On a pro forma basis, the Company's loss from continuing operations
      increased by approximately $1,455,000 or $(0.24) per share from
      approximately $(45,000) or $(.01) per share for the nine months ended
      March 31, 2000 to approximately $1,500,000 or $(0.25) per share for the
      nine months ended March 31, 2001.

Historical Information

      These results include the operations of CLH, CMG, DMG and DHS from the
      effective date of their acquisitions by the Company through March 31,
      2001.

      During the nine months ended March 31, 2001 the Company had revenues of
      $3,610,543, all of which was derived from its operating subsidiaries, CLH,
      DMG and DHS.

      Selling general and administrative expenses were $4,933,129 of which
      $3,807,373 was attributable to its operating subsidiaries and the
      remainder, of $1,125,756 was attributable to kiosk and website development
      costs as well as administrative expenses.

      Depreciation attributable to acquired assets and amortization of goodwill
      arising from these acquisitions amounted to $334,824 for the nine months
      ended March 31, 2001 Interest expense was $274,333 for this period.

      As a result of all the above, the Company's loss from continuing
      operations and net loss amounted to $1,931,743 $(0.18 per share) and
      $2,030,163 $(0.19 per share), respectively, for the nine months ended
      March 31, 2001.

Liquidity and Capital Resources

      At March 31, 2001 the Company had a working capital deficiency of
      $2,178,018. The working capital deficiency is attributable to the excess
      of current liabilities over assets assumed in the acquisitions of CHP,
      current amounts due to sellers of CAT, CHP and DHS and current obligations
      incidental to CMG's kiosk and website development costs and fees
      incidental to the above, a private placement offering and a debt
      restructuring.

      Private Placement

      On July 17, 2000, the Company entered into subscription agreements with
      fifteen accredited investors under a private placement, which is exempt
      from registration under Regulation D of the Securities Act of 1933, as
      amended. The Company has agreed to sell to these accredited investors
      5,000,000 shares of its common stock at a per share price of $.83 for an
      aggregate purchase price of $4,150,000. As of December 31, 2000, the
      Company has received or accounted for $2,448,000 of these subscriptions.


                                                                              16
<PAGE>

Note Restructuring

      Prior to July 14, 2000, the Company had outstanding three 8% Convertible
      Promissory Notes, dated March 3, 1999 in the aggregate principle amount of
      $819,000 ("Convertible Notes") and one 8% Promissory Note having a
      principal amount of $81,000 ("Non-Convertible Note"). The Company was in
      default as to the above notes and interest of $30,000 was due.

      The terms and conditions of the Convertible Notes were amended and
      restated in a Note Reformation Agreement dated as of July 14, 2000 and new
      Convertible Notes were issued reflecting a total balance of $930,000,
      extending the maturity date to June 30, 2003 and amending and modifying
      the conversion terms of the Convertible Note. Additionally, the
      Non-Convertible Note was cancelled.

      Subsequently, the Amended and Restated Convertible Notes were sold by the
      note holder to a group of investors.

      As of March 31, 2001 certain convertible note holders exercised their
      conversion rights resulting in the Company's issuance of 16,154,126 common
      shares and thereby reducing the principal balance of the 8% Convertible
      Note to $431,086.

      The Company anticipates that its working capital, as a result of accounts
      receivable loans presently being negotiated, together with anticipated
      cash flow from the recently acquired companies, will be sufficient to
      satisfy the Company's cash requirements for at least twelve months. In the
      event the Company's plan changes (due to unanticipated expenses or
      difficulties of integrating these acquisitions), or if the working capital
      and projected cash flow otherwise prove insufficient to fund operations,
      the Company could be required to seek additional financing sooner than
      currently anticipated. The Company has no current arrangements with
      respect to, or sources of, additional financing. Accordingly, there can be
      no assurance that additional financing will be available to the Company
      when needed, or at all, on commercially reasonable terms. The Company's
      inability to obtain such additional financing could have a material
      adverse effect on the Company's liquidity. The Company believes that it
      will be able to obtain financing, if needed, although there can be no
      assurances of such.

      In accordance with the requirements of the Exchange Act, the Registrant
      caused this report to be signed or behalf by the undersigned thereunto
      duly authorized.

                                        Comprehensive Medical Diagnostics
                                          Group, Inc.
                                        A Florida Corporation


                                        /s/ Ronald Wilheim
                                        ----------------------------------------
                                        Ronald Wilheim
                                        Chief Executive Officer


17