COMTECH CONSOLIDATION GROUP INC/DE, SB-2, 2000-07-12

COMTECH CONSOLIDATION GROUP INC/DE
SB-2, 2000-07-12
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As filed with the Securities and Exchange Commission on July 11, 2000.

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

FORM SB-2

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
(AMENDMENT NO. _________________ )

COMTECH CONSOLIDATION GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 7375;8082 76-0544385
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)

Copies to:

Comtech Consolidation Group, Inc. T. Deon Warner
10497 Town & Country Way Warner & Washington L.L.P.
Suite 460 4410 Montrose Blvd.
Houston, Texas 77024 Houston, Texas 77006
(713) 554-2244 (713) 807-1007

Approximate date of proposed sale to the public: As soon as practicable after
this Registration Statement becomes effective.

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ].

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
The Securities Act, check the following box and list the Securities Act
Registration statement number of the earlier effective registration statement
for the same offering. [ ].

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ].

If delivery of the prospectus is expected to be made pursuant to Rule 434 check
the following box. [ ]

<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE

Proposed Proposed

Amount Maximum Maximum Amount of

Title of Each Class of Securities To Be Offering Price Aggregate Registration

To be Registered Registered Per Unit Offering Price Fee
--------------------------------- ---------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
Common Stock. . . . . . . . . . . 27,000,000 $ 0.15 (1) $ 4,050,000 $ 1,069.20
<FN>

1. Assuming a market price of $0.15 per share for the Common Stock on the date this
Registration Statement is declared effective. On July 7, 2000, the market price for the Common
Stock closed at $ 0.12 per share.

The registrant hereby amends this registration statement on such date or dates as may be
necessary to delay its effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
</TABLE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECRURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICIATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS FO ANY SUCH STATE.

<PAGE>
SUBJECT TO COMPLETION DATED JULY 11, 2000

PROPSECTUS

COMTECH CONSOLIDATION GROUP, INC.

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

SECURITIES TO BE ISSUED BY THE COMPANY:

19,853,179 SHARES OF COMMON STOCK

SECURITIES TO BE OFFERED BY SELLING SHAREHOLDERS:

7,146,821 SHARES OF COMMON STOCK

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

Comtech Consolidation Group, Inc., a Delaware corporation (the "Company"),
is offering, upon the terms and conditions set forth herein, 19,853,179 shares
of Common Stock, par value $.00967 per share ("Common Stock"), of the Company
(8,519,980 shares of which will be used to extinguish up to $1,277,997 of the
Company's outstanding account payables) for a price per share of $ . In
--
addition, certain selling shareholders of the Company are offering up to
--------------------------------------------------------------------------------
7,461,821 shares of Common Stock to the public at a price per share of $ .
-------------------------------------------------------------------------- -
The market price for the Common Stock closed at $___ on _________, 2000.
--------------------------------------------------------------------------------

All Offerees receiving this Prospectus are urged to read this Prospectus
carefully.

THE DATE OF THIS PROSPECTUS IS
____ , 2000

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SUMMARY INFORMATION

Comtech Consolidation Group, Inc., f/k/a Venning Group, Inc. ("ComTech" or
the "Company") was incorporated on July 13, 1987 under the laws of the State of
Delaware, to engage in any lawful corporate undertaking, including but not
limited to selected mergers and acquisitions. The Company had been in the
development stage from inception until August 12, 1997, at which time it
acquired all of the capital stock of Networks On-Line, Inc., a network
integrator and Internet service provider and began operations under its business
plan. Networks On-Line, Inc. provides Internet access services to individuals
and businesses in the Houston, Texas area and provides website hosting and
Internet consulting on a nationwide basis.

Revenue from three operating subsidiaries (EISP Corporation - engaged in
the sale of Internet services; Professional Management Providers, Inc. - engaged
in the delivery of health care services; and Networks On-Line, Inc. - engaged in
the sale of Internet service provider services) will be the Company's primary
source of cash flow during 2000. Although the Company continues to seek
strategic acquisitions to enhance its core businesses, there can be no assurance
that the Company will be able to generate sales in quantities sufficient to
generate positive cash flow. In addition, there can be no assurance that the
Company will not continue to experience operating losses for the foreseeable
future as it commits additional resources to increase revenue.

The Company business is the acquisition and consolidation of the business
operations of small companies. It combines these small entities into larger
organizations that can take advantage of their collective size and achieve
economies of scale. To date the Company has acquired and was consolidating
business operations in two industries, Internet services and Healthcare.

In January of 1998, the Company formed a new wholly owned subsidiary named
EISP Corporation (Enhanced Internet Service Provider), a Texas corporation.
EISP's mission was to develop market enhanced Internet services, i.e. video
teleconferencing, faxing to be bundled with its standard Internet services.

In February of 1998, the Company acquired Professional Management
Providers, Inc. (PMP), a Baton Rouge, Louisiana based corporation. PMP is a
management consulting company for home health care providers, with customers
located in Texas and Louisiana. PMP was established as a subsidiary holding
company for acquisitions of home health care agencies. During 1998, PMP made a
significant amount of acquisitions with annualized revenues of approximately $17
million.

In April 1998, the Company acquired Unique Dawning, Inc. (UDI), a Texas
Corporation. UDI, headquartered in Houston, operated specialized health care
center (partial hospitals) providing services to outpatients, with centers
located in Texas and Louisiana. UDI was established as a subsidiary holding
company for acquisitions of partial hospitals. During 1998 and 1999, UDI made
a significant amount of acquisitions with annualized revenues of approximately
$6 million.

ComTech was originally in the business of growing sales revenues and
earnings through consolidation (acquisition) of privately held operating
entities under its two tier corporate holding structure. As acquisitions were
made, the Company formed a subsidiary holding company, specifically structured
as a financing vehicle to fund ongoing expansion around the business initially
acquired. This two tier corporate holding structure was established to provide
a means of raising operating capital without dilution to the Company
shareholders. It also allowed the subsidiary holding company to develop its own
market identity, separate and apart from that of the Company. The objective of
this system was to continue to grow the business of its subsidiary holding
company, thereby increasing sales revenue and earnings.

In second quarter of 1999, ComTech decided to abandon the subsidiary
holding company concept because of its lack of control over the subsidiary
holding companies. The Company did not realize how much control it had actually
lost until it tried to change its method of managing the day-to-day operations
of the subsidiaries. In doing so, the Company lost a significant amount of
operations in the health care division.

In July 1999, the Company lost seven of the eight operating health care
facilities of PMP. The only surviving operating health care entity of PMP was
A-1 Bayou, a home health care agency located in Jeanerette, Louisiana. In
December 1999, the Board of Directors of ComTech voted to transfer the ownership
of A-1 Bayou directly to ComTech. In September 1999, the Company closed four of
the five operating health care facilities of UDI.

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As of December 1999, ComTech has only three operating subsidiaries, one
engaged in health care and two engaged in Internet related businesses. These
entities generate approximately $2 million in annual revenues.

Networks On-Line/EISP - Each of NOL and EISP is a wholly owned subsidiary
of ComTech. Their combined primary business is providing high speed Internet
access, video conferencing, web hosting, and other bundled Internet services.
Management's goal is to build the revenue base of both companies from their
current combined base of approximately $550,000 to over $2 million annually
during the next eighteen months. To accomplish this task, management hired an
experienced ISP operator whose compensation is performance-based and
incentive-laden to promote achievement of company goals. ComTech will also seek
to build NOL and EISP through acquisitions and groom the company for a potential
spin-off to increase shareholder value.

A-One Bayou Home Health 2000, Inc. - A-One Bayou is a wholly owned
subsidiary of ComTech. A-One Bayou operates in the home health care industry.
A-One has grown its current operations, and is generating revenues of
approximately 1.5 million dollars a year. Last year, the company opened a
second office in the Jeanerette, Louisiana area. The company is managed and
operated by a seasoned health care professional with more than ten years'
managerial experience. This professional is responsible for the growth of
A-One, opening the second office last year, and continues to manage the
day-to-day operations of the company.

A-One Bayou Home Health 2000, Inc. is the only home health agency located
in Jeanerette, Louisiana. A-One specializes in providing quality health care in
the home environment. A-One has a second branch located in Morgan City,
Louisiana which is located directly across from Lakewood Hospital. There are
two other home health care agencies in Morgan City.

A-One provides the following services: RN, LPN, Home Health Aides (HHA),
Medical Social Services, Physical and Occupational Therapist. A-One specializes
in providing Psychiatric and Pediatric Nursing.

Since its acquisition in October of 1998, revenue for A-One increased to
$2.2 million in 1999 and the Company anticipates even greater results in the
year 2000.

RISK FACTORS

An Investment in the Company involves a high degree of risk. Offerees and
other prospective investors should consider the following factors, in addition
to other information contained in this Prospectus.

History of Operating Losses; Accountants' Explanatory Paragraph

The Company was originally formed in 1987, commenced business in August
1997 and has incurred operating losses since inception. Revenue from three
operating subsidiaries (EISP Corporation - engaged in the sale of Internet
services; Professional Management Providers, Inc. - engaged in the delivery of
health care services; and Networks On-Line, Inc. - engaged in the sale of
Internet service provider services) will be the Company's primary source of cash
flow during 2000. Although the Company continues to seek strategic acquisitions
to enhance its core businesses, there can be no assurance that the Company will
be able to generate sales in quantities sufficient to generate positive cash
flow. In addition, there can be no assurance that the Company will not continue
to experience operating losses for the foreseeable future as it commits
additional resources to increase revenue.

