================================================================================

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

                                   Form 1O-KSB

               [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

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

                         Commission File Number: 0-25974

                         CAPITAL DEVELOPMENT GROUP, INC.
                 (Name of small business issuer in its charter)

                   Oregon                                        93-1113777
(State or other jurisdiction of incorporation                (I.R.S. Employer
                       or organization)                      Identification No.)

               4333 Orange Street, Suite 3600, Riverside, CA 92501
               (Address of principal executive offices) (Zip Code)

         Issuer's telephone number, including area code: (909) 276-0873

      Securities registered under Section 12(b) of the Exchange Act: None

         Securities registered under Section 12(g) of the Exchange Act:
                         Common Stock, par value $0.0001
                                (Title of Class)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days:
Yes [  ]  No [XX]

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

Issuer's revenues for its most recent fiscal year were $54,010. The aggregate
market value of voting stock held by non-affiliates of the registrant was
$1,505,373 as of March 30, 2001, based upon the last sales price as reported on
the Nasdaq OTC Bulletin Board.

The number of shares outstanding of the Registrant's Common Stock as of March
29, 2001 was 10,163,935.

Transitional Small Business Disclosure Format (check one): Yes [  ]  No [ X ]

                      Documents Incorporated by Reference
None.

================================================================================
<PAGE>
<TABLE>
<CAPTION>
                         CAPITAL DEVELOPMENT GROUP, INC.
                                FORM 10-KSB INDEX




                                     PART I
                                                                                          Page

<S>                                                                                       <C>
Item 1.             Description of Business..............................................  3

Item 2.             Description of Property..............................................  4

Item 3.             Legal Proceedings....................................................  4

Item 4.             Submission of Matters to a Vote of Security Holders..................  5

                                     PART II

Item 5.             Market for Common Equity and Related Stockholder Matters.............  5

Item 6.             Management's Discussion and Analysis or Plan of Operation............  6

Item 7.             Financial Statements................................................. 10

Item 8.             Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure.................................. 10

                                    PART III

Item 9.             Directors, Executive Officers, Promoters and Control Persons;
                    Compliance with Section 16(a) of the Exchange Act.................... 11

Item 10.            Executive Compensation............................................... 11

Item 11.            Security Ownership of Certain Beneficial Owners and
                    Management........................................................... 12

Item 12.            Certain Relationships and Related Transactions....................... 12

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

                    Signatures........................................................... 13
</TABLE>



<PAGE>
                                     PART I

Note Regarding Forward-Looking Statements. This report includes "forward-looking
statements." Forward looking statements contained in this report are based on
our beliefs and assumptions and on information currently available to our
management. Forward-looking statements include statements in which words such as
"expect, " "anticipate," "intend," "plan," "believe," "estimate," "consider," or
similar expressions are used. You should not construe any forward-looking
statement as a guarantee of future performance. These predictions inherently
involve risks, uncertainties and assumptions. Our future results and stockholder
values will differ from those expressed in these forward-looking statements, and
those variations may be material and adverse. Many of the factors that will
affect these results and values are beyond our ability to control or predict. A
partial list of the factors that may cause our actual results to vary from our
expectations is set forth in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

ITEM 1.  DESCRIPTION OF BUSINESS

(a)      Business Development

         Capital Development Group, Inc. ("CDG", the "Company" or the
         "Registrant") is an Oregon corporation incorporated on May 19, 1993.
         Its authorized capital consists of 30,000,000 shares of common stock,
         of which 10,163,935 shares were issued and outstanding as December 31,
         2000. Shares of CDG common stock have traded on the Nasdaq Stock Market
         - OTC Bulletin Board since September 1994 under the symbol "CDVG."

         CDG has never been the subject of a bankruptcy or receivership.
         However, in late 1998 and early 1999, we resolved and settled claims
         with a number of our creditors by exchanging creditors' claims totaling
         approximately $460,000 for cash amounting to approximately $15,000 and
         144,600 shares of our common stock. We were unable to locate
         approximately 14 creditors holding claims totaling, in the aggregate,
         approximately $90,000 (with no individual claim larger than $20,000).
         To our best knowledge, none of these latter creditors have actively
         pursued their claims since 1995, and none have contacted us since early
         1996. Therefore, we do not plan to pursue the creditors or pay any
         claims they might assert.

         In early 2000 CDG acquired two companies - IntraMed Corporation
         ("IntraMed") and Healthsource Financial Advisors ("HFA"). IntraMed is a
         developer of an Internet based referral, scheduling, billings and
         claims processing software for the healthcare industry. HFA is a
         healthcare financial consulting firm. Both company's were acquired for
         stock.

                                       3
<PAGE>
(b)      Business of Issuer

         CDG was originally formed to be a Medical Accounts Receivable (MAR)
         factoring company. We developed a software package (Administrator 1) to
         help manage the MAR's. After the acquisition of IntraMed Corporation in
         April 2000, the Company changed direction to become an information
         management Company in the healthcare industry.

         CDG currently acts as a holding Company for two ongoing businesses,
         IntraMed Corporation and Healthsource Financial Advisors.
         CDG, as the parent Company, is responsible for funding and
         helping with business contacts to enhance the profitability of its
         subsidiaries.

         We have no employees. Our president, Mr. Michael P. Vahl, receives no
         salary or other benefits, but bills us for his services at the rate of
         $100 per hour. At present, we owe Mr. Vahl approximately $130,000 for
         accrued hourly billings and expenses.

         IntraMed is a software company with its principal product being
         Internet based, medical referral, scheduling, billings and claims
         processing software. IntraMed currently has a small client base while
         it finishes the development of the system. It is now ready to go to
         market and CDG intends to help IntraMed with marketing and sales
         support to achieve profitability in 2001.

         HFA is a healthcare financial consulting company. Due to the
         resignations of the two employees of HFA in December 2000, HFA is
         currently in a dormant stage.

ITEM 2.  DESCRIPTION OF PROPERTY

The Registrant does not currently own any real property. We are currently
leasing 1,200 square feet of office space in Riverside, California to conduct
our operations.

We also own 7 computers, 2 servers, a laser printer and various pieces of office
furniture.

ITEM 3.  LEGAL PROCEEDINGS

The Registrant is not currently involved in any legal proceedings.

                                       4
<PAGE>
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of fiscal 2000.


                                     PART II


ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market Information

The common stock of Capital Development Group, Inc. is currently traded on the
NASDAQ Over the Counter Bulletin Board ("OTCBB") under the symbol CDVG. The
stock has traded regularly over the past year. Over the most recent 52-week
period the stock has traded in a range of $0.188 (low) and $3.00 (high) per
share. The trading history of the stock for the past two years is summarized
below.

          ------------- ---------------- --------------------
          QUARTER       LOW TRADE        HIGH TRADE
          Q4 2000         1/4                1 14/16
          ------------- ---------------- --------------------
          Q3 2000       1 3/16               2 11/16
          ------------- ---------------- --------------------
          Q2 2000         3/16               3
          ------------- ---------------- --------------------
          Q1 2000         5/16                 3/4
          ------------- ---------------- --------------------
          Q4 1999         3/16                 5/8
          ------------- ---------------- --------------------
          Q3 1999         1/8                  1/4
          ------------- ---------------- --------------------
          Q2 1999         1/4                  5/16
          ------------- ---------------- --------------------
          Q1 1999         1/16                 3/4
          ------------- ---------------- --------------------

The quotations reflect reported inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.

Approximately 801,086 of the Registrant's shares are held in street name.
Approximately 50 individual shareholders hold the remaining shares of common
stock. We have not paid dividends on our common stock and do not anticipate
paying dividends in the future.










