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

                                   FORM 10-KSB

[X]  Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 2000

                                       or

[ ]  Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to ___________.

Commission file number 33-11863

                      HEALTHCARE INVESTORS OF AMERICA, INC.
                      -------------------------------------
        (Exact name of small business issuer as specified in its charter)
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            Maryland                                       86-0576027
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    (State or other jurisdiction of            (IRS Employer Identification No.)
    incorporation or organization)

     2940 N. Swan Rd., Suite 212
              Tucson, AZ                                     85712
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(Address of principal executive offices)                  (Zip Code)

                                 (520) 326-2000
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                (Issuer's telephone number, including area code)

                           2990 N. Swan Rd., Suite 212
                              Tucson, Arizona 85712
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              (Former name, former address and former fiscal year,
                          if changed since last report)

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

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

Common Stock, $.01 Par Value - 397,600 shares as of May 4, 2001.

<PAGE>

ITEM 1.  BUSINESS

GENERAL DEVELOPMENT OF BUSINESS

1.   Overview
     Healthcare  Investors  of  America,   Inc.  (the  "Trust")  is  a  Maryland
corporation  formed on February 6, 1987.  The Trust changed its name from Harbor
American  Healthcare  Trust,  Inc.  effective  December 18, 1996.  The principal
office of the Trust is  located at 2940  North  Swan  Road,  Suite 212,  Tucson,
Arizona 85712.  The Trust's present advisor is Harbor American  Capital Group, a
California limited partnership ("HACG" or the "Advisor").

     During 2000, the Trust owned the real property,  fixtures and  improvements
used in connection  with the  operation of a long term care facility  located in
Florida  known as  Bayshore  Convalescent  Center  ("Bayshore"  or the  "Florida
Property"),  a 150-bed  skilled and  intermediate  care  nursing  home  facility
located at 16650 West Dixie  Highway in North Miami  Beach,  Florida,  which was
acquired in March 1988.

2.   Intended Sale of Bayshore and Related Lease
     At January 1, 2000, the Trust hereinafter referred to as the "Seller",  and
Abraham  Shaulson,  hereinafter  referenced  as the "Buyer",  had entered into a
Purchase and Sale Agreement (the "Original  Agreement"),  dated as June 3, 1999,
which has subsequently been amended three times. Under the Agreement, Seller has
agreed to sell all of the real estate, personal property, inventory,  trademarks
and other  intangibles,  and patient contracts  (collectively,  the "Assets") to
Buyer with respect to the Bayshore  Convalescent Center ("Bayshore")  located at
16650 West Dixie Highway,  Miami,  Florida.  Excepted from the Asset sale is all
cash,  accounts  receivables,  prepaid  expenses,  notes receivable and personal
property of the residents at Bayshore.

     Buyer agreed to pay Seller  $5,750,000 (the "Purchase  Price") for Sellers'
Assets as follows:

     (i)  $350,000  (the  "Deposit")  from  Buyer to Seller  as a  nonrefundable
          deposit  except  in  the  event  of a  default  by  Seller  under  the
          Agreement; and
     (ii) The balance of the purchase price due on the closing date scheduled on
          or before October 31, 2000 (the "Closing Date").  The Closing Date has
          by amendment subsequently been extended to April 3, 2001.

     The Agreement provides for the allocation of the Purchase Price between the
Seller in accordance with a schedule that will be attached to the Agreement.  To
date, the Seller has not made an allocation to disclose on the schedule that the
Seller will attach to the Agreement.

     With the execution of the Amendment,  the Buyer  deposited  $150,000 into a
separate  interest bearing account of Seller.  The proceeds in this account were
for capital improvements to Bayshore,  as described in the Agreement.  Buyer has
completed these  improvements  and the funds have been remitted to Buyer. If the
Asset  sale  fails to close by the  Closing  Date for any  reason  other  than a
default by the Seller, any amount not used for capital improvements shall become
the property of the Seller.

     Pending the closing of the sale under the Agreement, Sellers have agreed to
have the Registrant lease Bayshore to a Buyer affiliate.  The terms of the Lease
(the  "Watercrest  Lease"),  dated as of July 30, 1999,  from the  Registrant to
Watercrest  Nursing and  Rehabilitation  Center,  Inc.  (the  "Lessee"),  are as
follows:

     The initial term of the Watercrest  Lease  commenced  September 1, 1999 and
ended October 31, 2000,  which the parties  extended to April 3, 2001.  The base
rent for Bayshore was $48,314 per month payable on the 20th day of each calendar
month  plus such  additional  amounts  that may be  necessary  to cover the debt

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<PAGE>

service under the loan  agreement  between the  Registrant  and any mortgagee of
Bayshore. Lessee assumes the obligation to pay all taxes and other charges which
arise  out of  Bayshore.  Lessee is  responsible  for all  utilities,  insurance
premiums  related  to  the  premises   including  a  $2,000  monthly   insurance
administration  fee due the Registrant for monitoring the insurance  coverage of
Bayshore.

     In the event of a partial  condemnation  or  damage  to or  destruction  of
Bayshore,  which does not render  Bayshore  unsuitable for its primary  intended
use, the rent shall be abated to the extent that it is fair,  just and equitable
to both the Registrant and Lessee.  The primary  intended use of the property is
as a health  care  facility  licensed  for skilled  and  intermediate  long-term
nursing  services.  Lessee  covenants  in  the  Lease  to  operate  Bayshore  in
accordance with the primary intended use and to maintain its  qualifications for
licensure and accreditation. Under the Watercrest Lease, Lessee may enter into a
management  agreement  with the prior written  consent of the Registrant and any
mortgagee  of  Bayshore,  subject to the  payment of the  management  fees being
subordinate to all sums due under the Lease.

     The Watercrest Lease requires the Lessee to maintain Bayshore in good order
and  repair.  Lessee is  responsible  for the cost of any capital  additions  to
Bayshore which shall be deemed a leasehold  improvement.  The  Watercrest  Lease
further  requires  the  Lessee  to  spend  the  $150,000  referred  to  above on
improvements  to Bayshore.  As of December  31, 2000,  Lessee has spent the full
$150,000  primarily on computer  equipment,  floor  coverings,  window frame and
glass  replacements  and  exterior  painting.  Lessee may not create or allow to
remain on the premises of Bayshore any lien or encumbrance  on Bayshore.  Lessee
may, however,  contest any taxes, insurance requirements,  liens or encumbrances
so long as Lessee shall provide reasonable  security in the event any such lien,
taxes, insurance requirements or encumbrance exceeds $50,000.

     Lessee  must  maintain  all-risk  insurance  in  an  amount  equal  to  the
replacement costs of Bayshore, boiler insurance, business interruption insurance
covering the Registrant's risk of loss, comprehensive public liability insurance
in an amount not less than $4 million per occurrence for injuries and $2 million
for  property  damage,  malpractice  insurance  in an amount of not less than $5
million for each person and $10 million for each occurrence, and flood insurance
if Bayshore lies in a flood plain area. Effective November 1, 2000, the required
liability  insurance has become  unavailable in the state of Florida at any cost
less  than  that  which  would be  considered  self-insurance.  Thus,  liability
coverage  is not  currently  provided  for the  property  with the risk that any
significant judgment related to this property may not be able to be satisfied by
the Lessee or the Registrant.

     Insurance proceeds as a result of loss or damage to Bayshore are payable to
the Registrant for reconstruction or repair of Bayshore.  If Bayshore is totally
or substantially destroyed from a risk covered by insurance,  Lessee, subject to
the  rights of any  mortgagee,  shall have the  option to  restore  Bayshore  or
acquire  Bayshore at fair market value or terminate  the  Watercrest  Lease.  If
Bayshore is destroyed  from a risk not covered by insurance,  the Registrant may
elect to restore  Bayshore or absent such an election  Lessee may  terminate the
Lease.

     A partial  condemnation  of Bayshore  so long as  Bayshore is not  rendered
unsuitable  for its primary  intended use,  shall not cause a termination of the
Watercrest Lease. If the condemnation  causes Bayshore to be rendered unsuitable
for its primary  intended use, then Lessee has the right to restore  Bayshore at
its own expense,  to acquire  Bayshore  for fair market  value or terminate  the
Watercrest Lease. In the event Lessee or its affiliate purchases  Bayshore,  any
condemnation  award  belongs  to  Lessee,  otherwise  the award  belongs  to the
Registrant.

     An event of default occurs upon:

     (i)   the existence  of an event of  default under any other lease between
           the Registrant and Lessee;
     (ii)  failure of Lessee to make a rental payment under the Watercrest Lease
           and such failure  continues  for a period of 10 days after receipt of
           written notice;

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<PAGE>

     (iii) Lessee's failure to observe or perform  any other  term,  covenant or
           condition of the  Watercrest  Lease  and  such  failure is not  cured
           within 30 days after receipt of notice;
     (iv)  bankruptcy of Lessee;
     (v)   voluntary  cessation of operations by Lessee at Bayshore for a period
           of longer than 30 days; or
     (vi)  failure  of  Lessee  to provide  financial  statements  or  copies of
           required  licensing  information, to  maintain quarterly cash flow of
           not less  than 125% of  minimum  rent or to operate  Bayshore for its
           primary intended use.

     If an event a default shall have occurred and be continuing, the Registrant
may terminate the  Watercrest  Lease.  The Registrant may not remove Lessee from
Bayshore until the Registrant  provides for a substitute  operator acceptable to
any Bayshore  mortgagee.  Notwithstanding  termination of the Watercrest  Lease,
Lessee is responsible for all rent due and payable with respect to Bayshore.  In
addition,  if an event of default  shall have  occurred  and be  continuing  the
Registrant may require  Lessee to purchase  Bayshore for the Purchase Price plus
all rent then due and payable.  If Lessee fails to perform under the  Watercrest
Lease and is removed from Bayshore,  such action by the Registrant  shall not be
deemed an eviction of Lessee.

     Lessee agrees to indemnify the Registrant  against all liabilities  arising
from the  operation  of  Bayshore.  Lessee may not,  without  the prior  written
consent of the Registrant and any mortgagee, assign the Lease or sublet any part
of Bayshore.

     Effective  August  31,  1999,  the  Registrant  purchased  from BHS all the
personal  property used at Bayshore.  The Lessee is not paying any consideration
for the personal  property and upon termination of the Watercrest Lease, all the
personal property shall be deemed owned by the Registrant.

     The Registrant agrees to indemnify the Lessee from:

     (i)   any liability arising from any breach of representations, warranties,
           covenants or agreements made in the Lease;
     (ii)  any overpayment or assessment  relating to Bayshore from the Medicare
           or Medicaid programs;
     (iii) any claims  by  any  creditor  incurred  by  Bayshore  prior  to  the
           effective date of the Watercrest Lease; and
     (iv)  any claim arising out of operation of Bayshore prior to the effective
           date of the Watercrest Lease.

In the event  either  Medicaid  or  Medicare  withholds,  recoups or offsets any
payment due the Lessee for claims  arising  prior to the  effective  date of the
Watercrest Lease, the Registrant agrees to immediately reimburse Lessee for such
withholding, recoupment or offset. Notwithstanding other terms of the Watercrest
Lease,  the Lessee may offset any payments that the Registrant  fails to make in
this  situation  from the monthly  rent and  insurance  administration  fee. Any
amounts due to the Lessee from the  Registrant  as a result of the  unreimbursed
Medicaid or Medicare payments shall bear interest at 10% per annum until paid by
the Registrant to the Lessee.

     One of the  principal  conditions to the closing of the sale of Bayshore is
the  shareholder  approval  of the  sale by the  Registrant's  shareholders.  If
Sellers had not obtained  shareholder  approval at least six (6) months prior to
the end of the Watercrest  Lease,  Buyer had the option to extend the Watercrest
Lease  for  three  one-year  renewal  terms  with a rent  increase  equal to the
consumer  price  index  increase  for the  preceding  twelve (12)  months.  Such
shareholder  approval was received and on February 10, 2000,  the Trust Board of
Directors accepted the Inspector of Elections count of 271,162.4806 shares voted
for as an appropriate number of votes in excess of the required two-thirds super
majority.
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<PAGE>

     Under the terms of the Agreement,  Buyer was required to file  applications
for the appropriate  licenses to operate Bayshore with the applicable  licensing
agencies by  September  30,  1999,  with all  licenses to be issued on or before
December 31, 1999.  This was  accomplished  effective  September 1, 1999.  Buyer
further  agrees to indemnify  and hold  Sellers  harmless  from all  liabilities
arising in connection  with the operation of Bayshore from and after the date of
the Watercrest Lease until the Closing Date.