The Company's independent certified public accountants included an
explanatory paragraph in their opinion with respect to the Company's financial
statements to reflect the recurring losses from operations have raised
substantial doubt about the ability of the Company to continue as a going
concern. The Company's internally generated cash flows from operations have
historically been, and continue to be, insufficient for cash needs. The Company
has, therefore, relied upon external equity financing to continue its
operations.

From inception though March 31, 2000, the Company incurred significant
operating losses and at March 31 2000, the Company had a capital deficit of
$94,643. Until the Company can obtain monthly sales levels of approximately
$200,000, which the Company currently believes to be necessary to fund current
working capital needs, there is uncertainty as to the ability of the Company to
expand its business and continue as a going concern. The Company's current
forecast indicates that there will be negative cash flows from operations into
the fourth quarter of 2000. There can be no assurance that the Company will be

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able to generate revenues as projected sufficient to service the cost of
operations and fund the capacity to handle the Company's growth. Further,
failure to realize the sales growth projections could shorten the period that
the estimated offering proceeds will be sufficient to meet working capital
needs. As a result, there can be no assurance that the Company will be
successful in funding its working capital and capacity needs.

Need for Additional Capital and Capital Requirements

The Company's efforts to develop and grow its Internet services have
required, and will continue to require, the Company to invest in infrastructure
and systems development. In addition, the Company's reliance on government
programs such as Medicare and Medicaid to fund its healthcare operations puts
the Company's prospective revenues at risk due to the delays in payment and
potential for those agencies to seek repayment of previously paid fees. The
Company has incurred substantial losses since inception and expects to continue
to incur losses through the fourth quarter of 2000. During the second quarter
of 2001, the company expects its operating revenues will be sufficient to cover
operating costs and provide positive cash flow. However, there can be no
assurance that the Company will meet these expectations and generate positive
cash flow in the foreseeable future. As a result, the Company expects it will
need to raise additional capital in future periods. The Company currently does
not have sufficient capital to meet its cash flow requirements over the next 6
months. The Company expects to satisfy its cash flow shortages with (i) the
sale of additional shares of Common Stock pursuant to private sales, (ii) the
proceeds of the Offering and (iii) the proceeds of a working capital line of
credit, which the Company is presently seeking with an unaffiliated lender. If
the Company experiences greater than anticipated capital requirements, or if the
implementation of the Company's operating strategy fails to produce anticipated
revenue growth and cash flows or if additional sources of capital are needed
earlier than currently anticipated, the Company's ability to continue operations
will be severely impacted. The timing of the need for additional capital also
will be affected by the extent to which shares of Common Stock in this Offering
are sold. See "Offering." There can be no assurance that the Company will be
able to obtain equity or lease financing when needed or on terms that the
Company finds acceptable. Any additional equity financing may cause immediate
and substantial dilution to the Company's shareholders. If the Company is
unable to obtain sufficient funds to satisfy its capital requirements, it will
be forced to reduce the scope of its expansion plans, curtail operations,
dispose of assets or seek extended payment terms from its vendors, any of which
could have a material adverse effect on the Company's business, financial
condition and results of operations. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Liquidity and Capital
Resources."

Risk of Managing Growth; Recent Management Changes

The Company's growth has placed, and is expected to continue to place, a
significant strain on the Company's management, administrative, operational,
financial and technical resources and on its systems and controls. The Company
has made recent changes in executive level management positions and certain of
the Company's senior management personnel have worked together only a short
time. The Company believes it will need, both in the short term and the long
term, to hire additional qualified administrative and management personnel in
all functional areas. Failure to locate, hire and retain such qualified
personnel or failure to manage the Company's growth properly could have a
material adverse effect on the Company's business, financial condition or
results of operations. See "-Dependence on Key Personnel; Need to Hire
Additional Qualified Personnel," "Description of the Business," "Management's
Discussion and Analysis of Financial Condition and Results of Operation," and
"Directors, Executive Officers, and Control Persons - Management."

Market Growth of Internet Services

The market and demand for consumer-to-business and business-to-business
Internet services is growing rapidly. While the Company believes the market and
demand for such services will continue to grow, there can be no assurance as to
the extent of any such growth. Even if there is continued growth in the use of
Internet services, there can be no assurance that customers will elect to use,
or to continue to use, the services provided by the Company to fulfill their
Internet services needs. If the use of service providers does continue to grow,
there can be no assurance that the Company will be able to attract these new
users as customers. See "Description of the Business-Market Analysis."

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Competition

The Company faces a high degree of competition in each of its service
areas. The Company's current and potential competitors fall into the following
categories: A. for Internet service providers: (i) telecommunication companies
and resellers, (ii) institutional Internet service providers, (iii) independent
Internet service providers, (iv) unified Internet messaging providers and (v)
various web design and electronic commerce providers. However, because of the
high rate at which other established and new companies are entering the various
business segments, there can be no assurance that additional competitors will
not enter markets the Company currently serves. Many of these competitors may
possess significantly greater financial, marketing, technical and other
resources than the Company. There can be no assurance that additional
competitors will not enter markets that the Company presently serves or plans to
serve or that the Company will be able to compete effectively. In addition,
there can be no assurance that potential customers will not elect to use their
own equipment to fulfill their needs for Internet services or that they will not
elect to use alternatives to the Company's Internet services. See "Description
of the Business - Competition."

The Company also faces a high degree of competition in its health care
segment. These competitors include, but are not limited to, (i) hospitals, (ii)
day hospitals, (iii) clinics, and (iv) other shortterm care facilities. Many of
these competitors possess significantly greater financial, marketing, technical
and other resources than the Company. There can be no assurance that additional
competitors will not enter markets that the Company presently serves or plans to
serve or that the Company will be able to compete effectively.

Company System Failure

The success of the Company's Internet services is largely dependent upon
the efficient and uninterrupted operation of its telecommunications system
infrastructure. The Company needs to expand its disaster recovery plan to
include one or more redundant network switching centers. The Company's systems
and operations remain vulnerable to damage or interruption from fire, earthquake
or other natural disaster and from power loss, telecommunications failure,
break-ins, unauthorized entry, computer viruses, and similar events beyond the
Company's control. Furthermore, the hardware, software and network systems
developed by the Company are relatively new, and therefore have not withstood
the demands of the larger volume associated with the Company's revenue
projections. There can be no assurance that these systems will be adequate to
operate at the volume levels projected or operate efficiently enough to produce
the required gross margin for the Company to be profitable. The occurrence of
any of the foregoing risks could have a material adverse effect on the Company's
business, financial condition and results of operations.

Lack of Long-Term Customer Contracts

The majority of the Company's interest services are performed pursuant to
specific purchase orders from customers and other short-term arrangements.
While the Company actively pursues longer-term contracts with customers, the
Company's existing contracts typically are of a duration of six months to one
year. As a result, there can be no assurance that the majority of the Company's
internet relatedcustomers will continue to purchase the Company's services in
the future. See "Description of the Business - Market Analysis."

The Pricing for Services is Uncertain

Prices for Internet services have fallen historically. The Company expects
prices in the Internet industry in general to continue to fall, and prices for
the Company's existing and future services may fall corresponding. Accordingly,
there can be no assurance that the Company's current pricing schedule will prove
to be viable, demand for Company's services will materialize at the prices it
would like to charge, or the Company will be able to sustain adequate future
pricing levels as competitors introduce competing services.

Dependence on Key Personnel; Need to Hire Additional Qualified Personnel

The Company is highly dependent on the technical and management skills of
its key employees, including technical, sales, marketing, financial and
executive personnel, and on its ability to identify, hire and retain additional
personnel. Competition for such personnel is intense and there can be no
assurance that the Company will be able to retain existing personnel or identify
or hire additional personnel. The failure to retain and attract the necessary
technical, managerial, financial, marketing and customer service personnel could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company's performance also depends on its

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ability to retain and motivate its executive officers and key employees, several
of whom have worked together for only a short time. The Company is in the
process of entering into employment agreements with its senior officers. The
loss of key personnel could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Risk of Managing
Growth; Recent Management Changes" and "Directors, Executive Officers, and
Control Persons - Management"

Technological Change

The Internet service industry is characterized by rapid and continuous
technological change, evolving industry standards, emerging competition and
frequent new service and other product introductions. Future technological
advances in the Internet services industry may result in the availability of new
services that could compete with the services currently provided by the Company
or decreases in the cost of existing services that could enable the Company's
established or potential customers to fulfill their own Internet services needs
more cost effectively. There can be no assurance that the Company can
successfully identify new service opportunities and develop and bring new
products and services to market in a timely and cost-effective manner, or that
products, services or technologies developed by others will not render the
Company's products, services or technologies noncompetitive or obsolete.

Software and Hardware Defects; Possibility of Development Delays

Software-based services and equipment, such as the Company's may contain
undetected errors or failures when introduced or when new versions are released.
The hardware, software, and network systems the Company has developed are
relatively new and, therefore, have not withstood the demand of the larger
volume associated with its revenue projections. There can be no assurance that
these systems will be adequate to operate at the volume levels projected or
operate efficiently enough to produce the required gross margin the Company
needs to be profitable. Furthermore, there can be no assurance that, despite
testing by the Company and by current and potential customers, errors will not
be found in the Company's software after commercial release, or that the Company
will not experience development delays, resulting in delays in market
acceptance. Any of these circumstances could have a material adverse effect on
the Company's business, prospects, financial condition and results of
operations.