                                       5
<PAGE>
ITEM 6.  MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

(a)      Plan of Operation

In recent months our president, Mike Vahl, has satisfied our cash requirements
by lending funds to us in exchange for demand promissory notes. At December 31,
2000 they totaled approximately $55,000.



The Company hopes to negotiate a debt financing line of credit in the second
quarter of 2001. This line will help stabilize the company's cash flow and help
with marketing the Company's products.



The Company plans to start marketing IntraMed's Software Package, The Patient
Tracking Wizard ("PTW") in mid 2001. IntraMed has spent much of 2000 making
enhancements to the software and feels that with the help of its current
customers, the software is ready to be marketed on a national basis.



The PTW is perfectly tailored for the Workers Compensation market. The Internet
accessibility is designed for case managers located remotely from their
corporate headquarters or offices. The case managers can access the software
from anyplace that they can access the Internet. This provides great flexibility
for the case managers as well as the Workers Compensation Insurance Carriers.
The PTW can also function efficiently in both a physicians office setting or a
medical clinic setting



(b)      Management's Discussion and Analysis of Financial Condition and Results
         of Operations


Mr. Vahl, CDG's current president, has indicated a willingness to continue to
loan money to CDG until we become operational and profitable, but he is under no
obligation to do so, and he may therefore withdraw his lending commitment and
demand payment of outstanding debts at any time.

However, a number of uncertainties may have an effect on our business, financial
conditions and operations, and those effects may be material and adverse. These
uncertainties include the following:



                                       6
<PAGE>
WE WILL REQUIRE ADDITIONAL FUNDING TO COMMENCE OPERATIONS.

We currently have no substantial cash reserves and have continued to accumulate
significant liabilities. If we do not receive additional capital during the
first half of 2001, we will be unable to implement our business plan and we will
not generate revenues sufficient to satisfy our existing liabilities. One result
of such an event is that our stock price would decrease materially and could
become valueless.

WE MAY BE UNABLE TO CONTINUE BORROWING MONEY FROM MR. VAHL AND HE MAY CALL OUR
OUTSTANDING OBLIGATIONS.

We recently have met our current expenses by borrowing money from our
controlling shareholder, Mr. Mike Vahl, in exchange for demand promissory notes.
We anticipate continuing to fund our necessary expenses by borrowing additional
funds from Mr. Vahl until we begin to generate revenues sufficient to satisfy
our current obligations. However, Mr. Vahl is not subject to a binding
obligation to lend additional funds to CDG, and there can be no assurance that
he will continue to do so. If we fail to obtain the necessary capital by
borrowing money from this individual or from other sources, our business,
financial condition and operation will be affected materially and adversely.

Additionally, we owe substantial sums of money to Mr. Vahl, under terms that
require payment on demand. If he should demand repayment of all or a portion of
the loans before we generate sufficient revenues to fund these payments, such a
demand would have a material adverse effect on our business, operations and
financial condition.

WE ARE ENTERING INTO A MARKET THAT CURRENTLY IS EXPERIENCING SIGNIFICANT
COMPETITION.

The market for medical billing services and related entities currently is served
by a substantial number of businesses, including both medical practice
management companies and billing and collection services. Many entities with
which we will compete are substantially better funded and have gathered
significant market share. Moreover, some of these enterprises have significant
cash reserves and can better fund shortfalls in collections that might have a
more pronounced impact on companies such as ours. Some of these companies also
have greater experience and/or more efficient collection methods than we might
develop. If we fail to compete effectively with businesses that provide similar
services, our business operations and financial condition will be affected
materially and adversely.







                                       7
<PAGE>
THE COMPANY ISSUED $235,000 IN CONVERTIBLE DEBT THAT IS DUE ON NOVEMBER 30,
2001.

In May and June 2000, the Company issued $235,000 in Convertible Notes. These
notes have a due date of November 30, 2001. They have a coupon rate of 10% and
will convert the amount due plus accrued interest into the Companies' common
stock at fifty cents ($.50) per share. The notes have six different triggering
events that allow the note holders to convert into stock at their option.  No
notes have been converted as of December 31, 2000.

DELINQUENT SEC FILINGS

The Companuy's June 30, 2000 and September 30, 2000 Form 10-QSBs were not
reviewed by the Company's accountants in accordance with Statement on Auditing
Standards No. 71 ("SAS 71"), "Interim Financial Information". Federal Securities
law requires SAS 71 reviews. Additionally, the Company has not filed Form 8-K in
connection with the acquisitions of IntraMed and HFA. Furthermore, as of May 18,
2001, the Company has not filed form 10-KSB for the year ended December 31, 2000
or Form 10-QSB for the quarter ended March 31, 2001. Such filing delinquencies
constitute securities laws non-compliance and, among other actions enforceable
by the SEC, could result in de-listing of the Company's common stock from the
OTCBB.

In addition, any owners of the Company's restricted securities who are otherwise
eligble to sell such securities under Rule 144 may be temporarily unable to do
so until such filing delinquencies are cured.

THE COMPANY ENTERED INTO AN AGREEMENT WITH CENTEX SECURITIES TO HELP MAKE A
MARKET IN OUR STOCK.

In June 2000, the Company entered into an agreement with Centex Securities to
assist them in helping to make a market in its stock. Centex is to bring on
market makers and provide general counsel in helping the Company make decisions
as it relates to the public market for its stock. The Centex agreement was paid
for with 600,000 shares of common stock.

DURING THE YEAR THE COMPANY HAD A NUMBER OF EQUITY TRANSACTIONS.

The company acquired 100% of the IntraMed Corporation common stock in April 2000
for 1,540,000 shares of its Common Stock. IntraMed has as its main asset the
Patient Tracking Wizard (PTW). The PTW has been going through extensive
enhancement though the balance of 2000 and early 2001. We intend to start
marketing the software on a national basis in mid 2001.

The Company acquired a 100% interest in Healthcare Financial Advisors, LLC. in
May 2000 for 350,800 shares of its Common Stock as well as 157,867 shares of the
companies Class A Preferred Stock. HFA spent the balance of 2000 trying to get
operational with its Quick Pay product. A number of circumstances contributed to
the failure of HFA to achieve its goal. Consequently the employees of HFA
resigned in December 2000. The


                                       8
<PAGE>
operations of HFA have been suspended and there are no plans for them to
recommence at this date.

The Company issued shares in exchange for services to Tiger Branch and Centex
Securities. Tiger Branch does Public Relations for the Company and Centex
provides market makers and general counsel to the Company.

The Company issued shares in exchange for Notes Payables due to Mr. Gordon Root
and Mr. Michael Vahl. Mr. Root loaned money to the Company and agreed to take
stock as repayment in exchange for the note amount plus accrued interest. Mr.
Vahl agreed to exchange stock for the accrued management services and accrued
expenses that he had incurred up through June 2000.

The Company also issued warrants in a couple of separate transactions. The
Convertible Notes sold by the Company in 2000 had warrants attached. For each
unit purchased ($5,000), the note holder received warrants to purchase 10,000
shares of the Company's common stock ($.50 per share) that would expire on
November 30,2000. Subsequently, the warrant agreements were modified to be $.25
per share and extended to December 31, 2000. $52,500 was raised (210,000 shares
sold) from the sale of these warrants. The Company also borrowed money from an
investor in September 2000. In exchange for the loan at 10% per annum, the
Company agreed to give the investor warrants to purchase up to 50,000 shares of
the Company's common stock at $.50 per share with an expiration date in
September 2001.