     The Agreement contains Seller's  representations and warranties related to,
among others:

     (i)    due organization and existence;
     (ii)   authorization of the Agreement;
     (iii)  good title to the real and personal property of Bayshore;
     (iv)   the operating  condition of the  buildings and  appurtenances on the
            real estate;
     (v)    proper  licensing  for  operation of  Bayshore as a 150 bed  nursing
            home;
     (vi)   payment of real estate taxes;
     (vii)  fair  presentation  of  the   financial  condition  and  results  of
            operations of  Bayshore  as  contained  in the  financial statements
            Seller has delivered to Buyer;
     (viii) no pending labor problems with the existing union at Bayshore;
     (ix)   no material and adverse litigation with respect to Bayshore;
     (x)    proper filing of all taxes, tax returns and cost reports;
     (xi)   sufficient insurance coverage with respect to Bayshore; and
     (xii)  no environmental claims.

The Agreement  contains Buyer's  warranties and  representations  related to due
organization and existence,  and proper  authorization  of the Agreement,  among
others.

     Conditions to the Buyer's obligation to consummate the Agreement include:

     (i)    no adverse change in Bayshore and the Seller's Assets;
     (ii)   Seller's compliance with the terms of the Agreement;
     (iii)  Buyer's receipt  of a  commitment  to  finance  the Assets  on terms
            reasonably acceptable to Buyer;
     (iv)   no  material  and  adverse  litigation  affecting  Bayshore  or  the
            Sellers' Assets;
     (v)    the  patient  census  shall  not  be  less  than  113  with Medicaid
            certified beds to be 115 and Medicare certified beds to be 16; and
     (vi)   Buyer's receipt of evidence that all cost reports of Seller required
            to be filed prior to the Closing Date have been timely filed.

     Conditions to the Seller's obligation to close the sale of Bayshore include
Buyer's continuing compliance with the Agreement,  no litigation pending against
Buyer  questioning  the legality of the  transactions  under the Agreement,  and
Seller's receipt of shareholder approval of the sale of Seller's Assets.

     Closing adjustments to the Purchase Price shall include proration of:

     (i)   real estate taxes;
     (ii)  water, sewage and electricity charges;
     (iii) fees for customer annual or periodic licenses and permits;
     (iv)  employee wages and related payroll taxes and expenses; and
     (v)   charges on service and maintenance agreements.

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<PAGE>

Seller  shall  also be  responsible  for the  payment of real  estate  brokerage
commissions.  Buyer and Seller  shall pay equally all  closing  costs  including
documentary  stamp taxes,  county  surtax,  recording  fees and title  insurance
premiums.

     Seller indemnifies Buyer for, among others items:

     (i)   liabilities  and  obligations  of Seller arising prior to the Closing
           Date unless otherwise expressly assumed by Buyer;
     (ii)  damages or deficiencies resulting from any misrepresentation,  breach
           of  warranty  or  nonfulfillment  of  any  obligation  on the part of
           Seller;
     (iii) any  retroactive payments  due to the State of  Florida or the United
           States  for  periods prior to the closing unless specifically assumed
           by Buyer; and
     (iv)  liabilities arising  out of the  transfer of funds or property by any
           patient to the Seller prior to the Closing Date.

     Buyer indemnifies Seller for, among other items:

     (i)   liabilities of Seller  arising  after the Closing Date and  expressly
           assumed by Buyer or relating to the  operation of  Bayshore by Buyer;
           or
     (ii)  any damage or deficiency resulting from any misrepresentation, breach
           of warranty or  nonfulfillment of any obligation on the part of Buyer
           under the Agreement.

3.   Prior Sales of Country View and New Life
     Trust management  worked during  1995-1998 to develop  alternative uses for
two of its then owned properties,  Country View Care Center ("Country View") and
New Life Care Center  ("New  Life",  collectively  the  "Colorado  Properties").
Country View was an 87-bed nursing home located in Longmont,  Colorado,  and New
Life was a 56-bed nursing home located in Greeley, Colorado.  Effective July 24,
1998, the Trust sold Country View to William E. Harper ("Harper"), an individual
not affiliated  with the Trust or its Advisor,  for $262,500 in accordance  with
the terms of Commercial Contracts to Buy and Sell Real Estate (the "Country View
Sales Contract"),  dated June 17, 1998, as amended. At closing on July 24, 1998,
the Trust  received  $80,000 in cash and was the payee of two  promissory  notes
(the "Harper  Notes"),  each dated July 24, 1998,  from Harper in the respective
original  principal amounts of $100,000 and $82,500.  The Harper Notes were paid
in full on July 16, 1999.  The Harper Notes were secured by a Deed of Trust (the
"Harper  Mortgage"),  dated July 24,  1998,  from  Harper for the benefit of the
Trust,  on the Country View property.  Pursuant to the Collateral  Assignment of
Promissory Notes and Deeds of Trust (the "1998 Collateral Assignment"), dated as
of July 24, 1998, the Trust assigned the Harper Notes and the Harper Mortgage to
PNC Bank, National  Association,  Louisville,  Kentucky (the "Bank") as security
for the debt of the  Trust  owing to the  Bank.  Upon  receipt  of the  $182,500
payoff,  the Trust used the full amount of this  payoff to reduce the  principal
balance due the Bank.

     After a number of attempts to privately  negotiate a sale of New Life,  the
Trust determined that a sale by advertised auction was the best available method
to relieve the Trust of the financial burden of this property.  Effective August
6, 1998,  the Trust sold New Life at auction to  Continuum  Health  Partnership,
Inc. ("Continuum"),  a Colorado corporation not affiliated with the Trust or its
Advisor,  for $250,000 in accordance  with the terms of that certain  Commercial
Contract  to Buy and Sell Real  Estate  (the "New Life Sales  Contract"),  dated
August 6, 1998.  The Trust  received  the sum of  $250,000 in cash at closing on
August 24,  1998.  Neither the  proceeds  from the sales of Country View and New
Life nor the Note payments on the Harper Notes  satisfied the  outstanding  debt
related to these facilities.

4.   Advisory Agreement
     The Trust  currently has a contract for advisory  services  with HACG.  The
general partner of HACG is Heritage Advisory Corporation ("Heritage"). The stock
of Heritage is owned by James R. Sellers, an affiliate of BHS, the former lessee
of Bayshore.

                                                                               6
<PAGE>

5.   Trust Debt and Forbearance
     The Trust's  continuing  plan of operation for the 2001 fiscal year (ending
December  31,  2001) is as follows:  The Trust  intends to own,  lease,  sell or
auction Bayshore.  If and when the sale of Bayshore is closed, the Trust intends
to distribute  any remaining  sales  proceeds to  shareholders  after payment of
Trust expenses including the Bank loan described below, and liquidate.  If it is
determined to be in the best interest of shareholders,  and if an opportunity to
re-capitalize  presents  itself,  to the  extent  it  has  funds  available  for
investment  (it currently  has no such funds  available and no plans for raising
such  funds),  it  will  invest  primarily  in  healthcare  related  properties,
including long term care facilities,  assisted living facilities, medical office
buildings,  retirement housing facilities,  psychiatric  hospitals and substance
abuse recovery centers through acquisitions,  joint ventures and mortgage loans.
The Trust may also  invest in  commercial,  industrial  and  residential  income
producing  real  properties  through  similar  means.  Since  the  Trust  has no
available funds for such investments,  its ability to undertake such investments
will be dependent  upon the  availability  of capital to the Trust.  See Item 6.
MANAGEMENT'S  DISCUSSION  AND ANALYSIS OR PLAN OF OPERATION.  Additionally,  the
Trust's  mortgage  notes payable  matured on June 20, 1997 and the Bank demanded
payment in full by letter dated August 15, 1997. In that  connection,  the Trust
and the PNC  Bank  National  Association,  Louisville,  Kentucky,  (the  "Bank")
entered into a Forbearance  Agreement (the "Forbearance  Agreement") dated as of
April 30, 1998.

     Under the Forbearance Agreement, the Bank originally agreed to forbear from
exercising  its remedies  until July 31, 1998. In  consideration  therefor,  the
Trust agreed to increase the outstanding  principal  amount of a Promissory Note
(Renewal and  Increase),  dated as of September  20, 1992,  in favor of the Bank
from $1,000,000 to $1,681,170.45, a portion of the security of which is a second
mortgage on Bayshore. The Trust agreed to waive any defenses,  offsets or claims
it may have as of the date of the Forbearance Agreement against the Bank related
to the  outstanding  debt of the Trust to the Bank.  The  Forbearance  Agreement
further  required the Trust to market the Country  View Care  Center,  Longmont,
Colorado and the New Life Care Center,  Greeley,  Colorado,  (collectively,  the
"Colorado  Properties")  and auction them by June 30, 1998,  if by May 31, 1998,
the Trust had not sold or had a binding  contract on the Colorado  Properties on
terms  reasonably  acceptable to the Trust and the Bank. The Trust completed the
sale of the last of the Colorado  Properties on August 24, 1998. The Forbearance
Agreement also contained  representations  of the Trust that, among other items,
it is  solvent  and has no present  intention  of filing or  acquiescing  in any
bankruptcy or insolvency proceeding.  To the extent that the Trust would so file
or  acquiesce,  the Trust  agreed not to contest any motion of the Bank  seeking
relief  from an  automatic  stay.  Upon (i) a breach or  violation  of any term,
covenant or condition of the Forbearance Agreement or related documents,  (ii) a
material  breach or default under any of the other loan  documents in connection
with the Trust indebtedness to the Bank, or (iii) any representation or warranty
or other statement contained in the Forbearance  Agreement or related documents,
or any loan documents in connection  with Trust  indebtedness  to the Bank being
false or  misleading  in any  material  respect  or  omitting  a  material  fact
necessary to make such  representation,  warranty or statement  not  misleading,
then the Bank could terminate its forbearance. The Bank extended the Forbearance
Agreement  initially  until  January 31, 1999 and  subsequently  to November 31,
2000. The Trust has requested an extension of the Forbearance  Agreement to June
30, 2001 in order to pay off this debt from proceeds of the Bayshore sale. As of
March 23, 2001, this request has not been approved.  Although the Trust believes
the extension will be approved, the Bank is under no obligation to do so.

     FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

     When financial  resources are available,  the Trust's primary  business and
industry segment is to invest in healthcare  related real properties,  including
long-term care facilities, assisted living facilities, medical office buildings,
retirement  housing  facilities,  psychiatric  hospitals,  and  substance  abuse
recovery  centers through  acquisitions,  joint ventures and mortgage loans. The
Trust   also   may   invest   in   commercial,   industrial,   and   residential

                                                                               7
<PAGE>

income-producing  properties  through  similar  means.  If the  Trust  does  not
re-capitalize,  and if the  Bayshore  sale  closes,  the Trust will proceed with
liquidation and disbursement of sales proceeds to shareholders.

     Through March 23, 2001, the only remaining property, Bayshore, is leased to
Watercrest,  the Lessee.  Further, the Trust has entered into the Agreement with
Mr. Shaulson to sell Bayshore. SEE DESCRIPTION OF BUSINESS - General Development
of Business.

NARRATIVE DESCRIPTION OF BUSINESS

     The  Directors of the Trust manage and control the affairs of the Trust and
have general  responsibility and ultimate authority affecting the investments of
the Trust.  The Directors  have engaged the Advisor as an investment  advisor to
select  investments and supervise the day-to-day  operations of the Trust. HACG,
as the Advisor, is engaged primarily in real estate consulting.