The Internet as an Information Transmission Medium

The Company's future success will depend on its ability to route its
customers' traffic through the Internet and through dedicated and/or partially
dedicated data network bandwidth. The Company depends on the viability of the
Internet and other bandwidth as a medium for the transmission of information in
various forms. To date, the Company has transmitted a limited amount of
customer traffic as compared to its growth projections. There can be no
assurance that these will prove to be viable communications media or that
information transmission will be reliable. There also can be no assurance
against the development of capacity constraints that might inhibit efficient
information transmission.

Continued Growth in the Use of the Internet

The Company's future success is dependent upon continued growth in the use
of the Internet in order to support the sale and use of the Company's internet
services and products. There can be no assurance that the number of Internet
users will continue to grow. As is typical in the case of a new and rapidly
evolving industry, demand and market acceptance for recently introduced products
and services are subject to a high level of uncertainty. The Internet may not
prove to be a viable avenue to transmit communications for a number of reasons.
These reasons include (i) lack of acceptable security technologies, (ii) lack of
access and ease of use, (iii) traffic congestion, (iv) inconsistent quality or
speed of service, (v) potentially inadequate development of the necessary
infrastructure, (vi) excessive governmental regulation, (vii) uncertainty
regarding intellectual property ownership, or (viii) lack of timely development
and commercialization of performance improvements, including high-speed modems.

Lack of Patents and Copyrights

The Company has developed much of its own operating system and user
software and expects to continue to improve existing applications and develop
new applications in the future. As of the date of this Prospectus, the Company
has not copyrighted or patented any of its software and relies on non-disclosure
agreements and common law rights of protection. Other companies may hold or
obtain patents on inventions or may otherwise claim proprietary rights to
technology useful or necessary to the Company's business. The Company intends
to pursue available patent, copyright, trademark and service mark protection for

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its business process, software, and Internet content. The extent to which the
Company may be required to seek licenses under such patents or other proprietary
rights of third parties, and the cost or availability of such licenses, cannot
now be predicted. There can be no assurance, however, that others will not
independently develop superior know-how or obtain access to know-how used by the
Company that the Company now considers proprietary.
Risk Associated With Acquisitions, Investments and Strategic Alliances

The Company intends, in the future, to pursue opportunities to acquire
customer data bases and businesses from, make investments in, or enter into
strategic alliances with, companies that have customer data bases, switching
capabilities or existing networks in the Company's current or target markets.
See "Description of the Business - Market Analysis." The Company currently does
not have any acquisitions or negotiations pending. Any future acquisitions,
investments or strategic alliances will be financed with either equity or debt
securities of the Company, and will be accompanied by the risks commonly
encountered in such transactions or efforts. Such risks include, among others,
(i) the difficulty of identifying appropriate acquisition candidates, (ii) the
difficulty of assimilating the operations and personnel of the respective
entities, (iii) the potential disruption of the Company's ongoing business, (iv)
the inability of management to capitalize on the opportunities presented by
acquisitions, investments, strategic alliances or related efforts, (v) the
failure to successfully incorporate licensed or acquired technology and rights
into the Company's services, (vi) the inability to maintain uniform standards,
controls, procedures and policies and (vii) the impairment of relationships with
employees and customers as a result of changes in management. Acquired
operations typically operate independent marketing, customer support, billing
systems and other functions. Any acquisition by the Company could result in
difficulties in the integration and consolidation of customer bases or
operations. Pending such integration and consolidation, it would be necessary
for the Company to maintain separate billing systems and other functions of the
acquired operation, which could cause inefficiencies and significant operational
complexity and expense, increase the risk of billing delays and financial
reporting difficulties, and impair the Company's efforts to cross-sell the
products and services of the acquired operation. Additionally, in connection
with an acquisition, the Company could experience rates of customer attrition
that would be significantly higher than the rate of customer attrition that it
ordinarily experiences. There can be no assurance that the Company would be
successful in overcoming these risks or any other problems encountered with such
acquisitions, investments, strategic alliances or related efforts.

Governmental Regulation

The telecommunications industry is subject to regulation by the Federal
Communications Commission (the "FCC"), by various state public service and
public utility commissions and by various international regulatory authorities.
The FCC has the power to impose regulatory requirements on the Company and
currently classifies the Company as a "nondominant carrier." Generally, the FCC
has chosen not to closely regulate the charges or practices of no dominant
carriers. The FCC also has the power to impose more stringent regulatory
requirements on the Company and to change its regulatory classification. As a
result, there can be no assurance that the FCC will not change the Company's
regulatory classification or otherwise subject the Company to more burdensome
regulatory requirements that would have a material adverse effect on the
Company's business, financial condition and results of operations.

The Company is subject to federal and state laws regulating the unsolicited
transmission of e-mail transmissions for advertisement purposes. The Company
has adopted a policy to refrain from transmitting e-mail advertisements except
to the Company's own customers and other recipients who have expressed an
interest in receiving the transmitted information or otherwise have given their
permission to receive such transmissions. The Company encourages its customers
to familiarize themselves with the relevant laws and to conduct their businesses
in accordance with applicable laws.

Government Regulation of Health Care Services

Various state and federal laws regulate the relationships between providers
of health care services, physicians and other clinicians. These laws include
the fraud and abuse provisions of the Social Security Act, which include the
"anti-kickback" and "anti-referral" laws. The "anti-kickback" laws prohibit
the solicitation, payment, receipt, or offering of any direct or indirect
remuneration for the referral of Medicare or Medicaid patients or for the
ordering or providing of Medicare or Medicaid covered services, items or
equipment. The "anti-referral" laws impose restrictions on physicians'
referrals for designated health services to entities with which they have
financial relationships. Violations of these laws may result in substantial
civil or criminal penalties for individuals or entities, including large civil
monetary penalties and exclusion from participation in the Medicare and Medicaid
programs. Such exclusion, if applied to the New PCs or other physician groups

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with which the Company may contract in the future, could result in significant
loss of reimbursement. A determination of liability under any such laws, could
have a material adverse effect on the Company. See "Business - Government
Regulation and Supervision."

State Regulation

Several states, including Texas and Louisiana, have adopted laws similar to
the "anti-kickback" and "anti-referral" laws that cover patients in private
programs as well as government programs. See "Business - Government Regulation
and Supervision." The laws of many states prohibit physicians from splitting
fees with non-physicians and prohibit non-physician entities from practicing
medicine. These laws vary from state to state and are enforced by the courts
and by regulatory authorities with broad discretion.

Compliance

Although the Company believes its operations as described in this
Prospectus are, and will continue to be, in material compliance with existing
applicable laws, the Company's business operations have not been the subject of
judicial or regulatory interpretation. There can be no assurance that review of
the Company's business by courts or regulatory authorities will not result in
determinations that could adversely affect the operations of the Company or that
the health care regulatory environment will not change so as to restrict the
Company's existing operations or their expansion. In addition, such regulatory
requirements could adversely impact the Company's continued operations within
such jurisdictions if the Company is unable to modify its operational structure
to conform to such regulatory framework. Any limitation on the Company's
ability to expand could have an adverse effect on the Company.

Reform Initiatives

In addition to extensive, existing government health care regulation, there
have been numerous initiatives on the federal and state levels for comprehensive
reforms affecting the payment for and availability of health care services. The
Company believes that such initiatives will continue during the foreseeable
future. Aspects of certain of these reforms as proposed in the past, such as
further reductions in Medicare and Medicaid payments and additional prohibitions
on physician ownership, directly or indirectly, of facilities to which they
refer patients, if adopted, could adversely affect the Company. See
"Description of the Business - Market Analysis - Medicare and Medicaid
Programs."

Reimbursement; Trends and Cost Containment

Management estimates that approximately 50% of the revenues of the
subsidiaries are derived from government sponsored health care programs
(principally, the Medicare and Medicaid programs). The health care industry is
experiencing a trend toward cost containment as government and private third
party payors seek to impose lower reimbursement and utilization rates and
negotiate reduced payment schedules with service providers. The Company
believes that these trends will continue to result in a reduction from
historical levels in per-patient revenue for such medical practices. Further
reductions in payments to physicians or other changes in reimbursement for
health care services could have an adverse effect on the Company's operations,
unless the Company is otherwise able to offset such payment reductions.

Rates paid by private third party payors, including those that provide
Medicare supplemental insurance, are based on established physician. ASC and
hospital charges are generally higher than Medicare payment rates. A change in
the patient mix of the practices under Company management that results in a
decrease in the number of patients covered by private insurance could adversely
affect the Company's results of operations.

The federal government has implemented, through the Medicare program, a
resource-based relative value scale ("RBRVS") payment methodology for physician
services. This methodology went into effect in 1992 and is continuing to be
implemented in annual increments through December 31, 1996. RBRVS is a fee
schedule that, except for certain geographical and other adjustments, pays
similarly situated physicians the same amount for the same services. The RBRVS
is adjusted each year, and is subject to increase or decreases at the discretion
of Congress. To date, the implementation of RBRVS has reduced payment rates for
certain of the procedures historically provided by physician practices.
RBRVS-type of payment systems have also been adopted by certain private third
party payors and may become a predominant payment methodology. Wider-spread
implementation of such programs would reduce payments by private third party

9
<PAGE>
payors, and could indirectly reduce the Company's operating margins to the
extent that costs of providing clinical services related to such procedures
could not be proportionately reduced.