THE COMPANY HAD A SIGNIFICANT LOSS IN 2000.

The Company had a net loss of $3,811,343 in 2000. This was due primarily due to
stock issuances and other costs associated with the issuance of notes and the
suspension of operations for HFA. The loss from operations in 2000 was $886,415.

THE STATUS OF THE COMPANIES' NEW SUBSIDIARIES.

IntraMed has spent the 2nd half of 2000 as well as the 1st half of 2001
enhancing the Patient Tracking Wizard. It currently has 4 employees: three
Software Engineers and one Customer Service Representative. The Company plans to
launch the PTW on a nationwide basis in the 3rd quarter of 2001. The Company
believes that there is a large segment of the Workers Compensation arena that is
available to be marketed to.

Healthsource Financial Advisors has had their operations suspended as of
December 31, 2000. This occurred when the two employees of HFA resigned due to
frustration in bringing HFA's product to Market. The Company is not attempting
to restart operations at this time.



                                       9
<PAGE>
THE COMPANY HAS SIGNED A LETTER OF INTENT TO ACQUIRE MEDTEL CENTERS, INC.

On April 11, 2001, the Company signed a Letter of Intent to purchase 100% of the
common stock of MedTel Centers Inc. (MedTel). MedTel is currently a customer of
IntraMed. MedTel is currently in the business of directing and managing pain
management surgeries. They contract for facilities and re-bill the facilities
out to Workers Comp insurance carriers at a marked-up price.

MedTel is currently negotiating to manage Outpatient Surgery Centers using the
IntraMed Software Platform. This creates a new highly profitable area of
business for MedTel. It also creates a new customer base for IntraMed, who will
add a number of new customers paying a monthly software-licensing fee.

The Company hopes to complete the acquisition by the end of the 2nd quarter
2001.



ITEM 7.  FINANCIAL STATEMENTS

         Financial Statements are included as part of this document at the end
         of the document.

ITEM 8.  CHANGES WITH AND DISAGREEMENTS WITH ACCOUNTANTS

         On March 23, 2001, the Company engaged Squar, Milner, Reehl &
         Williamson LLP as its principal accountants. There were no
         disagreements with the former accountants on any matter of accounting
         principles or practices, financial statement disclosure or auditing
         scope or procedure of any reportable events. The former accountants
         resignation became effective on May 15, 2000.









                                       10
<PAGE>
                                    PART III


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

Michael P. Vahl, age 43, is the President, Secretary and a director of CDG. Mr.
Vahl's one-year term as a director has been renewed annually at each of the last
three shareholder meetings. Mr. Vahl is compensated on an hourly basis as an
independent contractor for his activities on behalf of CDG. CDG has no other
employees. Mr. Vahl has been with the Registrant since its inception in 1993.
From its inception until January 1996, he was the Executive Vice president and
Chief Operating Officer. In January of 1996, he became the Registrant's
President and Chief Executive Officer. Since 1988, Mr. Vahl has also owned and
operated The Vahl Software Group, a sole proprietorship that provides software
development and consulting services. Mr. Vahl is not an officer or director of
any other entities, and has never been involved in any bankruptcies or criminal
matters.

Gordon C. Root, age 41 is a director of CDG. Mr. Root's one year term began at
the Annual Meeting of the Shareholders held on August 16, 2000. Mr. Root has
been a shareholder of CDG since 1994.

Based upon a review of forms submitted to the registrant, neither Mr. Vahl nor
Mr. Root has timely filed all reports required to be filed pursuant to Section
16(a) of the Exchange Act.

ITEM 10. EXECUTIVE COMPENSATION

Michael P. Vahl is the President of CDG, but he currently receives no salary or
other benefits. He bills CDG on an hourly basis of $100 per hour for time he
spends on behalf of CDG. In the last three years, CDG has paid the following
amounts to Mr. Vahl: 1996 - $0, 1997 - $0, 1998 - $17,300, 1999 - $0. CDG
currently is indebted to him for approximately $185,000 in loans and unpaid
services, and anticipates that this indebtedness will grow to approximately
$210,000 by the end of the second quarter of 2000. In addition, in December
1996, CDG issued 151,542 shares of preferred stock to Mr. Vahl in exchange for
unpaid management services of $530,396 that dated from 1992. This preferred
stock was converted to 497,946 shares of CDG common stock in December 1998.

If we are successful at implementing our operational plan in 2000, we expect to
pay Mr. Vahl additional consulting fees, but we will not pay salary or benefits
to Mr. Vahl until we generate cash flow from operations.



                                       11
<PAGE>
CDG has not established and does not anticipate establishing any benefit plans,
option plans or other forms of alternative executive compensation.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


-------------- ------------------------ -------------------- ----------------
                                        Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percent of Class
-------------- ------------------------ -------------------- ----------------
Common Stock   Michael P. Vahl
-------------- ------------------------ -------------------- ----------------
Common Stock   Gordon Root
-------------- ------------------------ -------------------- ----------------


No arrangement known to the registrant would reasonably be expected to result in
a change in control of the registrant.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In December 1996, CDG issued 151,542 shares of preferred stock to our President,
Michael P. Vahl, in return for unpaid management services of $530,396 that dated
from 1992. Mr. Vahl, as the sole director of CDG, independently approved this
transaction by making the determination that the conversion would benefit CDG by
reducing the debt on CDG's balance sheet.

Mr. Vahl has also advanced approximately $55,000 to CDG that also bears interest
at 0% to pay current operating expenses, and he may, but is not required to,
continue to do so until CDG becomes operational and profitable. These advances
are reflected in the accrued management services and expense obligations
described under "Executive Compensation" above. CDG may borrow additional funds
from Mr. Vahl during the remainder of 2000, but Mr. Vahl is not obligated to
make such loans. These loans, if made, will be payable on demand.

In December 1998, Mr. Gordon Root, a shareholder of the Company, loaned CDG
$20,000 to facilitate the payment of creditors and provide short-term working
capital. The loan is a demand loan that bears interest at 8.5% and which Mr.
Root may call at any time. Mr. Root is not obligated to loan any additional
funds to CDG.

On June 30, 2000, the Company converted $117,250 in accrued management services
to Mr. Vahl into 234,500 shares of the Company's common stock. The stock was
restricted under Rule 144. On the same date the Company converted the $20,000
note plus accrued interest, owed to Mr. Root, into 45,100 shares of the
Company's common stock. The stock was restricted under Rule 144.



                                       12
<PAGE>
Except for the relationships disclosed above, we do not anticipate entering into
any contracts or arrangements with officers, directors or other affiliates of
CDG.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

None.

Signatures

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


                                                CAPITAL DEVELOPMENT GROUP, INC.

                                                By:                 /s/
                                                Michael P. Vahl, President
                                                Principal Executive Officer
                                                April 6, 2001



                                                By:                 /s/
                                                Michael P. Vahl, President
                                                Principal Financial Officer
                                                April 6, 2001

















                                       13
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS





Independent Auditors' Report.......................................... 1

Consolidated Balance Sheets........................................... 2

Consolidated Statements of Operations................................. 3

Consolidated Statements of Stockholders' Deficit...................... 4

Consolidated Statements of Cash Flows................................. 6

Notes to Consolidated Financial Statements............................ 8


<PAGE>
                          INDEPENDENT AUDITORS' REPORT


         To the Board of Directors and Stockholders
         Capital Development Group, Inc. and Subsidiaries

         We have audited the accompanying consolidated balance sheet of Capital
         Development Group, Inc. and Subsidiaries (collectively referred to as
         the "Company"), as of December 31, 2000, and the related consolidated
         statements of operations, stockholders' deficit and cash flows for the
         year then ended. These financial statements are the responsibility of
         the Company's management. Our responsibility is to express an opinion
         on these financial statements based on our audit. The financial
         statements for the year ended December 31, 1999, were audited by other
         auditors whose report dated March 17, 2000 expressed an unqualified
         opinion on those statements.