     The  Advisor  is  currently  evaluating  the  Trust's  compliance  with the
provisions  of the  Internal  Revenue  Code of 1986 (the  "Code"),  the Treasury
Regulations and other relevant laws pertaining to  qualification of the Trust as
a real estate  investment trust ("REIT").  In the event the Trust qualifies as a
REIT,  the  Trust  would not be  subject  to  federal  income  taxes on  amounts
distributed to stockholders,  provided that distributions to stockholders are at
least 95% of the Trust's real estate  investment  trust  taxable  income and the
Trust meets certain other conditions. In the event the Trust does not qualify as
a REIT, the Trust would be taxable as a C corporation  under the Code.  However,
as a taxable  corporation,  the Trust  would not owe any  current tax or tax for
prior years due to its net operating loss carryovers.  Therefore,  no adjustment
would be  required to the  historical  financial  statements  related to any tax
provision.  There can be no assurance  that the Trust will qualify as a REIT for
any specific year.

     The investment objectives of the Trust are (1) to provide quarterly or more
frequent cash  distributions  to stockholders  from  operations,  (2) to provide
long-term capital appreciation to stockholders,  and (3) to preserve and protect
the stockholders  original invested capital. When and if financial resources are
available, the Trust intends to invest primarily in healthcare related property,
including long-term care facilities,  assisted living facilities, medical office
buildings,  retirement housing facilities,  psychiatric  hospitals and substance
abuse recovery centers through acquisitions, joint ventures, and mortgage loans.
The Trust also may  invest in  commercial,  industrial  and  residential  income
producing real  properties  through  similar means.  To the extent funds are not
fully  invested  in real  properties  or  mortgage  loans,  the Trust may invest
temporarily in investments such as: (i) short-term government  securities,  (ii)
securities of government  agencies,  (iii) bankers'  acceptances  and repurchase
agreements, (iv) certificates of deposit, (v) deposits in commercial banks, (vi)
participation in pools of mortgages or bonds and notes, and/or (vii) obligations
of municipal,  state, and federal  governments and government  agencies.  If the
sale of Bayshore closes,  and if no  determination is made to re-capitalize  the
Trust,  it will  liquidate  and disburse any  remaining  sales  proceeds,  after
payment of Trust expenses, including the Bank indebtedness, to shareholders.

     The current and  anticipated  business  of the Trust is not  seasonal.  The
results of  operations  of the Trust will  depend upon the  availability  of (i)
capital to the Trust,  which is currently limited,  (ii) suitable  opportunities
for investment and  reinvestment  of its funds,  and (iii) the yields  available
from time to time on real  estate  and other  investments.  If  capital  were to
become available to the Trust which is unlikely, the Trust will be competing for
acceptable  investments with other financial  institutions,  syndicators,  other
REITS,  investment bankers,  including banks,  insurance companies,  savings and
loan  associations,  mortgage  bankers,  pension  funds  and other  real  estate
investment  programs  (including other real estate investment programs which may
be  sponsored by the sponsor or the Advisor of the Trust in the future) that may
have similar  objectives to those of the Trust.  Substantially  all  competitors
have  greater  resources  than  the  Trust,  its  directors,   Advisor  and  its
affiliates.  Further,  certain of the  directors  of the Trust and  officers and

                                                                               8
<PAGE>

directors of the general  partner of the Advisor and its  affiliates are engaged
for their own account, or on behalf of other entities, in the type of activities
in  which  the  Trust  intends  to be  engaged.  Thus,  the  Trust  could  be in
competition  for  investments  with one or more  corporations,  partnerships  or
trusts with which such directors or officers may be affiliated.

     The Trust,  as of December 31, 2000,  did not directly  employ any persons.
The  business of the Trust is managed by the  Advisor,  with which the Trust has
entered into an Advisory Agreement.  See Item 9. DIRECTORS,  EXECUTIVE OFFICERS,
PROMOTERS  AND CONTROL  PERSONS - Compliance  With Section 16(a) of the Exchange
Act and Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

ITEM 2. DESCRIPTION OF PROPERTY

     BAYSHORE-  Bayshore  consists of a one story  structure built in 1963 and a
two story addition  built in 1968.  The structure  totals 35,294 square feet and
contains 150 beds.  The Property is located on an  approximately  49,704  square
foot  parcel of real estate at 16650 West Dixie  Highway in North  Miami  Beach,
Florida.

     THE BAYSHORE LEASE.  The Trust is a party to the Watercrest Lease under net
lease terms on the Bayshore  property.  The Watercrest  Lease permits the lessee
thereunder to operate the property as a healthcare facility licensed for skilled
and intermediate  long term nursing services and for such additional uses as may
be approved by the Trust and consented to by the  appropriate  mortgage  lender.
See Description of Business -- General  Development of Business -- Intended Sale
of Bayshore and Related Lease.

     The Trust entered into a one-year lease with Watercrest beginning September
1, 1999,  pending  completion of the sale to Mr.  Shaulson.  The Lease has since
been extended to April 3, 2001.  The Watercrest  Lease is a net lease  requiring
Watercrest  to pay all  operating  expenses  of the  property.  Minimum  rent is
$48,314.00 per month plus $2,000 to Heritage as an insurance monitoring fee.

     Watercrest  is required  to furnish  regular  monthly and annual  financial
reports to the Trust.

     As of December 31, 2000,  real estate taxes  through 1999 of  approximately
$125,000 were due and owing on the Bayshore  Convalescent Center. These were the
responsibility of the Lessee,  but since the Lessee had not paid them, the Trust
borrowed from the first mortgage  holder and paid the taxes to protect from loss
of title to a tax lien  holder.  The Trust  secured a promise to repay from BHS.
Trust  management  has no way of  assuring  itself  that BHS  will  make the tax
repayment.

     THE LOANS.  Each of the three (3) properties  owned by the Trust at January
1, 1998,  was funded by a  combination  of cash and  mortgage  loans.  The Bank,
formerly  Citizens  Fidelity Bank & Trust Company,  holds the loans on Bayshore.
The debt  formerly  held on the Colorado  Properties  has been combined with the
debt held on Bayshore.

     THE COLORADO  PROPERTIES LOAN.  Although the Colorado  Properties were sold
during 1998,  there were  insufficient  proceeds  from such sales to pay off the
first mortgage loan to the Bank.

     THE BAYSHORE LOAN. The first mortgage loan to the Bank totals $2,863,880 as
of December 31, 2000.  All interest  payments have been kept current during 2000
and through March 23, 2001.  The loan,  as extended,  became due on November 30,
2000. The loan is secured by a first mortgage and assignment of leases and rents
thereunder.  In addition,  the Bayshore  Loan is secured by a $1,234,900  second
mortgage,  which  resulted  from the sales  proceeds of the Colorado  Properties
being insufficient to pay off the loan on the Colorado Properties.

     As noted above, the Company's  mortgage notes matured on November 30, 2000.
This date is pursuant to the  Forbearance  Agreement dated as of April 30, 1998,
as extended.  Management  is currently  seeking to sell Bayshore or to refinance
the mortgage notes  payable.  Trust  management  believes that the mortgage note

                                                                               9
<PAGE>

lender will not demand  payment prior to the  successful  completion of any such
sale or  refinancing  efforts.  There can be no assurance that the Trust will be
successful in its sale or  refinancing  efforts or that the Bank will not demand
payment of the mortgage notes payable.

     Management  believes  Watercrest  (formerly Bayshore) is adequately insured
except for the inability to secure  liability  insurance as discussed under ITEM
1.  BUSINESS - General  Development  of Business,  Intended Sale of Bayshore and
Related Lease. As of March 23, 2001, occupancy is 78%.

ITEM 3. LEGAL PROCEEDINGS

     On March 11, 1998,  John W. Madagan,  Sr., d/b/a Sundance  Realty  Advisors
filed an action in the Commonwealth of Massachusetts  District Court Department,
Pittsfield  Division  entitled  John W.  Madagan,  Sr.,  d/b/a  Sundance  Realty
Advisors, v. Lenox Healthcare, Inc. and Healthcare Investors of America, Inc. in
Civil Action No.  9827-CV-0199.  This suit alleges that Lenox Healthcare,  Inc..
("Lenox  Healthcare") and the Trust owe compensation in the amount of $50,000 to
Sundance  Realty  Advisors  ("Sundance")  as a result  of John W.  Madagan,  Sr.
("Madagan")  having  introduced  Lenox  Healthcare and the Trust to one another.
This allegation is pursuant to a letter attached to the Complaint dated November
8, 1996. Additional correspondence in 1997 is alleged to have been sent by Lenox
Healthcare  indicating the Trust's commitment to the compensation to Madagan for
services  performed,  at which time an alleged  good  faith  partial  payment to
Sundance  in the  amount of $4,970 was paid.  The  Complaint  alleges  joint and
several  liability  for both the  Defendants  for the unpaid  amounts,  interest
thereon  plus  attorneys  fees,  disbursements,   expenses  and  litigation  and
collection costs. The Trust has responded to this Complaint.  During 1999, Lenox
filed for protection under bankruptcy laws. During 2000 the Trust secured a stay
pending  Lenox's  emergence  from  bankruptcy  proceedings.  Although  the Trust
intends to vigorously defend the allegations, at this time the Trust is not in a
position to comment upon the possible  outcome of this  litigation  or as to the
loss or range of loss, if any, in connection therewith.


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

Not Applicable

                                     PART II

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

MARKET INFORMATION; DISCLOSURE RELATING TO LOW PRICE STOCK

     The  Trust  Common  Stock is traded  in the  over-the-counter  market on an
electronic bulletin board established for securities that do not meet the Nasdaq
SmallCap  Market  listing  requirements  or what is commonly  referred to as the
"pink  sheets"  under the symbol  "HCIV".  As a result,  holders of Common Stock
should  expect to find it more  difficult  to dispose of, or to obtain  accurate
quotations  on the  price of the  Common  Stock.  Additionally,  sales  practice
requirements are imposed on  broker-dealers  who trade in the Common Stock other
than established customers and accredited investors. For transactions covered by
this rule, the broker-dealer must make a special  suitability  determination for
the  purchaser  and  must  receive  the  purchaser's   written  consent  to  the
transaction prior to sale. Such burdens on trading in the Common Stock should be
expected to  discourage  active  trading which would reduce the liquidity of the
Common Stock and increase  the spread  between the bid and ask prices  quoted by
these  broker-dealers,  if any,  which  quote the  Common  Stock.  The Trust has
selected S. W. Ryan & Company as market maker for its shares.

                                                                              10
<PAGE>

     Based on  representations  made to the Advisor by the transfer agent of the
shares of the Trust,  no sales occurred during 2000, 1999 and 1998. The transfer
agent for the Common Stock of the Trust is Gemisys, Inc., Evergreen, Colorado.

HOLDERS

     As  of  March  23,  2001,   there  were  397,600  shares  of  Common  Stock
outstanding, which were owned by approximately 400 holders of record.

DIVIDENDS

     The Trust last  declared  dividends  on the  Common  Stock in the amount of
$0.06 per share in May, 1992.  Unless  property sales or leases are made in 2001
which result in receipt by the Trust of sale or lease  proceeds in excess of the
Trust  expenses,  including  the  Bank  indebtedness,  there  will  not be  cash
available for  distributions  for purposes of declaring and paying any dividends
in 2001.  Under the Code a REIT must meet  certain  qualifications,  including a
requirement that it distribute  annually to its stockholders at least 95% of its
taxable income as that term is defined in Part II,  Subchapter M of Chapter I of
the Code and regulations and rulings promulgated  thereunder.  The Trust intends
to distribute  quarterly or more  frequently to its  stockholders  on a pro-rata
basis  substantially all cash available for distribution.  The Trust anticipates
that such cash  distributions  will aggregate  annually at least 95% of its REIT
taxable income.

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

GENERAL

     The following  discussion and analysis  should be read in conjunction  with
the Financial Statements and Notes thereto appearing elsewhere herein.

RESULTS OF OPERATIONS

FISCAL YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 1999.

     For the year ended  December 31, 2000,  the Trust had loss of $125,394,  or
($0.32) per share,  as  compared to a net loss of $33,610,  or ($0.08) per share
for 1999.

     REVENUES.  The Company  primarily  derives its revenues from the leasing of
facilities to  healthcare  providers.  Revenues for the year ended  December 31,
2000 were  $587,146,  an increase of 1.0% over revenues of $581,606 for the year
ended December 31, 1999. The increase in revenues was not material.

     DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization  expense for
the year ended December 31, 2000 was $129,543, as compared with $117,083 for the
year ended  December  31,  1999.  The same  property  was the only asset in both
years.