There can be no assurance that any or all of these reduced revenues and
operating margins could be offset by the Company through cost reductions,
increased volume, introduction of new procedures or otherwise. See "Description
of the Business - Market Analysis."

Risks Associated with Managed Care Contracts

As an increasing percentage of patients come under the control of managed
care entities, the Company believes that its success will, in part, be dependent
upon the Company's ability to negotiate, contracts with health maintenance
organizations ("HMOs"), employer groups and other private third party payors
pursuant to which services will be provided on a risk-sharing capitated basis by
the Company. Under some of such agreements, the healthcare provider accepts a
pre-determined amount per month per patient in exchange for providing all
necessary covered services to the patients covered under the agreement. Such
contracts pass much of the risk of providing care from the payor to the
provider. The proliferation of such contracts in markets served by the Company
could result in greater predictability of revenues, but greater unpredictability
of expenses. There can, however, be no assurance that the Company will be able
to negotiate, on behalf of its healthcare facilities, satisfactory arrangements
on a risk-sharing or capitated basis. In addition, to the extent that patients
or enrollees covered by such contracts require more frequent or extensive care
than is anticipated, operating margins may be reduced, or in the worst case, the
revenues derived from such contracts may be insufficient to cover the costs of
the services provided. As a result, the subsidiaries may incur additional
costs, which would reduce or eliminate anticipated earnings under such
contracts. Any such reduction or elimination of earnings could have a material
adverse affect on the Company's results of operations.

Limited Public Market

The public trading market for the Company's Common Stock has a minimal
trading volume (approximately 200,000 per day) and there can be no
assurance that the trading market will improve. Assuming the successful
completion of the Offering, the Company intends to take the necessary actions to
continue its Common Stock to be traded by means of the Nasdaq National Market
System ("NMS"). However, there can be no assurance that the market for the
Company's Common Stock will continue on the OTCBB or the NMS. The market for
the Common Stock is highly illiquid, sporadic and volatile.

Penny Stock Regulation

The Commission has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Penny stocks generally are
equity securities with a price of less than $5.00 (other than securities
registered on certain national securities exchanges or quoted on the NMS,
provided that current price and volume information with respect to transactions
in such securities is provided by the exchange system). The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock not otherwise
exempt from the rules, to deliver a standardized risk disclosure document
prepared by the Commission that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also
must provide the customer with bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, the penny stock rules require that prior
to a transaction in a penny stock not otherwise exempt from such rules, the
broker-dealer must make a special written determination that a penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in any secondary market for a stock
that becomes subject to the penny stock rules. The Company's Common Stock is
subject to the penny stock rules, and accordingly, investors may find it
difficult to resell their shares, if at all.

Authorized Stock

The Board of Directors of the Company has the authority to issue up to
1,000,000 shares of "blank check" preferred stock with such designations, rights
and preferences as may be determined by the Board of Directors. Accordingly,
the Board of Directors of the Company is empowered, without further shareholder
approval, to issue preferred stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other

10
<PAGE>
rights of the holders of the Company's Common Stock. Certain companies have
used the issuance of preferred stock as an anti-takeover device and the Board of
Directors could, without further shareholder approval, issue preferred stock
with certain rights that could discourage an attempt to obtain control of the
Company in a transaction not approved by the Board of Directors. The Board of
Directors of the Company also has authority to issue up to 100,000,000 shares of
Common Stock. See "Description of Capital Stock."

Fluctuation in Stock Price

The Company's annual and quarterly operating results may fluctuate
significantly in the future as a result of numerous factors, including (i) the
rate at which the Company is able to add customers and up-sell additional
usage-based services to existing customers, (ii) the amount and timing of
expenditures to enhance sales and marketing and to expand the Company's
infrastructure, or other costs, (iii) the announcement or introduction of new or
enhanced internet services by the Company's competitors, (iv) technical
difficulties or network downtime, (v) economic and competitive conditions
specific to the Internet industry and (ii) the Company's integration of its two
separate core businesses. As a result, it is likely that in some future periods
the Company's operating results will be below the expectations of securities
analysts and investors. If this happens, the trading price of the Company's
Common Stock would likely be materially adversely affected.

Need to Maintain a Current Prospectus

The Company must maintain a current prospectus in order for the Selling
Shareholders to sell the shares of Common Stock to which this Prospectus
relates. In the event that the Company is unable to maintain this Prospectus,
the Selling Shareholders will not be able to resell their shares of Common Stock
in any public market.

Forward-Looking Statements and Associated Risk

This Prospectus contains forward-looking statements, including statements
regarding, among other items, the Company's future plans and growth strategies
and anticipated trends in the industry in which the Company operates. These
forward-looking statements are based on the Company's expectations and are
subject to a number of risks and uncertainties, many of which are beyond the
Company's control. Actual results could differ materially from these
forward-looking statements as a result of the factors described herein,
including, among others, regulatory or economic influences. In light of these
risks and uncertainties, there can be no assurance that the objectives and plans
of the Company will be achieved.

System Failure Risk

In 1999, the Company reviewed the computer hardware and software systems
used in the delivery and support of its products and services and brought all
systems into Year 2000 compliance and readiness. However, the ability of third
parties with which the Company transacts business to adequately address their
system readiness issues is outside the Company's control. Therefore, there can
be no assurance that the failure of such third parties to adequately address
their respective system readiness issues will not have an adverse effect on the
Company's business, financial condition and results of operations.

11
<PAGE>
USE OF PROCEEDS

Management of the Company expects the net proceeds from the Offering to be
approximately $4,050,000 after deducting estimated expenses assuming
19,853,179shares of Common Stock registered hereunder are sold at a price per
share of $.15 and the Company's offering expenses do not exceed $100,000. The
Company will use the proceeds, if any, from the sale of the shares of Common
Stock (i) to retire vendor payables and other debt of the Company, (ii) to pay
expenses associated with registering shares for the selling shareholders and
(iii) for general corporate purposes. The Company's current vendor payables and
other debt approximate $1,277,997 and its general corporate needs for the period
July 2000 thru June 2001 approximate $1,397,893.

DIVIDEND POLICY

The Company has not declared or paid cash dividends on its Common Stock to
date. The current policy of the Board of Directors is to retain earnings, if
any, to provide funds for operating and expansion of the Company's business.
Such policy will be reviewed by the Board of Directors of the Company from time
to time in light of, among other things, the Company's earnings and financial
position. The Company is required to pay dividends on all classes of Preferred
Stock prior to payments, if any, of dividends on its Common Stock. As of June
30, 2000, the Company had accrued, but unpaid, dividends of $98,480 on its
Preferred Stock.

OFFERING

THE COMPANY IS OFFERING UP TO 19,853,179 SHARES OF COMMON STOCK FOR A PRICE
PER SHARE OF $___. THE SHARES ARE BEING SOLD BY THE COMPANY'S OFFICERS AND
DIRECTORS.

DETERMINATION OF OFFERING PRICE

The Offering price per share of the Common Stock will be the market price
on the date the Registration Statement, of which this Prospectus is a part,
becomes effective. On July 7, 2000, the market price for the Common Stock
closed at $0.12 per share.

12
<PAGE>

<TABLE>
<CAPTION>
CAPITALIZATION TABLE

The following table sets forth the unaudited capitalization of the Company as of
March 31, 2000, and as adjusted to reflect the issuance and sale of Preferred B,
Preferred E and Restricted shares of Common Stock by the Company.

(In Dollars)

MARCH 31, ISSUANCE OF ISSUANCE OF ISSUANCE OF
2000 B SHARES E SHARES RESTRICT SHARES
[1,645] [1,484] [5,114,642]
<S> <C> <C> <C> <C>

ASSETS: 1,203,035 1,203,035 1,203,035 1,203,035

LIABILITIES:. . . . . . 1,297,678 1,167,579 1,127,964 1,127,964

REDEEMABLE SECURITIES:. 0 164,500 312,900 1,080,096

CAPITAL DEFICIT:. . . . (94,643) (129,044) (237,829) (1,005,025)

TOTAL CAPITALIZATION: $1,203,035 $ 1,203,035 $ 1,203,035 $ 1,203,035
</TABLE>

13
<PAGE>
DESCRIPTION OF THE BUSINESS

Comtech Consolidation Group, Inc., f/k/a Venning Group, Inc. (ComTech or
the Company) was incorporated on July 13, 1987 under the laws of the State of
Delaware, to engage in any lawful corporate undertaking, including but not
limited to selected mergers and acquisitions. The Company had been in the
development stage from inception until August 12, 1997, at which time it
acquired all of the capital stock of Networks On-Line, Inc., a network
integrator and Internet service provider and began operations under its business
plan. Networks On-Line, Inc. provides Internet access services to individuals
and businesses in the Houston, Texas area and provides website hosting and
Internet consulting on a nationwide basis.

ComTech was originally in the business of growing sales revenues and
earnings through consolidation (acquisition) of privately held operating
entities under its two tier corporate holding structure. As acquisitions were
made, the Company formed a Subsidiary Holding Company, specifically structured
as a financing vehicle to fund ongoing expansion around the business initially
acquired. This two tier corporate holding structure was established to provide
a means of raising operating capital without dilution to the Company
shareholders. It also allowed the Subsidiary Holding Company to develop its own
market identity, separate and apart from that of the Company. The objective of
this system was to continue to grow the business of its Subsidiary Holding
Company, thereby increasing sales revenue and earnings.