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

         In our opinion, the consolidated financial statements referred to above
         present fairly, in all material respects, the consolidated financial
         position of Capital Development Group Inc. and Subsidiaries as of
         December 31, 2000, and the consolidated results of its operations and
         its cash flows for the year then ended in conformity with accounting
         principles generally accepted in the United States.

         The accompanying consolidated financial statements have been prepared
         assuming that the Company will continue as a going concern. The Company
         has an accumulated deficit and has experienced a loss of approximately
         $4,000,000 for the year ended December 31, 2000. As discussed in Note
         14 to the consolidated financial statements, a significant amount of
         additional capital will be necessary for the Company to maintain and
         increase operations. This condition raises substantial doubt about the
         Company's ability to continue as a going concern. Management's plans
         regarding these matters are also described in Note 14. The accompanying
         consolidated financial statements do not include any adjustments that
         might result from the outcome of this uncertainty.



         /s/ SQUAR, MILNER, REEHL & WILLIAMSON, LLP

         May 18, 2001
         Newport Beach, California
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------
                                                        2000          1999
                                                   ------------- --------------

                                     ASSETS

Current Assets
     Cash                                          $    19,790   $          -
     Accounts receivable                                13,603              -
     Other current assets                                3,623              -
                                                   ------------- --------------
                                                        37,016              -

Furniture and Equipment, net                             19,885             -

Intangible Assets, net                                 385,965              -
                                                   ------------- --------------

                                                   $   442,866   $          -
                                                   ============= ==============


                     LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities
   Accounts payable and accrued liabilities        $   171,209   $     14,934
   Due to related parties                              195,596        102,701
   Convertible Notes Payable                           247,904              -
   Notes payable                                        78,125              -
                                                   ------------- --------------
                                                       692,834        117,635

Deferred Tax Liability                                  99,516              -

Commitments and Contingencies

Stockholders' Deficit
   Common stock; $0.0001 par value; 30,000,000
     shares authorized; 10,163,935 and 7,158,535
     shares issued and outstanding as of December
     31, 2000 and 1999, respectively                      1,017            716
   Convertible Series A preferred stock; $0.0001
     par value; 300,000 shares authorized;
     157,867 shares issued and outstanding as of
     December 31, 2000; no shares issued and
     outstanding as of December 31, 1999                     16              -
   Additional paid-in capital                         5,620,102      2,040,925
   Accumulated deficit                               (5,970,619)    (2,159,276)
                                                   ------------- --------------
                                                      (349,484)      (117,635)
                                                   ------------- --------------

                                                   $   442,866   $          -
                                                   ============= ==============

--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

                                     Page 2
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 For the Years Ended December 31, 2000 and 1999
--------------------------------------------------------------------------------
                                              2000            1999
                                         -------------   -------------


REVENUES                                 $      54,010   $           -

OPERATING EXPENSES
     Depreciation and amortization             319,461               -
     Payroll expenses                          227,317               -
     Management fees                           165,142          40,100
     Other                                     228,505          36,917
                                         -------------   -------------
                                               940,425          77,017
                                         -------------   -------------

LOSS FROM OPERATIONS                          (886,415)        (77,017)

OTHER EXPENSES
     Stock promotion expenses                1,564,000               -
     Impairment of goodwill                    964,158               -
     Interest expense                          255,270               -
     Other                                     141,500               -
                                         -------------   -------------
                                             2,924,928               -
                                         -------------   -------------

NET (LOSS) BEFORE EXTRAORDINARY GAIN        (3,811,343)        (77,017)

EXTRAORDINARY GAIN ON
  RESTRUCTURING OF DEBT                              -          89,359
                                         -------------   -------------

NET (LOSS) INCOME BEFORE PROVISION
  FOR INCOME TAXES                          (3,811,343)         12,342

PROVISION FOR INCOME TAXES                           -               -
                                         -------------   -------------

NET (LOSS) INCOME                        $  (3,811,343)  $      12,342
                                         =============   =============

BASIC AND DILUTED (LOSS) EARNINGS PER
  COMMON SHARE FROM OPERATIONS
                                         $      (0.43)   $       (0.01)
                                         =============   =============

EARNINGS PER SHARE ON
  EXTRAORDINARY GAIN                      $         -    $        0.01
                                         =============   =============

BASIC AND DILUTED (LOSS) EARNINGS PER
  COMMON SHARE ON NET (LOSS)
  INCOME                                  $      (0.43)   $       0.01
                                         =============   =============

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                  8,845,968       7,116,276
                                         =============   =============

--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

                                     Page 3
<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                 For the Years Ended December 31, 2000 and 1999
--------------------------------------------------------------------------------

                                    Common Stock     Preferred Stock   Additional
                                ------------------  ----------------    Paid-in      Accumulated
                                  Shares    Amount   Shares   Amount    Capital        Deficit          Total
                                ----------  ------  --------  ------  ------------  -------------   ------------
<S>                             <C>         <C>     <C>       <C>     <C>           <C>             <C>
DEFICIT BALANCE -
  December 31, 1998              6,989,500  $  699         -  $    -  $  2,040,942   $ (2,171,618)  $   (129,977)

Issuance of common stock           169,035      17         -       -           (17)             -              -
Net income                               -       -         -       -             -         12,342         12,342
                                ----------  ------  --------  ------  ------------  -------------   ------------
DEFICIT BALANCE -
  December 31, 1999              7,158,535     716         -       -     2,040,925     (2,159,276)      (117,635)

Issuance of common stock and
  preferred stock in
  connection with
  acquisition of IntraMed        1,540,000     154         -       -       388,346              -        388,500
Issuance of common stock in
  connection with acquisition
  of HFA                           350,800      35   157,867      16     1,184,999              -      1,185,050
Conversion of due to related
  parties to common stock
  at $0.50 per share               279,600      28         -       -       139,772              -        139,800
Beneficial conversion feature
  of convertible notes payable           -       -         -       -        93,674              -         93,674
Issuance of warrants in
  connection with issuance
  of convertible notes
  payable                                -       -         -       -       143,470              -        143,470

                                   (continued)

--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

                                     Page 4
<PAGE>

                                    Common Stock     Preferred Stock   Additional
                                ------------------  ----------------    Paid-in      Accumulated
                                  Shares    Amount   Shares   Amount    Capital        Deficit          Total
                                ----------  ------  --------  ------  ------------  -------------   ------------

Modification of warrants in
  connection with issuance of
  convertible notes
  payable                                -  $    -         -  $       $    211,000  $           -   $    211,000
Issuance of warrants for
  services                               -       -         -       -       353,000              -        353,000
Issuance of stock for services
  at $1.67 per share               600,000      60         -       -       999,940              -      1,000,000
Issuance of stock for services
  at $0.50 per share                25,000       3         -       -        12,497              -         12,500
Exercise of warrants at $0.25
  per share                        210,000      21         -       -        52,479              -         52,500
Net loss                                 -       -         -       -             -     (3,811,343)    (3,811,343)
                                ----------  ------  --------  ------  ------------  -------------   ------------
DEFICIT BALANCE -
  December 31, 2000             10,163,935  $1,017   157,867  $   16  $  5,620,102  $  (5,970,619)  $   (349,484)
                                ==========  ======  ============================================================
</TABLE>