     INTEREST  EXPENSE.  For the year ended December 31, 2000,  interest expense
totaled $391,556,  a decrease of $4,224 or 1.1% from $395,780 for the year ended
December 31, 1999.  This  decrease is the result of an average  lower  principal
balance on the Bank loans.

     ADVISOR AND DIRECTORS  FEES.  Advisor and  directors  fees consist of costs
associated with the advisor and directors of the Company.  Advisor and directors
fees for the year ended  December 31, 2000 were $63,295,  similar to the $63,000
paid for the year ended December 31, 1999.

                                                                              11
<PAGE>

     OTHER  EXPENSES.  Other  expenses for the year ended December 31, 2000 were
$38,444, a decrease of $909 or 2.3% from $39,353 for the year ended December 31,
1999. This decrease is primarily the result of reducing  administrative costs in
2000.

     OTHER  MATTERS.  The Trust adopted the provisions of Statement on Financial
Accounting Standards Number 121 ("SFAS 121"),  "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of". The adoption of SFAS
121 did not have a material effect on the Trust's financial  statements  because
the Trust had previously recorded writedowns of property carrying amounts to net
realizable value.

LIQUIDITY

     Cash decreased from $76,285 at December 31, 1999 to $20,803 at December 31,
2000.  Restricted cash of $328,864 at December 31, 1999 became unrestricted as a
result of the Bayshore sale deposit becoming free of the Buyer's right to return
resulting from  shareholder  approval of the Bayshore sale. The restricted  cash
was used to purchase  all  personal  property  from  Bayshore and to reduce bank
debt. Rent and other receivables  decreased from $90,000 at December 31, 1999 to
zero at December 31, 2000. This decrease was primarily the result of owning only
one  property  asset  from  which  to  receive  rents  in  2000.   Building  and
improvements  net,  increased from $3,301,343 at December 31, 1999 to $3,321,314
at December 31, 2000.  This  increase was not material.  Mortgage  Notes payable
decreased  from  $4,325,404  at December 31, 1999 to  $4,098,780 at December 31,
2000.  This  decrease  was  primarily  the result of  payments of  principal  on
mortgaged  property.  Distributions  in excess of net  earnings  increased  from
($4,377,552)  at December 31, 1999 to  ($4,502,946)  at December 31, 2000.  This
increase is the result of an increase in the net loss to ($125,394).

     The Trust has relied  solely on rental  income to pay its  expenses in 2000
and 1990.  Cash flows provided by operations  were $51,792 in 2000 and ($64,044)
in 1999. The Other Receivables  increase was caused by the borrowing and lending
to Bayshore for the Patient Trust Bond.

     The  above  discussion  and the  Trust's  financial  statements  have  been
presented  on the  basis  that it is a going  concern,  which  contemplates  the
realization of assets and the  satisfaction  of liabilities in the normal course
of business. The Trust had only one remaining property under lease in 2000, thus
limiting cash flows available to pay operating expenses.  Mortgage notes payable
on the Trust's property matured on November 30, 2000 as the Bank had continually
extended the Forbearance Agreement dated April 30, 1998 to November 30,2000, and
the Bank has not extended the forbearance period in writing since that date. See
Item 1. DESCRIPTION OF BUSINESS - General  Development of Business.  The current
maturity of the Trust's notes payable and accumulated recurring operating losses
raise a  substantial  doubt  about the  Trust's  ability to  continue as a going
concern for a reasonable period of time.

     Management's plans include continuing to sell the remaining property and/or
seeking  sources  to  refinance  the  mortgage  notes  payable on  Bayshore  and
minimizing  operating  costs.  See Item 1.  DESCRIPTION  OF  BUSINESS  - General
Development of Business.

     There can be no assurance that the Trust's sale or refinancing efforts will
be  successful  or that the Bank will not demand  payment of the mortgage  notes
payable and exercise their foreclosure or other remedies available to the Bank.

     The  Advisor  is  currently  evaluating  the  Trust's  compliance  with the
provisions  of the  Code,  the  Treasury  Regulations  and other  relevant  laws
pertaining  to  qualification  of the  Trust as a REIT.  In the  event the Trust
qualifies as a REIT,  the Trust would not be subject to federal  income taxes on
amounts distributed to stockholders, provided that distributions to stockholders
are at least 95% of the Trust's real estate  investment trust taxable income and
the Trust  meets  certain  other  conditions.  In the  event the Trust  does not
qualify as a REIT, the Trust would be taxable as a C corporation under the Code.

                                                                              12
<PAGE>

However,  as a taxable  corporation,  the Trust would not owe any current tax or
tax for prior years due to its net  operating  loss  carryovers.  Therefore,  no
adjustment would be required to the historical  financial  statements related to
any tax  provision.  There can be no assurance  that the Trust will qualify as a
REIT for any specific year.

     Much national attention is currently focused on healthcare reform. Although
there is concern as to the status of  reimbursement  programs on which the Trust
indirectly relies for its rental income,  management believes the long term care
industry will benefit from any significant healthcare reform.

ITEM 7. FINANCIAL STATEMENTS

     The financial  statements are listed under Item 13: Exhibits and Reports on
Form 8-K. The financial statements are listed herein beginning on page F-1.

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

     None





                                                                              13
<PAGE>

                                    PART III

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

DIRECTORS

     Information with respect to the Company's directors is set forth below.

NAME                       AGE     POSITION PRESENTLY HELD      DIRECTOR FROM
----                       ---     -----------------------      -------------

F. Dale Markham            71      Director, Chairman of the    1987 to Present
                                   Board.  President, Chief
                                   Financial Officer from
                                   March 3, 1999 to present

Grady P. Hunter            67      Director                     1987 to Present

Charles E. Trefzger, Jr.   42      Director                     1996 to Present


GENERAL

     The Directors of the Trust are  responsible  for the management and control
of the  affairs of the Trust but have  retained  the  Advisor  to,  among  other
things, locate, investigate,  evaluate, and recommend real property and mortgage
loan  investment  opportunities  for the Trust.  The  Advisor  also  serves as a
consultant  in  connection  with the  investment  policy  decisions  made by the
Directors and supervises,  subject to direction of the Directors, the day-to-day
operations of the Trust. The By-laws of the Trust provide that a majority of the
Trust's  Directors  must be  unaffiliated  with the Advisor  and its  affiliates
("Unaffiliated  Directors").  The  remaining  Directors may be affiliates of the
Trust  ("Affiliated  Directors").  Further,  the By-laws  provide that the Trust
should have five  directors;  however,  at this time,  no  qualified  or willing
persons to become  directors have been located.  Presently,  the Trust has three
directors, all of whom may be considered Unaffiliated Directors.

OFFICERS AND DIRECTORS OF THE TRUST

     The  Directors  and  principal  officers  of the Trust and their  principal
occupations and other  affiliations  during the past five years or more,  unless
otherwise stated, are as follows:

     Grady P. Hunter,  has served as a Director of the Trust since its formation
in 1987. Mr. Hunter was the Executive Vice President and Chief Operating Officer
of RSI,  Inc. and  similarly  of RSI  Properties,  Inc.  both  headquartered  in
Cranberry  Township,  PA, from  October,  1995  through  June,  1999.  He is now
retired. RSI, Inc. and RSI Properties, Inc. were engaged in a national effort to
develop and operate programs and facilities serving frail,  chronically impaired
elderly in an assisted living setting.  Mr. Hunter was Senior Vice President and
Chief  Operating  Officer  of  Lutheran  Affiliated  Services,   Inc.  in  Mars,
Pennsylvania  ("LAS")  from April 1991 to 1995.  LAS is an owner and operator of
skilled  nursing  facilities,  specialized  care programs and  residential  care
communities for the elderly in Western  Pennsylvania.  From January,  1988 until
April,  1991, Mr. Hunter served as Executive Vice President and Chief  Operating
Officer of Retirement Systems, Inc., a firm engaged in developing facilities and
programs and  consulting  with  developers  and  operators of long term care and
assisted living facilities for the frail elderly. Mr. Hunter served as Executive
Vice President and division Chief Executive  Officer for Stanley Smith Security,
Inc.  ("Smith")  from  1973 to 1987.  Smith is one of the top ten  international
contract and consulting services companies providing electronic, transportation,
security, manpower and facility operations support services.

                                       14
<PAGE>

     F. Dale  Markham has served as Chairman of the Board of the Trust since May
16, 1991. He formerly served as President,  Vice President and Secretary through
December 1996, and has been a Director of the Trust since its inception in 1987.
Effective March 3, 1998, he was elected  President and Chief Financial  Officer.
From 1991 until his  retirement  effective  December 31, 1994, he was a mortgage
banking  consultant and founder of the Real Estate Financing  Division of Wardon
Financial Corporation, a mortgage banking firm located in Phoenix, Arizona. From
1982 through 1990, he was President,  a Director, and a Principal Stockholder of
Markham,  Sellers & Mony,  Inc., a mortgage  banking firm which was the original
managing  general partner of the current Advisor and a Sponsor of the Trust. Mr.
Markham  served as  President  of  Western  American  Financial  Corporation,  a
mortgage  banking  firm  from 1974 to 1982.  He has been  involved  in  mortgage
banking and real estate activities since 1957.

     Charles E.  Trefzger is the  President of  Chancellor  Health  Services,  a
healthcare  management  company  specializing  in the long term  care  industry.
Through  affiliated  entities,  he owns fourteen  nursing homes and six assisted
living facilities.  Mr. Trefzger was Corporate Counsel for Smith/Packett Med-Com
from 1986 to 1989.  From 1986 to 1988,  Mr.  Trefzger was  Corporate  Counsel to
Brian  Center  Management  Corporation.  Mr.  Trefzger is a graduate of Virginia
Commonwealth  University  and  holds a Juris  Doctor  degree  from  Wake  Forest
University.

     At the Board of Directors  meeting held January 21, 2000,  Mr.  Markham was
elected to serve as Chairman, President and Chief Financial Officer of the Trust
and Joan M. Zeller was elected to serve as Secretary of the Trust.

OFFICERS AND DIRECTORS OF THE ADVISOR

     Effective  March 1, 1998 the Trust  entered  into a contract  for  advisory
services with HACG. The general partner of HACG is Heritage. All of the stock of
Heritage is held by James R. Sellers,  an affiliate of BHS, the former lessee of
Bayshore.

     James  R.  Sellers,  age 67,  is the  President  and  sole  stockholder  of
Heritage,  an affiliate of the Advisor.  Heritage had been the Managing  General
Partner of the Advisor since July,  1990, when it succeeded  Markham,  Sellers &
Mony, Inc. ("MSM").  Mr. Sellers is also the sole stockholder of BHS, the former
lessee of Bayshore  until  September 1, 1999.  Mr.  Sellers has been Senior Vice
President of Keystone  Mortgage  Partners LLC, an Arizona based mortgage banking
firm since May,  1993.  Effective  February 2, 2001,  GMAC  Commercial  Mortgage
purchased the assets of Keystone  Mortgage Partners and Mr. Sellers continues as
a Senior Vice President and Tucson Branch Manager of GMAC  Commercial  Mortgage.
Mr.  Sellers was Senior Vice  President of Catalina  Mortgage  Company,  also an
Arizona based mortgage  banking firm, from July, 1990 until May, 1993. From 1982
to 1990,  he served as Executive  Vice  President,  a director,  and a principal
stockholder  of MSM,  the  original  Managing  General  Partner of the  original
Advisor.  From 1974 until 1978,  he served as a Vice  President  and  thereafter
until 1982 as Senior Vice President of Western American Financial Corporation, a
mortgage  banking  firm,  where he supervised  income  property  lending  staffs
throughout the western United States.

ITEM 10.  EXECUTIVE COMPENSATION

     Set forth  below is  information  concerning  the annual  compensation  for
services in all  capacities to the  Registrant by the President and Treasurer of
the Trust for the last three  fiscal years  ending  December  31, 2000.  F. Dale
Markham,  President and Treasurer of the Trust, was compensated by the Trust for
services  rendered to the Trust during the fiscal years ended December 31, 2000,
1999 and 1998, respectively.