In second quarter of 1999, ComTech decided to abandon the Subsidiary
Holding Company concept because of its lack of control over the Subsidiary
Holding Companies. The Company did not realize how much control it had actually
lost until it tried to change its method of managing the day-to-day operations
of the company. In doing so, the Company lost a significant amount of
operations in the health care division.

In September 1999, the Company closed four of the five operating health
care facilities of UDI.

As of December 1999, ComTech has only three operating subsidiaries, one
engaged in health care and two engaged in Internet related businesses. These
entities generate approximately $2 million in annual revenues.

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<PAGE>
In summary, ComTech was a holding company that had developed a strategy
that:

- Enhances the values of its assets (equity in Subsidiary Holding
Companies).

- Provides management with incentives to continue to grow the businesses.

- Provides management with the corporate structure to obtain ongoing
growth.

Due to the significant management problems noted in 1999, the Company has
changed its method of managing it subsidiaries. ComTech, the holding company,
now directly managed the financial and administrative operations of all of its
subsidiaries.

Due to the significant management problems noted in 1999, the Company has
changed its method of managing it subsidiaries. ComTech, the holding company,
now directly manages the financial and administrative operations of all of its
subsidiaries.

In early 2000, the new management team of ComTech decided to refocus the
Company to capitalize on the tremendous growth of the Internet. The fact that
ComTech already owns NOL and EISP (Internet service providers) facilitates this
refocus. ComTech will play a major role in the technology arena and will grow
rapidly through acquisitions. Management feels that by changing the direction
of the Company to focus more fully on technology related companies, ComTech will
be opening the door to numerous business possibilities.

Networks On-Line/EISP - NOL is a wholly owned subsidiary of ComTech whose
primary business is providing high speed Internet access, video conferencing,
web hosting, and other bundled Internet services. Management's goal is to build
the revenue base of Networks Online from its current base of approximately
$550,000 to over $2 million annually during the next eighteen months. To
accomplish this task, management hired an experienced ISP operator whose
compensation IS performance-based and incentive-laden to promote achievement of
company goals. ComTech will also seek to build NOL through acquisitions and
groom the company for a potential spin-off to increase shareholder value.

Since its acquisition in October of 1998, revenue for A-One increased to
$2.2 million in 1999 and the Company anticipates even greater results in the
year 2000.

MARKET ANALYSIS

The multi-billion dollar U.S. Internet industry is currently going through
a massive restructuring, which is creating virtually unlimited acquisition and
merger possibilities. Opportunities for Internet and technology firms abound,
and ComTech's Internet companies will be key to its growth and expansion in
technology related industries.

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<PAGE>
Health Care Industry - According to a report by the Health Care Financing
Administration (HCFA), total health care spending increased by 5.6% in 1998,
compared with 4.7 percent in 1997. The $1.1 trillion spent on health care in
1998 amounted to an average of $4,094 per person, compared with $3,912 per
person in 1997. In contrast to the public spending decline, private health care
spending increased 6.9 percent in 1998, compared with 4.8 percent in 1997.
According to the HCFA report, the private sector spending growth in 1998 was
primarily the result of an 8.2 percent increase in private health insurance
premiums, which is more than twice the rate of the past couple of years.

In 1999, there were 32 million older Americans and 5 million disabled
people enrolled in SMI (Supplementary Medical Insurance -- Medicare Part B); 87
percent received services covered under the program. Medicare was the dominant
payer source, representing nearly one-third of industry revenue, according to
Health Industry Distributors' Association's 1999 Home Care Financial Performance
Survey.

The aging American population and the growing desire among older citizens
to remain in their own homes as long as possible, have created a revolution in
the home health care industry. More and more seniors remain in their own homes,
or family residences, than in past years. Other factors affecting the growth in
the home health care segment include: the emphasis on preventive medicine,
increases in self-treatment, earlier hospital releases, and the expansion of
senior residential facilities.

Together, these changes have created a rising demand for products and
supplies needed to care for these patients. Total demand for disposable medical
supplies is expected to expand 5.3 percent annually through 2004 to nearly $56
billion -- and home health care will be the fastest-growing market, according to
a report entitled U.S. Disposable Medical Supplies, compiled by the
Cleveland-based Freedonia Group.

According to the Freedonia report, sales in the home care segment will
reach $8.6 billion by 2004, up 6.5 percent annually from 1999. Despite such
growth, however, home uses of disposable medical supplies will be concentrated
in only a few product groups. Favorable growth opportunities are anticipated for
IV administration kits, enteral feeding sets, oxygen delivery accessories,
prefilled and empty hypodermic syringe systems, dialysis sets, adhesive tapes,
and general patient utensils, such as bedpans and basins.

On the consumer side, trends promoting self-care will increase the demand
for first-aid kits, bandages and dressings, diabetes monitoring products and
home medical test kits. A growing incidence of incontinence experienced by an
aging population will boost sales of related products.

The report also stated that one of the main factors in determining the
success of disposable medical goods in the home care market is the establishment
of strong retail distribution channels. A common sales strategy that therefore
has emerged is extending marketing efforts to reach establishments and
organizations involved in home care, such as ComTech's subsidiaries provide.

Future Trends in Home Health Care -- A study by the White House National
Economic Council and Domestic Policy Council yielded some interesting findings,
particularly in reference to Medicare's future enrollment. According to the
study, by 2025, elderly individuals will compose at least one-fifth of the
population in 30 states. Currently there are no states with that high a
percentage of elderly. This means that some 62 million Americans will have
reached that age 65 or greater within 25 years, more than double the current
mark of 35 million.

Since more than half the individuals currently receiving home health care
services are seniors, there will be an increase in the demand for such services.
Providing professional medical services in the senior's own home is economically
advantageous. It costs less to provide quality medical care in the home than in
an institution or hospital environment.

Patients also feel more comfortable in their own surroundings and, in many
cases, family members assist with the care of their loved ones. Currently, the
federal government enacting serious costs cuts for nursing home services. Many
nursing facilities have been forced to cease operations and their patients have
been moved back to their own or relatives' homes. This trend will also create
additional potential revenue for home health care agencies.

Medicare and Medicaid Programs --Net revenue from the majority of the Company's
subsidiaries is generated from services rendered to Medicare and Medicaid
program (the Programs) beneficiaries. The reimbursement from the Programs is
determined under cost-based reimbursement formulas. The ultimate reimbursement
to which the Company is entitled is based on the submission of annual cost
reports, which are subject to audit, by the Programs through the Programs'

16
<PAGE>
intermediaries. Management has made allowances for potential cost
disallowances. Differences between allowances and final settlements are
reported as modification to net patient service revenue in the year of
settlement. Since the Company receives a substantial portion of its funding from
the Programs, it is dependent on funding from the Medicare and Medicaid programs
to support an estimated fifty-percent of its operations.

Technology Market Trends- A May 2000 study by eTForecasts, a market
research and consulting firm, estimates that by the end of 2000, there will be
375 million Internet users. This will be an increase of almost 100 million
since 1999, when 276 million users worldwide accessed the Internet. eTForecasts
reports that although the US continues to be the leading Internet country, the
rest of the world is getting online as well.

Other Internet research firms have similar high estimates for the number of
Internet users. These include the Computer Industry Almanac, which places the
number at 349 million, while IDC and Internet Industry Almanac both estimate 327
million users. eMarketer projects a more modest 191 million Internet users
worldwide for 2000.

The growing number of Internet users has created a tremendous demand for
Internet Service Providers. Coming off a spectacular 67% increase in 1999,
revenues in the U.S. Internet services market will increase another 29% in 2000
and approach the $23 billion mark. According to International Data Corporation,
(AOL) and UUNet will lead the market's drive. These two Internet service
providers (ISPs) have a commanding lead over the competitors in their market
segments.

Accounting for 40% of consumer access subscribers, America Online's share
is more than the next 20 largest ISPs' combined share. UUNet controls 26% of
revenues in the business segment, 43% in the wholesale segment, and 17% in the
value-added services market - almost double the share of the nearest competitor
in each market.

Individual users are not the only ones flocking to the Internet in growing
numbers. The huge online population has created an enormous potential market
for businesses. Businesses on the Internet serve both other business clients as
well as the general consumer market. International Data Corporation expects the
number of U.S. small businesses engaged in e-commerce to increase from 400,000
at the end of 1998 to almost 2.8 million by the end of 2003 - an annual increase
of 47.1%. Leading research firms project that the Business to Business (B2B)
market will reach between $2.7 and $7.3 trillion by the year 2004 (CNET
News.com.) That figure compares with the $131 billion generated by B2B
companies in 1999. On the other side of the coin, Forrester Research projects
that the Business to Consumer (B2C) market will generate $184.5 billion in 2004,
up from $20.3 billion in 1999.

According to IDC, the consumer segment will maintain the largest share of
the market's revenues until 2002, when the value-added services segment will
grab the lead. Value-added services are expected to grow faster than the other
segments as Web-hosting revenues skyrocket, free Internet service providers
build their subscriber bases, and corporations and consumers utilize services
other than just access from ISPs. IDC predicts that growth in the consumer
segment will moderate due to market saturation, but that the number of daily
users in this segment will increase as will the length of time they remain
online.

Business to Business companies generally focus on infrastructure, software,
online exchanges, as well as industrial and commercial items that allow their
clients to operate more effectively in the modern marketplace. B2B companies
make it possible for other firms to decrease the cost of doing business and
increase their profits. Typically, B2B technology partners provide expertise,
consulting, and technical knowledge that the client firms do not possess
in-house and don't require on a permanent, full time basis.