--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

                                     Page 5

<PAGE>
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 For the Years Ended December 31, 2000 and 1999
--------------------------------------------------------------------------------
                                                                            2000              1999
                                                                     -------------  -------------
<S>                                                                  <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) income                                                    $  (3,811,343) $     12,342
Adjustments to reconcile net (loss) income to net cash used in
     operating activities:
         Extraordinary gain on restructuring of debt                             -       (89,359)
         Depreciation and amortization expense                             319,461             -
         Impairment of goodwill                                            964,158             -
         Issuance of warrants for services                                 353,000             -
         Extension of warrant agreements                                   211,000             -
         Issuance of stock for services                                  1,012,500             -
         Interest expense related to discount on note payable              253,173             -
         Changes in operating assets and liabilities:
              Accounts receivable                                          (13,603)            -
              Other current assets                                           4,830             -
              Accounts payable and accrued liabilities                      73,574        57,017
              Due to related parties                                       247,276             -
                                                                     -------------  -------------
Net cash used in operating activities                                     (385,974)      (20,000)
                                                                     -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment                                        (24,856)            -
                                                                     -------------  -------------
Net cash used in investing activities                                      (24,856)            -
                                                                     -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable                                    310,000             -
Net increase in amounts due to related parties                              68,120             -
Proceeds from exercise of warrants                                          52,500             -
                                                                     -------------  -------------
Net cash provided by financing activities                                  430,620             -
                                                                     -------------  -------------

NET INCREASE (DECREASE) IN CASH                                             19,790       (20,000)

CASH - beginning of year                                                         -        20,000
                                                                     -------------  -------------

CASH - end of year                                                   $      19,790  $          -
                                                                     =============  =============



--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

                                     Page 6


<PAGE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Discount on notes payable related to allocation of relative fair
     value of warrants and beneficial conversion feature             $     237,144  $          -
                                                                     =============  =============

Intangible assets acquired from acquisitions                         $   1,573,550  $          -
                                                                     =============  =============

Conversion of due from related parties to common stock               $     139,800  $          -
                                                                     =============  =============

Deferred tax liability from acquisition                              $     127,800  $          -
                                                                     =============  =============

</TABLE>
























--------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.

                                     Page 7

<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

1. NATURE OF BUSINESS AND ACQUISITIONS

Nature of Business

Capital Development Group, Inc. (the "Company") was incorporated in Oregon on
May 19, 1993. Prior to the acquisitions of IntraMed Corporation and HealthSource
Financial Advisors, LLC, (see Acquisitions of Subsidiaries discussed below) the
Company primarily engaged in the business of purchasing healthcare receivables
from hospitals and other healthcare institutions at a discount and administering
the collection process of such receivables. As of December 31, 2000, the Company
has redirected its efforts and has become primarily focused of the operations on
the newly acquired subsidiaries.

The Company is publicly traded on the Over the Counter Bulletin Board ("OTCBB")
under the symbol "CDVG". As discussed in Note 12, the Company is delinquent on
several required SEC filings.

Proposed Acquisitions

On April 11, 2001, the Company entered into a non-binding letter of intent
agreement to acquire all of the outstanding common stock of MedTel Centers, Inc.
("MedTel"), a company engaged primarily in the business of network management of
medical facilities and physicians. Such proposed purchase is intended to qualify
as a tax-free transaction under Section 368 (a)(1)(B) of the 1986 Internal
Revenue Code, as amended. According to the terms of the agreement, the Company
would issue 2,000,000 shares of restricted common stock upon the closing date
and an additional 2,000,000 shares of restricted common stock within 90 days of
the first anniversary of such closing date. As of May 18, 2001, such proposed
acquisition has not been consummated.

Acquisitions of Subsidiaries

As more fully discussed in Note 3, on April 29, 2000, the Company acquired 100%
of IntraMed Corporation ("IntraMed") in exchange for common stock. IntraMed is a
developer of an Internet based referrals, scheduling, billings and claims
processing software for the health care industry. The acquisition was accounted
for as a purchase, and the total purchase consideration approximated $388,000.
The accompanying consolidated statements of operations include the revenues and
expenses of IntraMed from April 29, 2000 through December 31, 2000.





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

                                     Page 8
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

1. NATURE OF BUSINESS AND ACQUISITIONS (continued)

Acquisitions of Subsidiaries (continued)

Also as more fully discussed in Note 3, on May 31, 2000, the Company acquired
100% of HealthSource Financial Advisors, LLC, ("HFA") in exchange for common
stock and preferred stock. HFA is a provider of healthcare consulting services.
The acquisition was accounted for as a purchase, and the total purchase
consideration approximated $1,200,000. The accompanying consolidated statements
of operations include revenues and expenses of HFA from May 31, 2000, to
December 31, 2000. At December 31, 2000, management determined that goodwill
recognized in the purchase of HFA was impaired due to the cessation of
operations by HFA, and, accordingly, recorded an impairment expense of
approximately $964,000 for the year ended December 31, 2000.

There are certain restrictions on the sale or other transfer of the Company's
common stock issued under these acquisitions. Such stock, generally referred to
as "Rule 144 stock," was not registered under the Securities Act of 1933, as
amended (the "Act"), in reliance upon an exemption from its registration
requirements. Each exchanging stockholder agreed to (1) acquire such stock for
his/her own account and (2) hold the stock for investment purposes only. In
addition, the stock certificates must contain a legend documenting these
restrictions, and the legend requires the stockholder to obtain a legal opinion
that any proposed sale is exempt from registration under the Act.


2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The summary of significant accounting policies of the Company presented below is
designed to assist the reader in understanding the Company's consolidated
financial statements. Such financial statements and these notes are the
representations of Company management, which is responsible for their integrity
and objectivity. These accounting policies conform to accounting principles
generally accepted in the United States ("GAAP") in all material respects, and
have been consistently applied in preparing the accompanying consolidated
financial statements.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the
Company and those of its wholly-owned subsidiaries IntraMed and HFA
(collectively hereinafter referred to as the "Company"). The operations of the
subsidiaries acquired on April 29, 2000 and May 31, 2000 are included in the
accompanying consolidated statements of operations from such dates through
December 31, 2000. All significant intercompany balances and transactions have
been eliminated in consolidation.



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

                                     Page 9
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at December 31, 2000 and 1999
and the reported amounts of revenues and expenses during the years then ended.
Actual amounts could materially differ from those estimates.

Concentrations

The Company extends credit to its customers based upon an evaluation of each
customer's financial condition and credit history. The Company generally does
not require collateral from its customers. Should a customer be unable to meet
its obligation to the Company, the accounting loss would equal the recorded
account receivable.

Management periodically reviews accounts receivable and establishes an allowance
for accounts deemed uncollectible. No such allowances were considered necessary
at December 31, 2000 and 1999.

Proprietary Software

The Company does not have any patents or patent applications pending on its
proprietary software. The Company relies on trade secret, trademark and
copyright law to protect its proprietary software; such protection may be
limited or unavailable in some foreign countries.

Furniture and Equipment

Furniture and equipment are stated at cost. Major renewals and improvements are
capitalized, while replacements, maintenance and repairs which do not
significantly improve or extend the useful life of the asset are expensed when
incurred.

Depreciation of furniture and equipment is computed using the straight-line
method over the estimated useful lives of the assets, typically five years.
Accumulated depreciation and amortization totaled $4,971 at December 31, 2000.