                                                                              15
<PAGE>

                           SUMMARY COMPENSATION TABLE
                               Annual Compensation

NAME AND PRINCIPAL POSITION                YEAR    TOTAL COMPENSATION
---------------------------                ----    ------------------

F. Dale Markham, Chairman of the Board,    2000    $11,000 paid
President and Chief Financial Officer      1999    $11,000 paid
                                           1998    2,750 accrued, $8,250 paid


     The Trust paid or accrued  annual  directors'  fees of $11,000  each to the
unaffiliated  Directors in 2000 and 1999, plus a fee of $800 for each Directors'
meeting attended in person. In 2000,  $11,000 of Director's fees was paid to Mr.
Markham.

     The Trust may pay officers  whose only  affiliation is a result of being an
officer of the  Trust.  The Trust is not  required  to pay any  compensation  to
officers and directors of the Trust who are also  affiliated with the Advisor or
its affiliates.

     No other  direct  compensation  was paid or payable by the Trust during the
fiscal year ended December 31, 2000.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth as of March  23,  2001  the  number  and
percentage  of  outstanding  shares of Common Stock  beneficially  owned by each
person known by the Trust to own beneficially more than five percent (5%) of the
Trust's  outstanding  shares of Common Stock, by each director of the Trust, and
by all directors and officers of the Trust as a group.

                                AMOUNT & NATURE OF     PERCENTAGE OF OUTSTANDING
NAME OF BENEFICIAL OWNER        BENEFICIAL OWNERSHIP   SHARES OWNED
------------------------        --------------------   -------------------------

Harbor American Capital         20,000 Shares (1)                  5.03%
Group, a California Limited
Partnership

Herbert W. Owens                40,000 Shares                     10.06%

Grady P. Hunter                 2,500 Shares                       0.63%
                                (2)                                XXX

F. Dale Markham                 (1)                                XXX

James R. Sellers                (1)                                XXX

All Directors and Officers      (1)                                XXX

(1) The current  Advisor as of March 23, 2001,  Harbor  American  Capital Group,
owns of record  and  beneficially  20,000  shares of Common  stock.  The  former
managing  general partner of the Advisor,  MSM and each of the former  officers,

                                                                              16
<PAGE>

directors and  principal  shareholders  of MSM (F. Dale  Markham,  the Estate of
Marvin Mony, and James R. Sellers) may be deemed to be beneficial  owners of the
shares of Common Stock owned of record by Harbor American Capital Group.

(2) Harbor  American  Capital Group agreed to  distribute  to each  Unaffiliated
Director,  prior to 1989,  as  additional  compensation,  1,000  shares of Trust
Common Stock for each of the first three  fiscal  years of the Trust.  As of the
date hereof, Harbor American Capital Group has neither purchased any such shares
from the Public  Offering nor has it purchased  such shares from broker  dealers
since  the  termination  of the  Public  Offering.  Discussions  between  Harbor
American Capital Group and Mr. Hunter, the only Unaffiliated  Director involved,
have been held as to the elimination of this  distribution  to the  Unaffiliated
Director; however, no final agreement has been reached with respect to this form
of compensation.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information set forth below summarizes certain transactions between the
Trust and its directors and/or five percent (5%) shareholders during fiscal year
2000. The former managing  general partner of the Advisor (MSM), and each of the
principal  shareholders  of MSM (F. Dale Markham,  the Estate of Marvin Mony and
James R.  Sellers) and present  officer,  director and  shareholder  of Heritage
(James R. Sellers), may be deemed to be the beneficial owners of more than 5% of
the shares of Common Stock of the Trust.

ACQUISITION AND DISPOSITION FEES

     The Advisor receives  acquisition and disposition fees with respect to each
real property purchased and sold by or on behalf of the Trust, equal to up to 5%
of the contract price for the property. No such properties were purchased during
2000 and therefore no acquisition fees were paid.

ADVISORY FEE

     During the fiscal year ended  December  31, 2000,  the Trust paid  Advisory
Fees to Harbor American  Capital Group,  the current  advisor,  in the amount of
$30,000.00.  James R.  Sellers is the owner of  Heritage  which is the  managing
general partner of Harbor American  Capital Group. He is the owner of BHS, which
served as lessee of the Florida Property through August 31, 1999.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.

     Index of Financial Statements
     The following financial statements of Healthcare Investors of America, Inc.
     are included.
<TABLE>
<S>  <C>                                                                           <C>
     Independent Auditor's Report - Years ended December 31, 2000 and 1999.        F-1
     Balance sheets - December 31, 2000 and 1999.                                  F-2
     Statements of operations - Years ended December 31, 2000 and 1999.            F-3
     Statements of cash flows - Years ended December 31, 2000 and 1999.            F-4
     Notes to financial statements - December 31, 2000.                            F-5
</TABLE>
REPORTS ON FORM 8-K

     None

EXHIBITS

     See attached list of Exhibits.

                                                                              17
<PAGE>

                                   SIGNATURES

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

Dated:  May 4, 2001            HEALTHCARE INVESTORS OF AMERICA, INC.

                                    BY: /s/ F. Dale Markham
                                        ----------------------------------------
                                        Director, President and Chief Financial
                                        Officer (Principal Executive, Financial
                                        and Accounting Officer)


     In  accordance  with the Exchange Act, this report has been signed below by
the  persons  on behalf of the  Registrant  in the  capacities  and on the dates
indicated.

Dated:  May 4, 2001            BY: /s/ F. Dale Markham
                                   ---------------------------------------------
                                        F. Dale Markham
                                        Director, President and Chief Financial
                                        Officer (Principal Executive, Financial
                                        and Accounting Officer)

Dated:  May 4, 2001            BY: /s/ Grady P. Hunter
                                   ---------------------------------------------
                                        Grady P. Hunter, Director

Dated:  May 4, 2001            BY: /s/ Charles E. Trefzger
                                   ---------------------------------------------
                                        Charles E. Trefzger, Jr., Director



                                                                              18
<PAGE>

                                    EXHIBITS

                                       TO

                                   FORM 10-KSB

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       FOR

                      HEALTHCARE INVESTORS OF AMERICA, INC.

                              FOR FISCAL YEAR ENDED
                                DECEMBER 31, 2000


3.2*      Articles of Amendment and  Restatement  of Trust filed as Exhibit I to
          Pre-Effective Amendment No. 1 to the Trust's Registration Statement on
          Form S-11 (Registration No. 33-11863) filed June 2, 1987.

3.3*      Third  Amended  and  Restated  Bylaws of Trust filed as Exhibit 3.2 to
          Form 10-K filed March 30, 1988.

10.1*     Advisory Service  Agreement dated as of May 18, 1988 between the Trust
          and Harbor American  Capital Group, a California  Limited  Partnership
          ("HACG") filed as exhibit 10.1 to Pre-Effective Amendment No. 1 to the
          Trust's   Registration   Statement  on  Form  S-11  (Registration  No.
          33-11863) filed June 2, 1987.

10.2*     Advisory Service  Agreement dated as of June 25, 1987 between HACG and
          Health  Concepts  Advisory  Company filed as Exhibit 10.2 to Form 10-K
          filed March 30, 1988.

10.3*     Advisory Service  Agreement dated as of June 25, 1987 between HACG and
          Markham, Sellers & Mony, Inc. filed as Exhibit 10.3 to Form 10-K filed
          March 30, 1988.

10.9(a)*  Dividend  Reinvestment  Agreement  and Plan  dated as of June 24, 1987
          between the Trust,  Federated  Transfer Agents,  and LCS, Inc. Company
          ("Federated") and HACG filed as Appendix A to Pre-Effective  Amendment
          No. 2 to the Trust's Registration Statement on Form S-11 (Registration
          No. 33-11863) filed July 2, 1987.

10.9(b)*  Amendment  to  Dividend  Reinvestment  Agreement  and Plan dated as of
          December  11,  1987  between  the Trust,  Federated  and HACG filed as
          Exhibit 10.9(b) to Form 10-K filed on March 30, 1988.

10.9(c)*  Second  Amendment  dated  April 1, 1987  between the Trust,  Federated
          and HACG (filed as  Amendment to Appendix  "A" to the  Prospectus  and
          incorporated by reference).

10.10*    Warrant  Agreement  dated  as of  July 8, 1987  between  the Trust and
          Federated filed as Exhibit 10.10 to Form 10-K filed on March 30, 1988.

10.11*    Agreement  between  HACG  and  the  Trust  filed as  Exhibit  10.12 to
          Pre-Effective Amendment No. 2 to the Trust's Registration Statement on
          Form S-11 (Registration No. 33-11863) filed July 2, 1987.

                                                                              19
<PAGE>

10.12*    Master  Facility  Lease  Agreement  dated as of  March 1, 1988 between
          the Trust and HCC-Bayshore  Convalescent Center, Inc. ("HCC-Bayshore")
          filed as Exhibit 10.12 to Form 10-K filed on March 30, 1988.

10.13*    Security  Agreement  dated as of  March 1, 1988  between the Trust and
          HCC-Bayshore filed as Exhibit 10.13 to Form 10-K filed March 30, 1988.

10.14*    Loan  Agreement  dated  as of  March 1,  1988  between  the  Trust and
          Citizens Fidelity Bank & Trust Company  ("Citizens")  filed as Exhibit
          10.14 to Form 10-K filed on March 30, 1988.

10.15*    Addendum  to  Loan  Agreement  dated as of  March 1, 1988  between the
          Trust and Citizens  filed as Exhibit 10.15 to Form 10-K filed on March
          30, 1988.

10.16*    Promissory  Note  dated  as of  March 1, 1988  between  the  Trust and
          Citizens filed as Exhibit 10.16 to Form 10-K filed on March 30, 1988.

10.17*    Assignment of  HCC-Bayshore  Security  Agreement  dated as of March 1,
          1988  between the Trust and  Citizens  filed as Exhibit  10.17 to Form
          10-K filed on March 30, 1988.

10.18*    Mortgage  dated  as of  March 1, 1988  between the Trust and  Citizens
          filed as Exhibit 10. 18 to Form 10-K filed on March 30, 1988.

10.19*    Assignment of Leases and Rents  dated as of  March 1, 1988 between the
          Trust and Citizens  filed as Exhibit 10.19 to Form 10-K filed on March
          30, 1988.

10.20*    Supplement  to  Assignment  of  Leases and Rents dated as of  March 1,
          1988  between the Trust and  Citizens  filed as Exhibit  10.20 to Form
          10-K filed on March 30, 1988.

10.21*    Real Property  Purchase  Agreement  dated as of  March 1, 1988 between
          the Trust and Medical  Resources  Development  Corporation,  a Florida
          corporation,  filed as Exhibit 10.24 to Post Effective Amendment No. 1
          to the Trust's  Registration  Statement on Form S-11 (Registration No.
          33-11863) filed April 13, 1988.

10.22*    Indemnification  Agreement  dated  March 9, 1988 between the Trust and
          HCC- Bayshore,  filed as Exhibit 10.25 to Post Effective Amendment No.
          1 to the Trust's Registration Statement on Form S-11 (Registration No.
          33-11863) filed April 13, 1988.

10.23*    Real Property  Purchase  Agreement  dated as  December 27, 1989 by and
          among (I) HCC-Country View Care Center, Inc.  ("HCC-Country  View"), a
          Kentucky  corporation;  (ii) HCC-New Life Care Center,  Inc. ("HCC-New
          Life"), a Kentucky corporation  (collectively HCC-Country View and HCC
          New Life are referred to as the "Sellers");  (iii) the Trust; and (iv)
          HACG, and exhibits thereto.

10.24*    Master  Facility  Lease  dated  as of  December  27, 1989  between the
          Trust and HCC-Country View.

10.25*    Master  Facility  Lease  dated  as of  December  27, 1989  between the
          Trust and HCC-New Life.

10.26*    Master  Facility  Lease  dated  as of  December  27, 1989  between the
          Trust and Citizens.

10.27*    Amended and Restated  Promissory  Note  dated as of  December 27, 1989
          from the Trust to Citizens.

                                                                              20
<PAGE>

10.28*    Assumption  Agreement  and  Amendment of  Deeds of Trust and  Security
          Agreement  dated as December  27, 1989 by and among (i) the Trust (ii)
          Citizens; (iii) HCC-Country View and (iv) HCC-New Life.