The growth of small business Internet, home page, and e-commerce activity
has been dramatic. During 1998, more than 1 million small businesses added
Internet capability. During 1999, over 800,000 small businesses implemented
their own Web sites. At the same time, the number of small businesses actively
selling on the Internet has doubled each year. IDC believes that number will
approach 1.6 million in 2000.

An increasing number of companies are turning to hosting service providers
to implement and manage their Web sites, and in response, the Web hosting
services market is growing at a torrid pace. According to International Data
Corporation (IDC), this segment is one of the fastest-growing markets in the
information technology industry and the Internet economy in general. IDC expects
revenues of U.S.-based Web hosting companies to grow by almost $1 billion in
1999 alone, bringing them to over $1.8 billion.

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<PAGE>
According to IDC, the U.S. Web hosting market will increase by a factor of
10 through 2003, when it will total $18.9 billion. The United States provides
the most lucrative market opportunities for U.S.-based service providers, but
IDC expects international sales to generate a significant portion of revenues by
2003.

Looking farther ahead, IDC expects the number of small businesses
implementing e-commerce to reach over 2.9 million by 2003. Although the
annualized growth rate will not match that seen prior to 2000, the number of
small firms adding e-commerce capabilities will still be increasing 22.5%
between 2000 and 2003.

According to IDC, total e-commerce revenues generated by small businesses
seemed significant in 1998, when they approached $6.2 billion. This was more
than triple the 1997 level of $1.9 billion, according to IDC's Internet Commerce
Spending Model. This growth was just a preview of things to come, as small
business e-commerce revenues continue to double each year. From $6.2 billion in
1998, small business e-commerce revenues will increase 103.2% annually to reach
over $213.3 billion in 2003.

The Internet is changing the way companies do business, and small businesses
(fewer than 100 employees) are no exception. According to results from IDC's
1999 U.S. Small Business Survey, the percentage of small businesses accessing
the Internet surpassed 52% in 1999, and that number will climb to over 70% by
2003. Once confined by geographical constraints, small businesses are now
leveraging the Internet to expand beyond local boundaries.

In addition to accessing the wealth of information the Web has to offer, a
number of small businesses have recognized the benefit of promoting themselves
via the Web. In 1999, 2.1 million U.S. small businesses had a home page or Web
site. That number will increase 30% to 2.7 million in 2000. IDC stated that
although more small businesses are experimenting with Web promotion of their
products and services, the market is far from saturated, and there is still
plenty of room to grow. Almost 13% of U.S. small businesses have yet to invest
in a PC, never mind add Internet capability.

At this point, e-commerce presents the most significant growth opportunity
for a wide range of U.S. small businesses. The number of these companies selling
goods and services online will grow from 850,000 at the end of 1999 to 2.9
million in 2003. By 2003 nearly half of online small businesses will be selling
over the Internet, according to IDC.

Internet technology spending is one the rise among businesses both large
and small. Now, more than ever, smaller businesses are realizing that with
appropriate levels of IT, they can compete on a more equal playing field with
larger firms. While a few small firms have the resources in-house to support a
large IT push, many others opt for outside consultant firms. Some of IDC's key
findings included:

- Average IT spending reported for 1998 varied from $55,500 among companies
with fewer than 100 employees to just over $3.1 million at large sites
with 500 or more employees.
- Overall IT spending is projected to increase, on average, from 1998 to
1999 by approximately $35,000, or 3.7%, with large companies reporting
the greatest rise.
- The proportion of corporate IT budgets spent internally increases with the
size of the company, as does the percentage of IT spending dedicated to
data communications.
- Internet access is available at a large majority of companies regardless
of size, with small companies having the greatest proportion of desktop
systems accessing the Internet in 1998.
- Internet access and corporate home pages are the most common uses of
internetworking; Intranet use is substantially less common, and
extranets are still comparatively rare. Companies of 500 or more employees
are most likely to have Web pages, the majority of which are hosted
on-site. Web sites are most likely to have product information and least
likely to support Internet-based sales. (Source: IDC report #20875 -
November 1999).

As the incentives driving worldwide outsourcing shift from optional
decisions based on cost savings to a matter of survival, the worldwide market
will add more than $60 billion to its coffers. IDC reports revenues will
increase from $116 billion in 1999 to $177 billion by 2004. The United States
represents the biggest opportunity for outsourcers. U.S. outsourcing spending
will jump from $56 billion in 1999 to $87 billion in 2004. Throughout the five
years, the United States will account for almost half of worldwide spending.
Banking spends more than any other U.S. industry on outsourcing, but the federal
government is increasing its spending faster than any other industry.

18
<PAGE>
In 1999, large companies accounted for 49% of U.S. outsourcing spending.
However, IDC believes smaller companies will increase their outsourcing
activities, and by 2004, large companies' share of U.S. outsourcing will fall to
43%.

Yet another change which will have a major impact on the Internet market is
high-speed wireless Internet access which is currently available in many markets
for residential and business customers. The advantage in this technology is
that it is relatively inexpensive to acquire and maintain. End-user
installation is accomplished very quickly because this type of service bypasses
local telephone company lines and equipment. One of the primary advantages of
wireless access is that security becomes much less of an issue because each
connection is transmitted using spread-spectrum technology - using many
frequencies to transmit information rather than one, easy to tap frequency.
Security will become almost a non-issue. As wireless technology matures, the
prices will fall, increasing the potential market for such services. With these
key features, wireless technology will provide tremendous possibilities for
growth in the business-to-business marketplace. NOL intends to begin pursuing
these opportunities in the current calendar year.

Once wireless Internet access becomes a more widespread alternative, it
will prove an attractive option for businesses since it is faster and less
expensive than the current choices. Wireless access promises to provide faster
speeds than current xDSL, in areas where xDSL technologies are not available,
and at a very cost-effective price. NOL fully intends to be a part of this
emerging market.

Equipment and Bandwidth -- Network On-Line began in 1994 as a small ISP offering
unlimited dial-up access to the Internet, web site hosting, and email, primarily
to individual accounts. As the business grew, better equipment was necessary
and was acquired to fulfill customer demands. As the business continues to grow
today, some of the equipment has become outdated, unreliable, and inappropriate
for its intended use. NOL has been very successful in its ability to maintain
its client base despite this shortcoming, but at the cost of a tarnished
reputation and ability to sustain growth.

To maintain its quality-of-service commitments to present and future
clients, NOL must lease of purchase additional equipment and bandwidth. It is
estimated that within the next six to twelve month period, at least four
additional servers and three additional workstations will be needed. The total
cost of these machines will be in the $40,000 to $50,000 range. That price will
include the appropriate operating system and installed programs necessary for
the tasks to be performed.

Additionally, as a Southwest Bell ADSL Partner (one of the few ISPs in
Houston to be so designated), NOL must purchase bandwidth, in the form of T1 ATM
circuits from SWB in order to provide ADSL to customers, whether residential or
business. ADSL has proven to be "the better mousetrap" because it provides very
fast bandwidth at an inexpensive price. ADSL offers huge growth potential
because of this. In order to continue offering ADSL to its subscribers, NOL
will need to implement additional T1 ATM circuits along with a router for each
circuit. The initial cost of implementing one circuit is approximately $3,000
and the monthly recurring cost is approximately $650.00. NOL currently needs
two additional circuits to balance current ADSL loads and provide for the
immediate needs of pending customers. The Company projections show that NOL
will need another two to four routers within the next 12 months.

Trends in health care industry for past three years -- In the mid-1990s, home
health care was a lucrative business in the US. Lacking stringent rules and
regulations, many agencies were started by owners and operators with little or
no experience. Then the government imposed more strict regulations with
vigorous policies and procedures, hiring additional auditors, revamping the
payment system, and researching the implementation of a surety bond. The
government places a moratorium on home health agencies in most states and that
limitation is still in place in the state of Louisiana, due to the number of
agencies which had started up.

Most agencies that began operations on or before October 30, 1993 are
considered base year agencies. Base year agencies are reimbursed at a higher
rate by the government, even though the services provided and overhead rates are
identical to established home health operations.

Health Care Financing Administration (HCFA) implemented an interim payment
system in which agencies were operating in the blind. HCFA reimbursed agencies
based upon their assigned interim rate. Six months later, HCFA adjusted the
agencies' rates with a retroactive date. HCFA withheld payment based on their
calculations. This lack of funds forced many agencies to cease operations.

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HFCA is once again in the process of implementing a new plan with an
effective date of October 1, 2000. The new program is the Prospective Payment
System (PPS). Under PPS, reimbursement will be based on diagnosis codes for a
three-month certification period. At present, HCFA has not announced nor
published the reimbursement rates.

Technology Trends for Past Three Years -- The dominant trend in all Internet
sectors for the past three years has been the continued phenomenal growth. In
April 1999. IDC, a top Internet research firm stated that the value of the US
ISP market would generate $15.1 billion in that year. This is an increase of
41% from the 10.7 billion produced in 1998. IDC further reported that the US
market for ISPs would continue its growth, generating a projected $37.4 billion
in 2003. This translates to a compound annual growth rate of 28 percent.

Growth in ISPs is projected to slow in 2001, however demand for value-added
services are expected to make up the deficit. IDC predicts that the value-added
service market will overtake the individual access market by 2003.