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


                                    Page 10
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Intangible Assets

Intangible assets, which resulted from the purchases of IntraMed and HFA,
consist of completed technology, customer relationships, and goodwill (see Note
3). Completed technology that was acquired in the purchase of IntraMed is
amortized using the straight-line method over three years. Accumulated
amortization of acquired completed technology totaled $60,000 at December 31,
2000. Customer relationships, which were also acquired in the purchase of
IntraMed, are amortized using the straight-line method over their estimated
useful lives of three years. Accumulated amortization of customer relationships
totaled $16,444 at December 31, 2000. Goodwill, resulting from both the
purchases of IntraMed and HFA, represents the excess of cost over the fair value
of net assets acquired and is amortized using the straight-line method over its
estimated useful life of three years. Accumulated amortization of goodwill
totaled approximately $34,000 at December 31, 2000. As discussed in Note 1
regarding acquisitions, management determined that the goodwill acquired in the
purchase of HFA was fully impaired at December 31, 2000 due to the cessation of
operations by HFA, and, accordingly, recorded an impairment expense of
approximately $964,000 for the year ended December 31, 2000.

Impairment of Long-Lived Assets

The Company reviews the carrying values of its long-lived and identifiable
intangible assets for possible impairment whenever events or changes in
circumstance indicate that the carrying amount of the assets may not be
recoverable. If the cost basis of a long-lived asset is greater than the
projected future undiscounted net cash flows from such asset (excluding
interest), an impairment loss is recognized. Impairment losses are calculated as
the difference between the cost basis of an asset and its estimated fair value.
Any long-lived assets held for disposal are reported at the lower of their
carrying amounts or fair values less costs to sell. As noted above, the Company
impaired goodwill associated with the acquisition of HFA. No such impairment
charges were recorded in 1999.

Stock Purchase Warrants Issued with Convertible Notes Payable

The Company issued warrants in connection with the issuance of certain notes
payable (see Note 4). Under Accounting Principles Board Opinion No. 14 ("APB
14"), "Accounting for Convertible Debt and Debt Issued with Stock Purchase
Warrants", the value of such warrants represents a discount from the fair value
of the note payable. Accordingly, the relative fair value of the warrants has
been recorded in the financial statements as a discount from the face value of
the notes. The total discount approximated $150,000 and is amortized over the
respective lives of the related notes of 4 and 18 months. At December 31, 2000,
accumulated amortization on the discount totaled approximately $65,000. Also at
December 31, 2000, management determined that due to the uncertainty of the
ability of
--------------------------------------------------------------------------------
                                    Page 11
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock Purchase Warrants Issued with Convertible Notes Payable (continued)

the Company to continue as a going concern, and the likelihood that the Company
cannot retire such debt as it becomes due, the remaining balance of the discount
should be expensed. Accordingly, the Company has expensed the remaining balance
of the discount of approximately $85,000 during the year ended December 31,
2000.

Beneficial Conversion Feature of Convertible Notes Payable

The convertible feature of certain notes payable (see Note 4) provides for a
rate of conversion that is below market value. Such feature is normally
characterized as a "beneficial conversion feature". Pursuant to Emerging Issues
Task Force No. 98-5 ("EITF 98-5"), "Accounting for Convertible Securities with
Beneficial Conversion Features or Contingently Adjustable Conversion Ratios" and
EITF 00-27, "Application of EITF Issue No. 98-5 to Certain Convertible
Instruments", the Company has determined the value of the beneficial conversion
feature ("BCF") of one such convertible note to be approximately $100,000.
Accordingly, the relative fair value of the BCF has been recorded in the
financial statements as a discount from the face value of the notes. Such
discount is amortized as a note issuance cost over the term of the related debt
obligations using the effective yield method. Amortization related to note
issuance costs totaled approximately $20,000 for the year ended December 31,
2000. Management determined that due to the uncertainty of the Company
continuing as a going concern and the likelihood that the Company cannot retire
such debt as it becomes due, the remaining unamortized balance of note issuance
costs should be expensed at December 31, 2000. Accordingly, the accompanying
consolidated statement of operations for the year ended December 31, 2000
includes a charge of approximately $80,000.

Revenue Recognition

Revenue is recognized when the Company's services are provided.

Income Taxes

Using the liability method required by Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes", ("SFAS109"), the estimated tax
effects of temporary differences between financial and income tax reporting are
recorded in the period in which the events occur. Such differences between the
financial and tax bases of assets and liabilities result in future tax
deductions or taxable income.





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


                                    Page 12
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Income Taxes (continued)

The Company records a valuation allowance for deferred income tax assets when,
based on management's best estimate of taxable income in the foreseeable future,
it is more likely than not that some portion of the deferred income tax asset
may not be realized. It is the Company's intent to file consolidated federal and
state income tax returns.

Equity Instruments

Compensatory stock issuances and similar equity instruments issued to
non-employees in exchange for goods or services are accounted for based on the
estimated fair market value of (1) the goods or services received or (2) the
equity instrument issued, whichever is more reliably measurable. This accounting
policy is in conformity with Statement of Financial Accounting Standards No.
123, "Accounting for Stock-Based Compensation."

Loss per Common Share

Loss per common share is based on the weighted average number of shares of
common stock and common stock equivalents outstanding during the year in
accordance with Statement of Financial Accounting Standards No.
128, "Earnings per Share."

As discussed in Notes 4 and 5, securities that could potentially dilute basic
loss per share (prior to their conversion, exercise or redemption) were not
included in the diluted-loss-per-share computation because their effect is
anti-dilutive.

Recent Accounting Pronouncements

For the quarter ending March 31, 2001 and thereafter, the Company will be
required to adopt Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities", as amended.
Management does not believe that such pronouncement will have a significant
impact on the Company's financial position or results of operations.

Reclassifications

Certain reclassifications have been made to the 1999 financial statement
presentation to correspond to the 2000 format.






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


                                    Page 13
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

3. ACQUISITION OF SUBSIDIARIES

Acquisition of IntraMed

On April 29, 2000, the Company acquired 100% of IntraMed in exchange for
restricted common stock. The transaction was intended to qualify as a tax free
purchase under Section 368 (a)(1)(b) of the 1986 Internal Revenue Code, as
amended. In accordance with the Purchase Agreement, the Company was required to
issue restricted common stock, subject to certain conditions, to the owners of
IntraMed as follows:

    o    900,000 shares of restricted common stock at closing of the
         transaction;

    o    500,000 shares of restricted common stock to be issued upon completion
         of certain software enhancements, provided that the enhancements are
         completed within three years of the closing date;

    o    28,572 shares of restricted common stock if IntraMed's revenues exceed
         certain thresholds during the first year of operations; and

    o    140,000 shares of restricted stock if the Company fails to raise the
         minimum stipulated amount of capital of $250,000 within 90 days of
         closing.

As of December 31, 2000, the performance requirements on IntraMed relating to
the software enhancements and earnings thresholds have not been met, however,
the Company has issued in advance the 500,000 shares of restricted common stock
relating to the software enhancements, without contingencies.

Also as of December 31, 2000, the Company has not raised the minimum stipulated
capital and, accordingly, has issued the identified 140,000 shares of restricted
stock.