10.29*    Supplement to  Assignment of  Leases and Rents (Country View) dated as
          of December 27, 1989 from the Trust to Citizens.

10.30*    Supplement  to  Assignment of  Leases and Rents (New Life) dated as of
          December 27, 1989 from the Trust to Citizens.

10.31*    Second  CV Note  dated  as of  December  27,  1989  from the  Trust to
          HCC-Country View.

10.32*    Second  NL Note  dated  as of  December  27,  1989  from the  Trust to
          HCC-Country View.

10.33*    Second Deed of Trust  dated as  of  December  27, 1989 from the  Trust
          for the benefit of Sellers.

10.34*    Third  CV Note  dated  as of  December  27,  1989  from  the  Trust to
          HCC-Country View.

10.35*    Third NL Note  dated  as  of  December  27,  1989  from  the  Trust to
          HCC-New Life.

10.36*    Third Deed of Trust dated  as of  December 27, 1989 from the Trust for
          the benefit of HCC-Country View.

10.37*    Third Deed of Trust dated  as of  December 27, 1989 from the Trust for
          the benefit of HCC-New Life.

10.38*    Country View Security  Agreement  dated  as of  December 27, 1989 from
          HCC Country View to the Trust.

10.39*    New Life Security  Agreement  dated  as of  December 27, 1989 from HCC
          New Life to the Trust.

10.40*    Collateral  Assignment  of  Notes  and  Loan  Documents  dated  as  of
          December 27, 1989 from the Sellers to Citizens.

10.41*    Collateral  Assignment  of Second Deed of Trust  dated as of  December
          27, 1989 from the Sellers to Citizens.

10.42*    Assignment of Country View Security  Agreement  dated  as of  December
          27, 1989 from the Trust to Citizens.

10.43*    Assignment of  New Life Security  Agreement  dated as of  December 27,
          1989 from the Trust to Citizens.

10.44*    Personal  Property  Purchase  Agreement  dated  as of  April 17,  1989
          between EMNH,  Inc.,  HCC-Marshall  Manor Nursing Home,  Inc. and HCC,
          filed as Exhibit 10.45 to Form 10-K filed April 1, 1991.

10.45*    Personal  Property  Purchase  Agreement  dated  as of  April 17,  1989
          between EMNH, Inc.,  HCC-Eaton Manor Nursing Home, Inc. and HCC, filed
          as Exhibit 10.45 to Form 10-K filed April 1, 1991.

                                                                              21
<PAGE>

10.46*    Amendment to HCC-Eaton  Purchase  dated as of  October 6, 1989 between
          EMNH,  Inc.,  HCC-Eaton  Manor  Nursing HoMe,  Inc. and HCC,  filed as
          Exhibit 10.46 to Form 10-K filed April 1, 1991.

10.47*    Amendment  to   HCC-Marshall  Purchase  dated  as  of  October 6, 1989
          between EMNH, Inc.,  HCC-Eaton Manor Nursing Home, Inc. and HCC, filed
          as Exhibit 10.47 to Form 10-K filed April 1, 1991.

10.48*    Second Amendment to  HCC-Eaton Purchase  dated as of December 28, 1989
          between EMNH, Inc.,  HCC-Eaton Manor Nursing Home, Inc. and HCC, filed
          as Exhibit 10.48 to Form 10-K filed April 1, 1991.

10.49*    Amendment to  HCC-Marshall  Purchase  Agreement  dated as of  December
          28, 1989 between EMNH,  Inc.,  HCC-Manor  Nursing Home,  Inc. and HCC,
          filed as Exhibit 10.49 to Form 10-K filed April 1, 1991.

10.50*    Master  Facility  Lease  dated as of  April 1, 1990  between the Trust
          and  HCC-Marshall  Manor Nursing Home, Inc., filed as Exhibit 10.50 to
          Form 10-K filed April 1, 1991.

10.51*    Master  Facility Lease  Agreement  dated  as of  April 1, 1990 between
          the Trust and HCC-Eaton  Manor Nursing  Home,  Inc.,  filed as Exhibit
          10.51 to Form 10-K filed April 1, 1991.

10.52*    Real Property Purchase  Agreement  dated as of  April 17, 1989 between
          Eaton Investment Company and the Trust, filed as Exhibit 10.52 to Form
          10-K filed April 1, 1991.

10.53*    Real Property Purchase  Agreement  dated as of  April 17, 1989 between
          Calhoun  Investment  Company and the Trust,  filed as Exhibit 10.53 to
          Form 10-K filed April 1, 1991.

10.54*    Amendment to  Real Property Purchase  Agreement  dated as of April 17,
          1989 between Eaton Investment  Company and the Trust, filed as Exhibit
          10.54 to Form 10-K filed April 1, 1991.

10.55*    Amendment to Real  Property Purchase  Agreement  dated as of April 17,
          1989  between  Calhoun  Investment  Company  and the  Trust,  filed as
          Exhibit 10.55 to Form 10-K filed April 1, 1991.

10.56*    Second  Amendment to  Real Property   Purchase  Agreement  dated as of
          April 17, 1989 between Eaton Investment  Company and the Trust,  filed
          as Exhibit 10.56 to Form 10-K filed April 1, 1991.

10.57*    Second  Amendment  to  Real Property  Purchase  Agreement  dated as of
          April 17, 1989 between Calhoun Investment Company and the Trust, filed
          as Exhibit 10.57 to Form 10-K filed April 1, 1991.

10.58*    Promissory  Note  dated as of  April 1, 1990 between the Trust and D &
          N for Eaton Manor,  filed as Exhibit 10.58 to Form 10-K filed April 1,
          1991.

10.59*    Promissory  Note  dated as of  April 1, 1990 between the Trust and D &
          N for Marshall Manor,  filed as Exhibit 10.59 to Form 10-K filed April
          1, 1991.

                                                                              22
<PAGE>

10.60*    Mortgage,  Security Agreement,  Assignment of Rents, Leases,  Guaranty
          and Security  Agreement and Financing  Statement  dated as of April 1,
          1990  between  the Trust and D & N for Eaton  Manor,  filed as Exhibit
          10.60 to Form 10-K filed April 1, 1991.

10.61*    Mortgage,  Security Agreement,  Assignment of  Rents, Leases, Guaranty
          and Security  Agreement and Financing  Statement  dated as of April 1,
          1990 between the Trust and D & N for Marshall Manor,  filed as Exhibit
          10.61 to Form 10-K filed April 1, 1991.

10.62*    Lease  Guaranty and Subordination  dated as of  April 1, 1990 from HCC
          and Guarantors in favor of the Trust for Eaton Manor, filed as Exhibit
          10.62 to Form 10-K filed April 1, 1991.

10.63*    Lease Guaranty and  Subordination  dated as of  April 1, 1990 from HCC
          and  Guarantors  in favor of the Trust for  Marshall  Manor,  filed as
          Exhibit 10.63 to Form 10-K filed April 1, 1991.

10.64*    Security Agreement  dated as of  April 1, 1990 between HCC-Eaton Manor
          and the  Trust,  filed as Exhibit  10.64 to Form 10-K  filed  April 1,
          1991.

10.65*    Security  Agreement  dated as of  April 1, 1990  between  HCC-Marshall
          Manor and the Trust,  filed as Exhibit  10.65 to Form 10-K filed April
          1, 1991.

10.66*    First  Omnibus  Amendment  Agreement  dated  as  of  September 1, 1991
          between  the Trust and  Citizens  filed as Exhibit  10.66 to Form 10-K
          filed May 29, 1992.

10.67*    Promissory  Note  (Renewal)  dated  as of  September 1, 1991  from the
          Trust to  Citizens  filed as Exhibit  10.67 to Form 10-K filed May 29,
          1992.

10.68*    Mortgage  dated as of   September  1, 1991  from the Trust to Citizens
          filed as Exhibit 10.68 to Form 10-K filed May 29, 1992.

10.69*    Assignment  of Leases and  Rents  dated  as of  September 1, 1991 from
          the Trust to  Citizens  filed as Exhibit  10.69 to Form 10-K filed May
          29, 1992.

10.70*    Extension  Agreement  dated as of  September 1, 1991 between the Trust
          and Citizens filed as Exhibit 10.70 to Form 10-K filed May 29, 1992.

10.71*    Lease  effective as of  September 1, 1992  between the Trust and Eaton
          Manor Healthcare Services, Inc., filed as Exhibit 10.71 to Form 10-KSB
          filed on April 15, 1992.

10.72*    Lease  effective  as  of  September  1,  1992  between  the  Trust and
          Marshall Manor  Healthcare  Services,  Inc., filed as Exhibit 10.72 to
          Form 10-KSB filed on April 15, 1993.

10.73*    Lease dated as of  September 25, 1992  between the Trust and Res-Care,
          Inc. ("Res-Care")(Country View), filed as Exhibit 10.73 to Form 10-KSB
          filed on April 15, 1993.

10.74*    Lease dated  as of  September  25, 1992 between the Trust and Res-Care
          (New Life),  filed as Exhibit  10.74 to Form 10-KSB filed on April 15,
          1993.

10.75*    Second  Omnibus  Amendment   Agreement   (Bayshore)   effective  as of
          December 4, 1992 between the Trust and Citizens filed as Exhibit 10.75
          to Form 10-K filed on April 15, 1993.

                                                                              23
<PAGE>

10.76*    Second Amendment to  Mortgage and Assignment of  Leases and Rents (re:
          Bayshore  First  Mortgage)  effective  as of December 4, 1992 from the
          Trust to Citizens  filed as Exhibit  10.76 to Form 10-K filed on April
          15, 1993.

10.77*    Second Amendment to  Loan Agreement (Colorado Nursing Homes)  dated as
          of December 4, 1992  between the Trust and  Citizens  filed as Exhibit
          10.77 to Form 10-K filed on April 15, 1993.

10.78*    Second  Amendment to  Loan Agreement  (Renewal and Increase)  dated as
          of  September  20,  1992 from the Trust to  Citizens  filed as Exhibit
          10.78 to Form 10-K filed on April 15, 1993.

10.79*    Second  Extension  Agreement  (Weld Country Colorado)  effective as of
          December 4, 1992 between the Trust and Citizens filed as Exhibit 10.79
          to Form 10-K filed on April 15, 1993.

10.80*    First  Amendment to  Mortgage and  Assignment of Leases and Rents (re:
          Bayshore  Second  Mortgage)  effective as of December 4, 1992 from the
          Trust to Citizens  filed as Exhibit  10.76 to Form 10-K filed on April
          15, 1993.

10.81*    Bill of Sale  effective as of  December 4, 1992 from  HCC-Country View
          to the Trust  filed as  Exhibit  10.81 to Form 10-K filed on April 15,
          1993.

10.82*    Bill of Sale  effective  as of  December 4, 1992 from  HCC-New Life to
          the Trust filed as Exhibit 10.82 to Form 10-K filed on April 15, 1993.

10.83*    Bill of Sale  effective  as of  December  4,  1992  from the  Trust to
          Res-Care, filed as Exhibit 10.83 to Form 10-K filed on April 15, 1993.

10.84*    Promissory  Note  dated as of  December 4, 1992  from  Res-Care to the
          Trust, filed as Exhibit 10.84 to Form 10-K filed on April 15, 1993.

10.85*    Security Agreement  dated as of  December 4, 1992 from Res-Care to the
          Trust filed as Exhibit 10.85 to Form 10-K filed on April 15, 1993.

10.86*    Promissory  Note  dated  as  of  December  4,  1992  from the Trust to
          Citizens filed as Exhibit 10.86 to Form 10-K filed on April 15, 1993.

10.87*    Lease,  as amended,  dated as of  April 1, 1993  between the Trust and
          Bayshore  Healthcare  Services,  Inc.,  filed as Exhibit 10.87 to Form
          10-K filed on April 18, 1994.

10.88*    Second  Supplement to  Assignment of Leases and  Rents dated as of May
          18, 1993 from the Trust to PNC Bank,  Kentucky,  Inc. (f/k/a Citizens)
          ("PNC"), filed as Exhibit 10.88 to Form 10-K filed April 18, 1994.

10.89*    Subordination of  Security Interest  dated as of May 18, 1993 from the
          Trust to PNC,  filed as  Exhibit  10.89 to Form 10-K  filed  April 18,
          1994.