America Online (AOL) currently occupies the dominant position in the ISP
market, with a 23% market share. MCIWorldCom is second, with 17 percent,
according to IDC. These two companies dominate the overall ISP market with AOL
holding the key position in individual and value-added ISP markets, and the
latter leading in business and wholesale markets.

Internet usage continues to grow at an unprecedented rate as new
technologies create additional opportunities for revenue generation, especially
in the business-to-business venue. A recent trend in the business-to-business
segment is the growth of Application Service Providers (ASPs). An ASP rents
software to be used online by businesses for a monthly fee. The software is a
value-added service rented from the ISP. Due to the nature of the
infrastructure required to deliver the ASP to the businesses, most ASPs are also
ISPs. The software is provided at a cost that is low enough to justify the
monthly expense and, in the long run the business client saves money by not
being required to purchase multiple licenses or multiple copies of the same
software. Some of the services typically provided by ASPs include Microsoft
Word, Excel, Access, Peachtree Accounting packages, and others.

High-speed wireless Internet access is currently available in many markets
for residential and business customers. This wireless access promises to be
faster than the current xDSL, as well as less expensive. This will make
high-speed wireless access attractive to businesses. The advantage to this
technology is that it is relatively inexpensive to acquire and maintain.
End-user installation can be accomplished quickly as this type of service
bypasses local telephone company lines and equipment.

One of the primary advantages of wireless access is that security becomes
much less of an issue because each "connection" is transmitted using
spread-spectrum technology - using many frequencies to transmit information than
just one, easy-to-tap frequency. With high-speed access, security becomes
almost a non-issue, making it very attractive to business users. As this
wireless technology matures, prices will drop, increasing the potential market
for such services. This relatively new technology is expected to provide a
boost in revenues across the board for the business to business segment of the
market.

MARKETING PLAN

The Company intends to implement a cost-effective marketing strategy
through a process of developing a public relations campaign to take advantage of
the opportunities that will be presented by the move to become a pure play
technology company.

FINANCIAL PLAN

Management's goals are to increase revenues and shareholder value through
acquisitions. ComTech will attempt to secure relationships with Investment
Banking firms to assist with capital needs. ComTech will prepare an SB-2 filing
to register stock to facilitate acquisitions and private placement of stock as
well as fund an Employee Stock Option Plan.

COMPETITION

The market for the company's Internet products is highly competitive, and
ComTech expects this competition to increase. Many of the Company's competitors
have significantly greater research and development, marketing and financial

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resources than the Company, and therefore, represent significant competition.
The Company believes that the primary competitive factors in the market for the
Company's services are price, performance, and technical support.

Networks On-Line's (NOL) competition -- As an Internet Service Provider, or
ISP, NOL competes with such well-known companies as America Online, MCIWorldCom,
Earthlink, Microsoft Network, Sprint, and many others. In addition to the major
names in the ISP industry, there are numerous smaller entities that derive their
revenues by providing Internet access. AOL and the majority of other ISPs have
focused on the individual Internet user and, up to this point, Networks On-Line
has as well. However, the individual Internet users market is one that produces
a small profit margin. One trouble call from an individual user whose telephone
line isn't working properly literally eliminates the profit from that account
for the month. Providing services to business Internet users is a far more
lucrative market.

NOL will focus on the business Internet user. These users have much higher
levels of expectation for their ISP. They want fast, easy, trouble-free
Internet and they are willing to pay premium rates to assure these features.
Internet services for business are becoming more "mission-critical" than ever
before. Services such as web hosting and email are simply expected from their
ISP. An ISPs ability to provide value-added services is critical to its
long-term success and growth. Web site design, web site hosting, applications
services, high-speed connections, customized email packages, e-commerce, and the
ability to successful bring these elements together on a consistent, reliable
basis will all but assure an ISP's success in the marketplace.

Quality-of-service issues are of paramount importance to business users.
An ISP must be fast, friendly, and reliable to succeed, and business Internet
users are generally willing to pay more than individual subscribers for that
service. Business both need and demand higher bandwidth connectivity in the
form of xDSL, T1, or DS3 circuits that an individual has no need for.
Businesses also need and demand fast, friendly, and competent customer service
and are adept at finding those ISPs that can provide it. Upon completion of the
anticipated financing, NOL will upgrade its infrastructure and equipment, and
hire marketing personnel, allowing the Company to target this more highly
selective business user audience.

The Company believes that the primary competitive factors in the market for
the Company's services are price, performance and technical support and
ComTech's ISP divisions will continue to provide these features to their
clients.

A-One Bayou's Competition -- A-One Bayou Home Health 2000, Inc. (A-One) is
the only home health agency located in Jeanerette, Louisiana. A-One specializes
in providing quality health care in the home environment. A-One has a second
branch located in Morgan City, Louisiana which is located directly across from
Lakewood Hospital. There are two other home health care agencies in Morgan
City.

Home Medical Equipment companies will serve this burgeoning senior
population in increasing numbers. The average HME provider is a small "Mom and
Pop" operation with fewer than 20 employees and less than $3 million in annual
revenue. Small businesses of this nature spend a disproportionate amount of
their time and revenue on administrative functions and costs. By acquiring
numerous small operations and centralizing the administrative functions within
the parent corporation, ComTech creates a more cost-effective business and
streamlines operations.

DESCRIPTION OF PROPERTY

The Company leases a total of approximately 3,000 square feet of office
space for the Company's headquarters and Internet operations. The Company's
headquarters is located at 10497 Town & Country Way, Suite 460, Houston, Texas.
In addition, the Company leases approximately 2,000 square feet of space for its
health care operations in Louisiana. The operating lease at the Company's
headquarters expires on May 31, 2001.

LEGAL PROCEEDINGS

The following cases reflect the status of legal proceedings in which the
Company is involved.

ComTech is a Defendant/Third Party Plaintiff in a cause in the 356th
District Court of Hardin County, Texas. ComTech is one of three defendants sued
by former owners of a home health care agency acquired by a subsidiary of
ComTech. Settlement discussions are in progress and a favorable result
anticipated with no loss to the Company.

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ComTech is a Plaintiff in a cause in the 11th District Court of Harris
County, Texas. ComTech filed suit against this former subsidiary in order to
rescind the share exchange agreement. Judgment for the Company is anticipated
with no potential loss.

Home Care Center, Inc., a subsidiary of ComTech, is a Defendant in a civil
action in the United States District Court, Middle District of Louisiana. Home
Care Center is one of ten firms sued by the Department of Labor relative to
pension funds transferred to the former owners. Attorneys representing the
Department of Labor have negotiated a settlement with the former owners that
should result in no loss to the Company.

ComTech is a Defendant in a cause in the 60th District Court of Jefferson
County, Texas. ComTech is one of three Defendants in a suit brought by former
employees of ComTech subsidiaries. It is presently anticipated that the liquid
assets of the two other defendants in this matter will satisfy the plaintiffs'
demands without loss to ComTech.

ComTech is a defendant in two causes in the 58th District of Jefferson
County, Texas. These suits were brought by former employees of a health care
agency acquired by a subsidiary of ComTech. The Plaintiffs do not have privity
of contract with ComTech and favorable outcome is expected without loss to the
Company.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

The following is a discussion of the financial condition and results of
operations of the Company for the years ended December 31, 1999 and 1999 and the
three months ended March 31, 2000 and 1999. It should be read in conjunction
with the financial statements and the notes thereto included elsewhere in this
Prospectus. The following information contains forward-looking statements. For
a discussion of certain limitations inherent in such statements, see "Risk
Factors - Forward Looking Statements."

OVERVIEW

STATE OF THE COMPANY AT THE CHANGE OF MANAGEMENT

The change of management occurred in the first quarter of 2000. It included
the appointment of three independent board members and the election of Walter
Davis as Chief Executive Officer and Lamont Waddell as Chief Financial Officer.
At this point in time morale was low, stock values were in decline and the
company was in poor financial condition due to significant management problems
and in part to the closure of most of its healthcare subsidiaries.

NEW MANAGEMENT'S PHILOSOPHIES

The new management team of Comtech decided to redirect to company to take
advantage of the growth of the Internet industry. Management intends to refocus
on technology and technology related aspects of the healthcare industry.
Management has secured relationships with an investment-banking firm to assist
with capital needs and has established a performance based employee stock option
plan for executives and the board. Management believes that their primary
competitive edges in its industries are its cost control policies, its
experience in the Internet and healthcare business and technical support from
its consultants. Management believes in being open and honest and to always work
in the best interest of its shareholders to increase shareholder value over
time.

FUTURE PLANS AND PROSPECTS

As in the Company's filings with the SEC, management has changed the focus
of the Company to pursue the technology industry, with emphasis on Internet
related businesses. The Company intends to acquire Internet related companies
by issuing shares of the Company's stock after a secondary offering. As of the
date of this report, management of the Company has had preliminary discussions
with potential merger or acquisition candidates, but there is no definitive
agreement between the Company and any merger candidates. In the event the
Company does enter into an agreement with such a third party, the new Board of
Directors intends to obtain certain assurances of the value of the target entity

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assets prior to consummating such a transaction. Current management has
established a due diligence team to prevent the type of transactions that have
negatively impacted the Company in the past.

CERTAIN ACCOUNTING POLICIES

New Accounting Pronouncements

In June 1998, the Financial Accounting Standards board issued Statement of
Financial Accounting Standards (SFAS) no. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS No. 133 is effective for fiscal years
beginning after June 15, 2000. SFAS no. 133 established standards for
accounting and reporting of derivative financial instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in fair value of a derivative depends
on the intended use of the derivative and the resulting designation. Management
is currently in the process of assessing the impact of SFAS No. 133 to the
Company.