The Company has accounted for the acquisition of IntraMed using the purchase
method of accounting. The total purchase consideration of approximately $388,500
was allocated as follows, based on an April 29, 2000 estimated fair value of the
net assets acquired as determined by an independent third party valuation:

Completed technology                        $ 270,000
Customer relationships                         74,000
Goodwill                                       24,211
Current assets                                 24,199
Current liabilities                            (3,910)
                                            ----------

                                            $ 388,500
                                            ==========





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


                                    Page 14
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

3. ACQUISITION OF SUBSIDIARIES (continued)

Acquisition of HFA

On May 31, 2000, the Company issued 350,800 shares of restricted common stock,
157,867 shares of convertible Series A preferred stock, in exchange for of all
of the outstanding shares of the HFA's common stock. An additional 7,159 shares
of restricted common stock and an additional 3,222 shares of convertible Series
A preferred stock are to be issued by the Company if HFA's revenues exceed
certain thresholds during the year ended December 31, 2001. Since, as previously
noted, HFA ceased operations, it is unlikely such shares will be issued. The
acquisition was intended to qualify as a tax-free transaction under Section 368
(a)(1)(B) of the 1986 Internal Revenue Code, as amended. Thereupon, HFA became a
wholly-owned subsidiary of Company.

The Company has accounted for the acquisition of HFA using the purchase method
of accounting. The total purchase consideration of approximately $1,185,050 was
entirely allocated to goodwill, based on the May 31, 2000 estimated fair value
of the net assets acquired. As discussed in Note 2, HFA ceased operations and
accordingly the Company recorded approximately $946,000 of impairment expenses
(equal to the unamortized goodwill balance) for the year ended December 31,
2000.

Other Matters

The purchase price allocations set forth above for both acquisitions are based
in part on an independent third-party valuation of the estimated fair value of
the Company's restricted common stock issued in the acquisitions. Such value has
been estimated at $0.188 per share for the acquisition of IntraMed and $0.338
for the acquisition of HFA, considering blockage and restrictions on the sale of
such stock.

The Company has accounted for the Series A convertible preferred stock issued in
connection with the acquisition of HFA at the estimated value of the common
stock as if the shares of preferred stock were converted into common stock.






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


                                    Page 15
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

3. ACQUISITION OF SUBSIDIARIES (continued)

Pro Forma Information

The table below reflects certain pro forma information as though the IntraMed
and HFA acquisitions occurred at the beginning of each period presented:

                                                   Year Ended December 31
                                                     2000          1999
                                                  (Unaudited)   (Unaudited)
                                                 ------------- -------------

Revenues                                         $    116,777  $     88,144
                                                 ============= =============

(Loss) from continuing operations                $ (3,839,600) $ (1,386,723)
                                                 ============= =============

Net (Loss)                                       $ (3,839,600) $ (1,297,364)
                                                 ============= =============

(Loss) from continuing  operations per
   common share, basic and diluted               $      (0.15) $      (0.40)
                                                 ============= =============

(Loss) per common share, basic and diluted       $      (0.40) $      (0.14)
                                                 ============= =============


4. NOTES PAYABLE

In May 2000, the Company issued convertible notes payable totaling $235,000
("Note Payable I"), bearing interest at 10% per annum, with principal and
accrued interest due on November 30, 2001 and subordinated by all current and
future obligations of the Company. Such notes require no payment of principal or
interest during the term; all such amounts are due at maturity. Also, such notes
were issued with detachable warrants (see Note 5). The Holder may convert all of
the outstanding principal of Note Payable I into the Company's common stock at
(a) the election of each Holder (i) within 120 days prior to the reasonably
anticipated effective date of any registered, underwritten public offering of
the Company's equity securities with proceeds to the Company in excess of
$7,000,000 at a valuation in excess of $15,000,000; (ii) upon the occurrence of
an Event of Default, as defined; (iii) contemporaneously with a private
placement of the Company's equity securities resulting in an investment by one
or a group of five or fewer investors of not less than $2,000,000; (iv)
immediately prior to the closing of any merger, reorganization or sale of all or
substantially all of the Company's assets; (v) on or before the tenth (10th) day
prior to a prepayment date specified in a notice of prepayment; or (vi) at the
Maturity Date; or (b) at the election of the Company within 120 days prior to
the reasonably anticipated effective date of any Qualifying Public Offering, as
defined.



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

                                    Page 16
<PAGE>
--------------------------------------------------------------------------------
                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

4. NOTES PAYABLE (continued)

The number of common shares that can be issued upon conversion shall be equal to
the total amount of principal and unpaid interest on Note Payable I as of the
date of conversion, divided by the Conversion Price. The Conversion Price per
share shall be equal to the lesser of (a) the lowest per-share price at which
common stock has been sold to any person (other than pursuant to exercise of
stock options or warrants) at any time after the issuance and before the date of
conversion; or (b) $0.50. No notes have been converted as of December 31, 2000.

In August 2000, the Company issued a note payable totaling $75,000 ("Note
Payable II"), bearing interest at 10% per annum, with principal and accrued
interest due on December 20, 2000 and subordinated by all current and future
obligations of the Company. Note Payable II is in default and the Company is in
negotiations to renew such note.


5. WARRANTS

In connection with the issuance of Note Payable I, the Company issued a total of
470,000 warrants to purchase common stock for no additional consideration, with
an exercise price of $0.50 per share expiring in November 2000. All warrants
were exercisable upon issuance. On November 30, 2000, the Company extended the
life of the warrants by one month and modified the strike price to $0.25 per
share. In December 2000, a total of 210,000 warrants were exercised at $0.25 per
share for a total of $52,500 and are included in common stock in the
accompanying consolidated financial statements. All other unexercised warrants
associated with the issuance of convertible notes payable expired as of December
31, 2000. The proportional fair value of warrants upon issuance in connection
with Note Payable I was approximately $100,000.

In connection with the issuance of Note Payable II, the Company issued a total
of 50,000 warrants to purchase Company common stock at no additional fees with a
strike price of $0.50 per share, expiring in September 2001. All warrants were
exercisable upon issuance. None of such warrants were exercised, expired or
forfeited in 2000. The proportional fair value of the warrants upon issuance of
Notes Payable II was approximately $35,000.

In 2000, the Company issued 200,000 warrants to purchase Company common stock to
related parties, in connection with agreements with stockholders to exchange
shares of restricted common stock for shares of freely tradable common stock at
a strike price of $0.50 per share, expiring in June 30, 2001. No additional
shares were issued related to these agreements.





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                                    Page 17
<PAGE>
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                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

5. WARRANTS (continued)

A summary of the aggregate warrant activity for the year ended December 31, 2000
is presented below:

                                                                 2000
                                                            --------------

Warrants outstanding - December 31, 1999                                -
Warrants issued                                                   720,000
Warrants expired                                                 (260,000)
Warrants exercised                                               (210,000)
                                                            --------------

Warrants outstanding - December 31, 2000                          250,000
                                                            ==============

The fair value of warrants granted in connection with the notes payable
issuances, as described above, have been estimated using the Black-Scholes stock
option pricing model based on the exercise price per share, the market price of
the Company's common stock, and the weighted average assumptions set forth
below:

Expected life                                     3.4 months
Estimated volatility                                 260%
Risk-free interest rate                              5.2%
Dividends                                            Zero


6. RELATED PARTY TRANSACTIONS

The Company's President/CEO, who is also approximately a 50% shareholder,
provides management services for a fee and is also reimbursed for expenses
incurred on behalf of the Company. In total, management fees and expenses
incurred by the Company by the President/CEO totaled approximately $215,000 and
$55,000 for the years ended December 31, 2000 and 1999, respectively. In 2000,
the President/CEO also advanced to the Company approximately $55,000 in cash
that was used for short-term working capital. At December 31, 2000 and 1999, the
Company owed approximately $186,000 and $85,000, respectively, to its
President/CEO. These payables/advances are non-interest bearing and payable on
demand.

In 2000, a shareholder advanced the Company $15,000. Such advance is
non-interest bearing and payable on demand.