10.90*    Agreement  Concerning  Interest  Arrearage  dated  as of  May 20, 1993
          between the Trust and PNC,  filed as Exhibit  10.90 to Form 10-K filed
          April 18, 1994.

10.91*    Purchase  and Sale  Agreement  dated  as of  March 4, 1994 between the
          Trust and  Marshall  Healthcare  Investors,  L.P.,  a Georgia  Limited
          partnership, filed as Exhibit 10.91 to Form 10-K filed April 18, 1994.

                                                                              24
<PAGE>

10.92*    Amendment  to  Promissory  Note  dated as of  October 31, 1994 between
          the Trust and PNC filed as Exhibit 10.92 to Form 10-KSB filed April 1,
          1996.

10.93*    Third Extension of  Leases and  Rents (re:  Bayshore First  Mortgage),
          dated as of  October  31,  1994  between  the  Trust  and PNC filed as
          Exhibit 10.93 to Form 10-KSB filed April 1, 1996.

10.94*    Advisor Agreement,  dated  as of  March 1, 1998, between the Trust and
          Harbor  American  Capital  Group filed as Exhibit 10.95 to Form 10-KSB
          filed August 12, 1998.

10.95*    Forbearance  Agreement,  effective  as of  April 30, 1998, between the
          Trust and PNC Bank,  National  Association  filed as Exhibit  10.96 to
          Form 10-KSB filed August 12, 1998.

10.96*    Commercial  Contract to  Buy and Sell  Real Estate  [Seller or Private
          Third-Party],  dated June 17,  1998,  between the Trust and William E.
          Harper  ("Harper")  -  $162,500;  as amended on July 11, 1998 filed as
          Exhibit 10.97 to Form 10-KSB filed August 12, 1998.

10.97*    Commercial  Contract to  Buy and Sell  Real Estate  [Seller or Private
          Third-Party],  dated  June 17,  1998,  between  the Trust and Harper -
          $100,000;  as amended on July 11, 1998 filed as Exhibit  10.98 to Form
          10-KSB filed August 12, 1998.

10.98*    Promissory Note, dated  July 24, 1998, from  Harper to and in favor of
          the Trust,  in the  original  principal  amount of  $100,000  filed as
          Exhibit 10.99 to Form 10-KSB filed August 12, 1998.

10.99*    Promissory Note, dated  July 24, 1998, from  Harper to and in favor of
          the  Trust,  in the  original  principal  amount of  $82,500  filed as
          Exhibit 10.100 to Form 10-KSB filed August 12, 1998.

10.100*   Deed of Trust,  dated  July 24, 1998, from  Harper for the  benefit of
          the Trust  filed as Exhibit  10.101 to Form  10-KSB  filed  August 12,
          1998.

10.101*   Collateral Assignment of  Promissory Notes and  Deeds of Trust,  dated
          as of July 24, 1998,  from the Trust to PNC filed as Exhibit 10.102 to
          Form 10-KSB filed August 12, 1998.

10.102*   Commercial  Contract to  Buy and Sell  Real Estate  [Seller or Private
          Third  Party] dated  August 6, 1998,  between the Trust and  Continuum
          Health Partnership,  Inc. filed as Exhibit 10.103 to Form 10-KSB filed
          August 12, 1998.

10.103*   Purchase and  Sale Agreement,  dated as of  June 3, 1999,  as amended,
          by and between  the Trust,  Bayshore  Healthcare  Services,  Inc.  and
          Abraham  Shaulson,  filed as Exhibit 10.1 to Form 8-K filed  September
          15, 1999.

10.104*   Master  Facility  Lease,  dated  as of  July 30, 1999,  by and between
          the Trust and  Waterfield  Nursing and  Rehabilitation  Center,  Inc.,
          filed as Exhibit 10.2 to Form 8-K filed September 15, 1999.

*  Incorporated by reference


                                                                              25
<PAGE>

                            S.E.CLARK & COMPANY, P.C.
--------------------------------------------------------------------------------
          Member: S.E.C. Practice Section of the American Institute of
                          Certified Public Accountants



                          INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholders
Healthcare Investors of America, Inc.
Tucson, Arizona


We have  audited the  accompanying  balance  sheets of  Healthcare  Investors of
America,  Inc., (the "Trust"),  as of December 31, 2000 and 1999 and the related
statements of operations and  distributions in excess of net earnings,  and cash
flows  for  the  years  then  ended.   These   financial   statements   are  the
responsibility of the Trust's  management.  Our  responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of  Healthcare  Investors  of
America,  Inc.  as of  December  31,  2000  and  1999,  and the  results  of its
operations  and its cash  flows  for the years  then  ended in  conformity  with
accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Trust
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements,  the  accumulation  of losses  raises  substantial  doubt  about its
ability to continue as a going  concern.  Management's  plans  concerning  these
matters are also  described  in Note 1 and include the pending  sale of the sole
remaining  property,  discontinuing  operations and distribution of the residual
proceeds.  The financial  statements do not include  adjustments that may result
from the subsequent resolution of these matters.

/s/ S.E.CLARK & COMPANY, P.C.

Tucson,  Arizona
March 16, 2001,  except for Note 8,
for which the date is April 3, 2001


          Member: National Association of Certified Valuation Analysts
--------------------------------------------------------------------------------
   744 N. Country Club Road, Tucson, Arizona 85716 (520) 323-7774 Fax 323-8174
                     seclarkcpa@aol.com   www.seclarkco.com

                                      F-1
<PAGE>

                      HEALTHCARE INVESTORS OF AMERICA, INC.

                                 BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                        AS OF DECEMBER 31,
ASSETS:                                                                2000           1999
------                                                             -----------    -----------
<S>                                                                <C>            <C>

Real Estate Property:
   Land                                                            $   393,195    $   393,195
   Building and improvements, net of accumulated depreciation
      of $1,511,517 and $1,381,974 at December 31, 2000
      and December 31, 1999, and respectively                        3,321,314      3,301,343

Prepaid expenses                                                        50,000         50,000
Rent and other receivables, net of allowance                                --         90,000
Cash and cash equivalents                                               20,803         76,285
Restricted cash                                                             --        328,864
                                                                   -----------    -----------
      TOTAL ASSETS                                                 $ 3,785,312    $ 4,239,687
                                                                   ===========    ===========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY):
-------------------------------------------------
Mortgage notes payable                                             $ 4,098,780    $ 4,325,404
Accounts payable and accrued expenses                                   65,056        107,413
Disputed claims                                                         92,623         92,623
Purchase deposits                                                      375,000        435,000
                                                                   -----------    -----------
      TOTAL LIABILITIES                                              4,631,459      4,960,440
                                                                   -----------    -----------

Stockholders' Equity (Deficiency):

 Common stock, $.01 par value; 10,000,000 shares authorized,
   397,600 shares issued and outstanding                                 3,976          3,976
Paid in capital                                                      3,652,823      3,652,823
Distributions in excess of net earnings                             (4,502,946)    (4,377,552)
                                                                   -----------    -----------
      TOTAL STOCKHOLDERS' EQUITY (Deficiency)                         (846,147)      (720,753)
                                                                   -----------    -----------
      TOTAL LIABILITIES AND
      STOCKHOLDERS' EQUITY (Deficiency)                            $ 3,785,312    $ 4,239,687
                                                                   ===========    ===========
</TABLE>


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

                                      F-2
<PAGE>

                      HEALTHCARE INVESTORS OF AMERICA, INC.

                   STATEMENTS OF OPERATIONS AND DISTRIBUTIONS

                            IN EXCESS OF NET EARNINGS
<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
REVENUES:                                                              2000           1999
--------                                                           -----------    -----------
<S>                                                                <C>            <C>
Rental income                                                      $   579,768    $   561,260
Interest and other income                                                7,378         20,346
                                                                   -----------    -----------
                                                                       587,146        581,606
                                                                   -----------    -----------
EXPENSES:
--------
Depreciation and amortization                                          129,543        117,083
Interest expense                                                       391,556        395,780
Advisor, directors fees and expenses                                    63,295         63,000
Other operating expenses                                                38,444         39,353
Bad debt expense                                                        89,702             --
                                                                   -----------    -----------
                                                                       712,540        615,216
                                                                   -----------    -----------
NET LOSS                                                           $  (125,394)   $   (33,610)
                                                                   ===========    ===========

NET LOSS PER SHARE                                                 $     (0.32)   $     (0.08)
                                                                   ===========    ===========
WEIGHTED AVERAGE SHARES OUTSTANDING                                    397,600        397,600
                                                                   ===========    ===========
DISTRIBUTIONS IN EXCESS OF NET EARNINGS:

   Beginning of Year                                               $(4,377,552)   $(4,343,942)

   Net loss                                                           (125,394)       (33,610)
                                                                   -----------    -----------
   End of year                                                     $(4,502,946)   $(4,377,552)
                                                                   ===========    ===========
</TABLE>


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

                                      F-3
<PAGE>

                      HEALTHCARE INVESTORS OF AMERICA, INC.

                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                     YEARS ENDED DECEMBER 31,
                                                                       2000           1999
                                                                   -----------    -----------
<S>                                                                <C>            <C>
CASH FLOWS FROM OPERATIONS:
--------------------------
Net loss                                                           $  (125,394)   $   (33,610)

Adjustments to reconcile net loss to net cash
   provided by (used for) operating activities:
   Depreciation and amortization                                       129,543        117,083
   Changes in assets and liabilities:
      Rent and other receivables                                        90,000        (90,000)
      Prepaid expenses                                                      --          5,838
      Accounts payable and accrued expenses                            (42,357)       (63,355)
                                                                   -----------    -----------
Net cash provided by (used for) operating activities                    51,792        (64,044)
                                                                   -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES
------------------------------------
(Increase) decrease in mortgage receivable                                  --        182,500
Property sale related items:
   Nonrefundable purchase deposit received                                  --        375,000
   Cash used for prepaid sales commissions                                  --        (50,000)
   Capital improvements deposit received                                    --        125,000
   Cash paid for capital improvements                                  (60,000)       (65,000)
Purchase of personal property                                         (149,514)            --
                                                                   -----------    -----------
Net cash provided by (used for) investing activities                  (209,514)       567,500
                                                                   -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
------------------------------------
Payments on long-term borrowings                                      (352,410)      (267,974)

Additions to long-term borrowings                                      125,786        131,246
                                                                   -----------    -----------
Net cash used for financing activities                                (226,624)      (136,728)
                                                                   -----------    -----------
CASH AND CASH EQUIVALENTS:
-------------------------
Increase (decrease) during year                                       (384,346)       366,728

Beginning of year                                                      405,149         38,421
                                                                   -----------    -----------
End of year                                                        $    20,803    $   405,149
                                                                   ===========    ===========
</TABLE>

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

                                      F-4
<PAGE>

                      HEALTHCARE INVESTORS OF AMERICA, INC.

                          NOTES TO FINANCIAL STATEMENTS

                 FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

NOTE 1: ORGANIZATION

The affairs of Healthcare  Investors of America,  Inc. (the "Trust") are managed
by its advisor, Harbor American Capital Group (the "Advisor") effective March 1,
1998. The Trust engages in acquiring and leasing health care facilities (nursing
homes and intermediate care mental retardation  developmentally disabled nursing
facilities) under long-term leases.

The historical  financial statements presented are prepared under the assumption
that the Trust is qualified as a real estate  investment  trust  ("REIT") and is
not  subject to federal  income  taxes on amounts  distributed  to  stockholders
(provided  distributions  to  stockholders  are at least 95% of the Trust's real
estate  investment  trust  taxable  income  and the Trust  meets  certain  other
conditions).  In the event the Trust does not qualify as a REIT, the Trust would
be taxable as a C corporation  under the Internal  Revenue Code.  However,  as a
taxable  corporation,  the Trust  would not owe any current tax or tax for prior
years due to its net operating loss carryovers.  Therefore,  no adjustment would
be required to the historical  financial statements presented related to any tax
provision.

The Trust's  financial  statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of  liabilities  in the normal course of business.  As of December 31, 2000, the
Trust has only one property  leased.  Therefore,  the cash flow available to pay
operating expenses is limited.

The  financial  statements  do  not  include  any  adjustments  relating  to the
recoverability of recorded asset amounts or the amount of liabilities that might
be necessary should the Trust be unable to continue as a going concern.

At December  31, 2000,  the  remaining  property  owned by the Trust is Bayshore
Convalescent Center in North Miami, Florida ("Bayshore"). Bayshore was leased to
Bayshore  Healthcare  Services,  Inc. ("BHS") through August 31, 1999. BHS is an
affiliate of the Trust, as it is owned by James R. Sellers,  an affiliate of the
Advisor.  On June 3, 1999,  the Trust entered into a Purchase and Sale Agreement
to sell Bayshore to Abraham Shaulson for $5,750,000.  Effective August 31, 1999,
the  Purchase  and Sale  Agreement  was amended to provide for a closing date of
October  31, 2000  subject to 66.667%  shareholder  approval  of the sale.  This
approval  was  obtained in  February  2000.  Additional  details of the sale are
disclosed  in the  Form  8-K  filed  with  the U.  S.  Securities  and  Exchange
Commission  on September 15, 1999.  Further,  effective  September 1, 1999,  the
Trust entered into a new lease with Watercrest Nursing and Rehabilitation, Inc.,
a Florida  corporation for a term of one year and one month expiring October 31,
2000,  unless sooner  terminated  to  accommodate  the closing of the sale.  The
closing date of the sale contract and the aforementioned  date of the lease have
subsequently been extended to April 3, 2001.

In 1998,  the Trust sold Country View and New Life,  two  properties it owned in
Colorado.  Effective  July 24,  1998,  the Trust sold Country View to William E.
Harper  ("Harper"),  an individual not affiliated with the Trust or its Advisor,
for $262,500 in  accordance  with the terms of  Commercial  Contracts to Buy and
Sell Real Estate,  dated June 17, 1998, as amended. At closing on July 24, 1998,

                                      F-5
<PAGE>

the Trust  received  $80,000 in cash and was the payee of two  promissory  notes
(the "Harper  Notes"),  each dated July 24, 1998,  from Harper in the respective
original principal amounts of $100,000 and $82,000. On July 16, 1999, the Harper
Notes were paid in full and the  proceeds  were used to pay down on the  Florida
property mortgage.  Effective August 6, 1998, the Trust sold New Life at auction
to Continuum Health Partnership, Inc. ("Continuum"),  a Colorado corporation not
affiliated  with the Trust or its Advisor,  for $250,000 in accordance  with the
terms of that certain Commercial  Contract to Buy and sell Real Estate (the "New
Life Sales  Contract"),  dated  August 6, 1998.  The Trust  received  $15,000 on
August 6, 1998 and the remaining balance of$235,000 in cash at closing on August
24,  1998.  The  proceeds  from the sales of  Country  View and New Life did not
satisfy the outstanding debt related to these facilities.

The Trust's  continuing  plan of operation for the year ending December 31, 2001
is to sell its  remaining  property,  distribute  the proceeds and liquidate the
corporation.

The Company's mortgage notes payable matured on November 30, 2000.  Approval for
an extension will be partly based on approval of the new tenant in the facility.
Technically,  failure to obtain  approval for the new tenant is a default  under
the documents.  Once proper financial and industry  references are obtained from
the tenant, this default may be cured and the extension requested.

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(1)  CASH AND CASH  EQUIVALENTS - For purposes of the  statements of cash flows,
     the Trust  considers  all  short-term  debt  securities  purchased  with an
     original maturity of three months or less to be cash equivalents.

(2)  BUILDINGS AND  IMPROVEMENTS -  Depreciation  of these assets is computed by
     the  straight-line  method over the useful  lives of the assets  which have
     been estimated to be 20 to 40 years. The Trust  periodically  evaluates the
     net realizable  value of its properties and provides a valuation  allowance
     when it becomes  probable  there has been a permanent  impairment of value.
     Depreciation is suspended while a facility is vacant.

(3)  LOAN COSTS - Loan costs have been  deferred and are being  amortized  using
     the straight-line method over the term of the related borrowing.

(4)  REVENUE  RECOGNITION - Rental income from operating leases is recognized as
     earned over the life of the lease agreements.

(5)  INCOME TAXES - As of December 31, 2000,  the Company had net operating loss
     carryforwards  for income tax purposes of  approximately  $1,835,000  which
     will  expire  beginning  in 2006.  The  Trust  did not file its  applicable
     Federal and State  income tax return for the periods 1992 through 1997 on a
     timely basis.  The Trust had  cumulative  net  operating  losses during the
     periods from 1991 through 1997.

(6)  FAIR VALUE OF FINANCIAL  INSTRUMENTS - The carrying values of the financial
     instruments   disclosed   elsewhere  in  these  notes,  are  deemed  to  be

                                      F-6
<PAGE>

     representative  of their fair  values,  as the interest  rates  approximate
     market rates giving consideration to their respective risks.

(7)  USE OF ESTIMATES - Management  has made certain  estimates and  assumptions
     that affect certain reported amounts and disclosures.  Accordingly,  actual
     results could differ from those estimates.

NOTE 3: REAL ESTATE PROPERTIES AND LEASES

At December 31, 2000 the Trust owned one nursing  home in Florida (the  "Florida
Property"). Trust management has evaluated the carrying value of the property as
reflected on the balance  sheet and  believes  that the  remaining  net carrying
value is realizable.

THE FLORIDA PROPERTY

Effective  May 1, 1993,  the Trust  entered into a five year lease with Bayshore
Healthcare  Services,  Inc.  ("BHS"),  an affiliate of the Advisor.  BHS has the
option to renew for an additional five, five-year terms. The first lease renewal
option was exercised on May 1, 1998.  BHS paid rents  totaling  $384,112  during
1999.

Effective September 1, 1999, the BHS lease was canceled and a new fourteen month
lease was entered into with Watercrest Nursing and Rehabilitation  Center,  Inc.
The termination date has subsequently been extended to `April 3, 2001

The new lease provides for monthly rentals  consisting of an equity component of
$7,000 and a debt component equal to the amount of the Trust's mortgage payment.
Due to an interest  rate  increase on the mortgage  note,  the monthly  mortgage
payments  were $41,314  through  January 31, 2001,  resulting in a monthly lease
payment of $48,314 through that date. The monthly lease payment giving effect to
the terms  resulting  from the  mortgage  negotiation  discussed  below would be
$51,150 effective February 1, 2001.

Future  minimum annual lease  payments,  expected to be received by the Trust on
the leased property during the lease term are as follows:

     YEAR ENDED DECEMBER 31,
     -----------------------
     2001 (through April 3, 2001)              $150,614

NOTE 4: MORTGAGE NOTE PAYABLE
                                               12/31/00           12/31/99
                                               --------           --------
Bank mortgage note-Florida Property,
payable in monthly installments of
$41,314, including interest at 9.00%,
through November 30, 2000, at which date
the unpaid balance was due in full.           $4,098,780         $4,325,404

                                      F-7
<PAGE>

The Property is secured by first  mortgages,  assignments of the lease and rents
thereunder.  The bank mortgage note balance on the Colorado  Properties was also
added and secured, to the extent unpaid by sales of the Colorado Properties,  in
accordance with the terms of the Forbearance Agreement,  by a second mortgage on
the Florida Property.

Extension  of this  note  is  pending  as  discussed  in  Note 1.  Additionally,
management is negotiating an extension of the mortgage notes effective  February
1, 2001. If successful,  this would result in extension of the  expiration  date
through June 30, 2001, a revision of the interest  rate from 9% fixed to the PNC
prime rate plus 1% (currently 9.50%) and monthly payments  totaling $44,150.  As
of this date, the agreement  extensions have not been transacted by the bank and
the notes remain in default,

NOTE 5: RELATED PARTY TRANSACTIONS

Effective  March 1, 1998,  the Trust entered into an agreement with the Advisor,
and  affiliates  of the  Advisor,  to provide  various  services to the Trust in
exchange for fees, as follows:

o    Advisory  fees at an annual  rate of the  greater  of  $30,000 or 5% of net
     income of the  Trust,  as  defined.  The Trust  incurred  advisory  fees of
     $30,000 to the Advisor during 2000 and 1999.

o    Property management, acquisition and disposition fees to be paid based upon
     contractual agreements between the parties. The Trust incurred no such fees
     in 2000 or 1999.

Leasing transactions with related parties are described in Note 3.

Under  terms of the  previous  lease  agreement,  the payment of the real estate
taxes were the responsibility of Bayshore Healthcare Services, Inc. ("BHS"), the
lessee affiliate of the Advisor, to September 1, 1999. BHS did not pay the taxes
for the years 1997, 1998 and 1999.

The Trust borrowed $125,582,  including taxes,  penalties and interest, to bring
the taxes  current.  The funds were  added to the  related  mortgage.  The Trust
accepted a promissory  note from BHS in the amount of $125,582  plus interest at
10% payable on demand.  Since there is no assurance  that BHS will have adequate
funds to pay the  note,  management  has  fully  reserved  the note and  accrued
interest  through  December  31,  2000  as a  bad  debt.  Additionally,  amounts
previously  accrued  by  the  Trust  for  payment  of  the  related  1997  taxes
(approximately $42,000) have been offset against the bad debt expense.

NOTE 6: DISPUTED CLAIMS

Management of the Predecessor Advisor entered into certain  transactions related
to the potential debt refinancing  and/or sale of the Properties.  The Trust has
recorded  certain  professional  fees related to those  transactions as disputed
claims,  believing that they are  obligations,  not of the Trust,  but of former
management or other third parties. In connection with one of these disputes, the
Trust has been named a codefendant  with the Predecessor  Advisor for payment of
fees totaling  approximately  $50,000 which relate to establishing  the advisory
relationship  with  the  Predecessor  Advisor.  The  advisory  relationship  was
terminated by the Trust for  nonperformance  of  management  of the  Predecessor
Advisor.  It is the  opinion of  current  management  that these  claims are the
obligation of former management due to its nonperformance.

                                      F-8
<PAGE>

NOTE 7: CONTINGENCIES

The  purchaser/lessee  is  responsible  for payment of the 2000  property  taxes
approximating  $39,000.  In  the  event  the  purchaser/lessee  defaults  on its
obligation  these taxes will become the liability of the Trust which will pursue
their collection from the purchaser/lessee.

The Company's mortgage notes payable matured on November 30, 2000.  Approval for
an extension will be partly based on approval of the new tenant in the facility.
Technically,  failure to obtain  approval for the new tenant is a default  under
the documents.  Once proper financial and industry  references are obtained from
the tenant, this default may be cured and the extension requested.

NOTE 8: SUBSEQUENT EVENTS

Management  estimates that additional  operating losses totaling $10,000 will be
incurred  through the closing date of April 3, 2000.  Management  also estimates
that the Company will  realize a gain on sale of  $1,276,000,  representing  the
$5,750,000  sales price net of selling  expenses of $790,000  and  undepreciated
costs  of  $3,684,000.  Management  additionally  estimates  that  the net  cash
residual  available  for  distribution  to  the  shareholders  will  approximate
$520,000,  representing  the  $5,750,000  sales  price net of  closing  costs of
$740,000,  mortgage  debt  service of  $4,070,000,  application  of the $375,000
deposit, and retirement of general corporate obligations totaling $45,000.

In that the sale has not yet closed, the Company is utilizing the deposit method
to recognize income from the sale transaction, whereby cash received is recorded
as a deposit on the  contract  pending  closing.  In the event the  contract  is
canceled,  deposit  forfeitures  are recognized as income.  When the closing has
occurred,  an appropriate  method of revenue  recognition will be adopted taking
the following factors (and others) into  consideration:  (a) the degree to which
ownership risks are transferred to the buyer, (b) the degree of seller financing
or financing recourse and (c) the adequacy of the buyer's initial investment.

The  sale  did not  close  on  April 3,  2001.  The  buyer/lessee  is  currently
negotiating with PNC to assume the existing  mortgages  secured by the property.
The lease and underlying  mortgage payments are current through that date. There
can  be  no  assurance  that  the  buyer/lessee  will  be  successful  in  their
negotiations or that in the event they are not successful, attempt return of the
deposit.

                                      F-9