In 2000, the Company converted approximately $140,000 of advances/payables from
stockholders, including the Company's President/CEO, into 279,600 shares of
common stock at $0.50 per share.


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                                    Page 18
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                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

6. RELATED PARTY TRANSACTIONS (continued)

At December 31, 2000, the Company had accounts payable due to stockholders of
approximately $25,000, which is included in accounts payable and accrued
liabilities in the accompanying consolidated balance sheets.

All other related party transactions were discussed elsewhere in these notes to
the consolidated financial statements.


7. COMMON STOCK TRANSACTIONS

In 2000, the Company issued, in total, 625,000 shares of common stock for
various marketing services, including investment banking consulting, valued at
approximately $1,025,000.

All other common stock transactions were discussed elsewhere in these notes to
the consolidated financial statements.


8. CONVERTIBLE SERIES A PREFERRED STOCK

The Company's convertible Series A preferred stock is convertible into common
stock at a ratio of 20:1, and the holder may convert 1/3 of its Series A
preferred stock on December 31, 2001 and 2/3 on December 31, 2002. No shares of
preferred stock have been converted as of December 31, 2000.


9. INCOME TAXES

The Company's deferred tax asset approximated $790,000 and $520,000 at December
31, 2000 and 1999, respectively. Because there is no reasonable assurance that
such asset will be realized in future years, the Company has recorded a 100%
valuation allowance against this deferred tax asset.

A summary of the deferred tax benefit and related 100% valuation allowance for
the years ended December 31, 2000 and 1999 follows:

Balance - December 31, 1998                  $     488,000

Deferred benefit for 1999                           32,000
                                             --------------

Balance - December 31, 1999                        520,000

Deferred benefit for 2000                          270,000
                                             --------------

Balance - December 31, 2000                  $     790,000
                                             ==============




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                                    Page 19
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                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

9. INCOME TAXES (continued)

Deferred income taxes reflect the net tax effect of temporary differences
between carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax reporting purposes. Significant
components of the Company's deferred tax assets and liabilities at December 31,
2000 and 1999 consist of net operating loss carryforwards, depreciation, and
valuation allowance.

The income tax benefit, before valuation allowance, for the years ended December
31, 2000 and 1999 differs from the amount that would result from applying the
federal statutory rate to the pre-tax loss as follows:

                                                      2000            1999
                                                  ------------    ------------

Effective  tax  benefit  (expense)  by  applying
  the federal statutory rate to pre-tax
  income / loss                                   $  1,296,000    $     (4,000)
Common stock and warrants issued for
  services                                            (617,000)              -
Amortization and impairment related to
  acquisitions                                        (444,000)
State income taxes and other                            35,000          34,000
                                                  ------------    ------------
Benefit for income taxes before valuation
  allowance
                                                       270,000          30,000
Less: valuation allowance                             (270,000)        (30,000)
                                                  ------------    ------------

Provision for income taxes                        $          -    $          -
                                                  ============    ============

The Company's federal tax net operating loss carryforward ("NOL") approximates
$1,980,000 at December 31, 2000. Such NOL expires as follows:

2009            $        970,000
2010                     250,000
2019                      77,000
2020                     683,000
                -------------------

                $      1,980,000
                ===================








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                                    Page 20
<PAGE>
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                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

9. INCOME TAXES (continued)

Since the acquisitions (see Note 1) are intended to qualify as non-taxable
transactions, the predecessor tax bases of IntraMed and HFA's assets and
liabilities are carried forward for U.S. income tax purposes. Therefore, the
amortization of the purchase consideration allocated to certain assets acquired
(see Note 3) is not deductible by the Company in its future income tax returns.
To account for such temporary differences, the accompanying consolidated balance
sheets reflect a deferred tax liability (representing additional goodwill) of
approximately $100,000 as required by GAAP.

The Company's income tax returns for the open years are subject to examination
and adjustment by the applicable taxing authorities.


10. EXTRAORDINARY ITEMS

At December 31, 1998, the Company made a good faith effort with its creditors to
settle debts incurred in years prior to 1997. Creditors representing the
majority of the outstanding debt accepted the settlement, resulting in an
extraordinary gain of $293,324. However, several creditors did not respond and
the original debts owed to these creditors remained in accounts payable at
December 31, 1998. In 1999, the Company, with consultation from legal counsel,
wrote off such accounts payable and realized an extraordinary gain of $89,359,
net of tax effects, due in large part to legal defenses such as the statute of
limitations.


11. COMMITMENTS AND CONTINGENCIES

The Company leases its facility under a noncancelable operating lease agreement
that expires in April 2001 and requires monthly payments of $1,381. The Company
plans to renew this lease with substantially the same terms until April 2002.
For each of the years ended December 31, 2000 and 1999, rent expense
approximated $17,000.


12. DELINQUENT SEC FILINGS

The Company's June 30, 2000 and September 30, 2000 Form 10-QSB's were not
reviewed by the Company's accountants in accordance with Statement on Auditing
Standards No. 71 ("SAS 71"), "Interim Financial Information". Federal securities
law requires SAS 71 reviews. Additionally, the Company has not filed Form 8-K in
connection with either of the acquisitions discussed in Note 3. Furthermore, as
of May 18, 2001, the Company has not filed Form 10-KSB for the year ended
December 31, 2000 or Form 10-QSB for the quarter ended March 31, 2001. Such
filing delinquencies constitute securities laws non-compliance and, among other
actions enforceable by the SEC, could result in de-listing of the Company's
common stock from the OTCBB.

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                                    Page 21
<PAGE>
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                         CAPITAL DEVELOPMENT GROUP, INC.
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           December 31, 2000 and 1999
--------------------------------------------------------------------------------

12. DELINQUENT SEC FILINGS (continued)

In addition, any owners of the Company's restricted securities who are otherwise
eligible to sell such securities under Rule 144 may be temporarily unable to do
so until such filing delinquencies are cured.


13. SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

Certain adjustments recorded during the fourth quarter of the year ended
December 31, 2000 had a material impact on the unaudited results of operations
for the quarters ended June 30, 2000 and September 30, 2000. The nature of the
adjustments were to record certain equity transactions including the issuance of
warrants and common stock for services and to reallocate the purchase price for
IntraMed and HFA. The impact on the unaudited results of operations for the
quarters ended June 30, 2000 and September 30, 2000 as were follows:

                         As Previously Reported               As Restated
                         ----------------------        ----------------------
                         Net Loss    Loss/Share        Net Loss    Loss/Share
                         --------    ----------        --------    ----------

Quarter ended:
      June 30            $125,245      $0.01           $1,550,030    $0.18
      September 30       $164,690      $0.02           $1,745,696    $0.20


14. GOING CONCERN AND LIQUIDITY CONSIDERATIONS

The accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the satisfaction
of liabilities in the ordinary course of business. For the year ended December
31, 2000, the Company incurred losses of approximately $4,000,000 and had
negative cash flow from operations of approximately $400,000. Operations of HFA,
acquired in April 2000, ceased prior to December 31, 2000. The Company has not
generated significant revenue or any profit from operations for the years ended
December 31, 2000 and 1999. Such factors indicate that the Company may be unable
to continue as a going concern for a reasonable period of time. Management is in
discussions with potential investors to pursue additional capital infusions into
the Company, which management believes are necessary until such time that
revenues achieve profitability levels.

The financial statements do not include any adjustments relating to the
recoverability of assets that might be necessary should the Company be unable to
continue as a going concern. The Company's continuation as a going concern is
dependent upon its ability to generate sufficient revenue and related cash flow
to meet its obligations on a timely basis and/or to obtain additional financing
or equity infusions as may be required.




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