In December 1998, the AICPA issued Statement of Position (SOP) No. 98-9,
Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain
Transactions. SOP No. 98-9 requires recognition of revenue using the "residual
method" in a multiple-element software arrangement when fair value does not
exist for one or more of the delivered elements in the arrangement. Under the
"residual method", the total fair value of the undelivered elements is deferred
and recognized in accordance with SOP No. 97-2. The Company will be required to
implement SOP No. 98-9 for the year beginning Jan. 1, 1999. SOP No. 98-9 also
extends the deferral of the application of SOP No. 97-2 to certain other
multiple element software arrangements until the date SOP 98-9 becomes
effective. The Company does not expect a material change to its accounting for
revenues as a result of the provisions of SOP 98-9.

Summary of Significant Accounting Policies

(a) Revenue Recognition

The Company recognizes revenue in accordance with Statement of Position No.
97-2, Internet Revenue Recognition. Internet license revenue is recognized when
all of the following criteria have been met: there is an executed license
agreement, software has been shipped to the customer, no significant vendor
obligations remain, the license fee is fixed and payable within a month and
collection is deemed probable. Maintenance revenues are recognized ratably over
the term of the contract, typically 3 - 12 months. Consulting and other
revenues are recognized when services are performed.

Deferred revenue represents payment received or amounts in advance of
services to be performed.

(b) Software Development Costs

Software development costs are expensed as incurred until technological
feasibility is established. Software development costs incurred subsequent to
establishing technological feasibility are capitalized and amortized over their
estimated useful lives. During 1999 and 1998, no software development costs
were capitalized.

Comprehensive income represents the change in stockholders' deficit
resulting from other than stockholder investments and distributions.
Accumulated other comprehensive income (loss) in the consolidated statements of
stockholders' deficit is solely comprised of the accumulated foreign currency
translation adjustment.

(d) Net loss per Share

Basic loss per share is computed by dividing net loss available to common
stockholders by the weighted-average number of share outstanding during the
period. Diluted EPS recognizes the potential dilutive effects of stock options
and warrants determined by the treasury stock method and the effects of
convertible debt.

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(e) Stock-based Compensation

The Company uses the intrinsic value-based method prescribed by Accounting
Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees,
and related interpretations in accounting for employee stock options. Under the
intrinsic value method, compensation expense is recorded only to the extent that
the market price of the common stock exceeds the exercise price of the stock
option on the date of grant.

(f) Income Taxes

The Company accounts for income taxes using the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized at the enacted rates for the future tax consequences attributable to
differences between financial statement carrying amounts of existing tax assets
and liabilities and their respective tax basis. The effect on deferred tax
assets and liabilities of a change in tax rate is recognized in income in the
period that includes the enactment date. Valuation allowances are established
when necessary to reduce deferred tax assets to the amounts expected to be
realized.

(g) Fair Value of Financial Instruments

The carrying value of the Company's financial assets and liabilities,
because of their short-term nature, approximates fair value. The carrying value
of notes payable and long-term debt approximates fair value because the current
rates approximate market rates available on similar instruments.

(h) Cash and Cash Equivalents

Cash equivalents consist of highly liquid money market accounts carried at
cost plus accrued interest, which approximates market value. All cash
equivalents have remaining maturities of 90 days or less.

(i) Stock Subscription Receivable

Stock subscription receivables that are paid in full by the subscriber
prior to the date the financial statements are issued are reflected as a current
asset.

(j) Property and Equipment, Net

Property and equipment consists of property, equipment, furniture and
computers and are stated at cost less accumulated depreciation. Depreciation is
calculated using the straight-line method over the estimated useful lives of the
respective assets, which generally range from three to seven years.

(k) Advertising Costs

Advertising costs are expensed as incurred. Advertising costs totaled
approximately $156,000 and $130,000 for the years ended June 30, 1999 and 1998,
respectively.

(l) Business and Credit Concentrations

Financial instruments, which potentially subject the Company to
concentrations of credit risk, consist primarily of trade accounts receivable.
The Company sells principally to resellers and end users in the United States,
Australia, and Europe. The Company performs ongoing credit evaluations of its
customers and has not experienced significant credit losses in the past.

(m) Impairment of Long-lived Assets and Assets to be Disposed Of

Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net undiscounted cash flows expected to be generate by the amount by

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which the carrying amount of the assets exceeds the fair value of the assets.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell.

(n) Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of those assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. A change in the facts and circumstances surrounding these
estimates could result in a change to the estimates and impact future operating
results.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

Total revenues for the three months ended March 31, 2000 and 1999 were
$525,162 and $4,974,608, respectively, which is a decrease of $4,449,446 or
approximately 89%. This decrease was primarily attributable to the disposal of
the majority of the Company's healthcare facilities, which represented
approximately 96% of the revenues for the three-month period ended March 31,
1999.

Net earnings for the three months ended March 31, 2000 and 1999 was $19,330
and $747,879 respectively, which represents a decrease of $728,549, or 97%. The
decrease in net earnings for this period is primarily attributable to the
disposal of the majority of the Company's healthcare facilities, which
represented approximately 96% of the net earnings for the three-month period
ended March 31, 1999.

YEAR END DECEMBER 31, 1999 COMPARED TO DECEMBER 31, 1998

Total revenues for 1999 of $9,452,081 represents an increase of $656,134 or
7.46% increase from revenues of $8,795,947 in 1998. This increase is due to
revenue from health care facilities being reported for six months in 1999 as
compared to five months in 1998.

The Company reported a net loss before extraordinary items of $352,924 in
1999 as compared to net income of $715,585 in 1998. The $1,096,616 decrease
from 1998 is primarily due to an increase of $969,396 in corporate expenses.
The increase in corporate expenses is due to the accrual of approximately
$400,000 in expenses related to settled and pending litigation, $71,000 in legal
expenses, $374,000 in expenses for investor relations paid in stock, $86,000 in
bad debts related to loans to subsidiaries, $113,000 in compensation to
officers.

LIQUIDITY AND CAPITAL RESOURCES

During February and March 2000, the Company raised $200,000 through a
private placement. The Company sold 2,000 shares of its Class E preferred stock
at $100 per share. The funds were used to pay for corporate operations. The
Company is currently in negotiations with a current investor to raise additional
equity capital for the Company. The Company also plans to obtain additional
equity financing through a secondary offering within the next sixty days. There
can be no assurance that the Company will be successful in these efforts.

SUBSIDIARY OVERVIEW

NETWORKS ON-LINE, INC. (NOL) is a wholly owned subsidiary of ComTech whose
primary business is providing high speed Internet Access, Video Conferencing,
Web Hosting and other bundled Internet Services. Management's goal is to build
the revenue base of Networks On-line, Inc. from its current base of
approximately $550,000 annually, to over $2 million annually during the next
twelve months. To accomplish this task, management will hire an experienced ISP
operator whose compensation will be performance based and incentive laden to
promote achievement of Company's goals. ComTech will also seek to grow NOL
through acquisitions and groom NOL for a potential spin-off to increase
shareholder value.

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NOL Revenue

Networks On-Line has several different types of clients, each on
month-to-month contracts. Either party may cancel these contracts at the end of
the current month. As of May 10, 2000, approximately 15 of NOL's accounts were
co-located, Ethernet, or T-1 accounts. These accounts generate approximately
$6,000 in monthly billings. NOL also provides ISDN services. The company has
over 100 clients receiving ISDN service. These accounts generate nearly $13,000
in monthly billings. Some of the accounts that NOL has are billed on a
quarterly or semi-annual basis, but these amounts have been averaged in to the
above calculations for simplicity.

The loss of one or two clients would not be a significant detriment to
NOL's financial security. The Company has a sufficiently diverse client base
that it would survive. However, with the levels of competition in this
marketplace, NOL will need to develop a strong marketing team to expand its
client base and generate additional income.

A-ONE BAYOU is a wholly owned subsidiary of ComTech. A-One Bayou operates
in the home health care industry. A-One Bayou has grown its current operations
to generate annual revenues of approximately $1.5 million. Last year the
company opened a second office in the Jeanerette, Louisiana area. A-One Bayou
is managed and operated by Karvett Queen. Ms. Queen is responsible for the
growth of A-One Bayou, having opened the second branch office last year and
continues to manage the day-to-day operations of A-One Bayou.

Patient service revenue

The Company's health care subsidiaries have agreements with third-party
payors (primarily Medicare and Medicaid programs) that provide for payments to
the Company at amounts different from its established rate for services and
supplies. Payment arrangements include prospectively determined rates,
reimbursed costs, discounted charges, and other arrangements. Patient service
revenue is reported at the estimated net realizable amounts from patients,
third-party payors, and others for services rendered, including estimated
retroactive adjustments under reimbursement agreements with third-party payors.
Retroactive adjustments are recorded on an estimated basis in the period the
services are rendered and adjusted in the future periods, as final settlements
with the payors are determined.

No agency should be 100% dependent upon a program such as Medicare or
Medicaid. Home health care agencies must be diverse enough to attract revenue
from private sources as well as the federal government. A-One is seeking
private sources such as private insurance companies. In order to qualify with
the larger insurance companies such as Blue Cross or Prudential, the agency must
be JACHO certified and presently, A-One holds this certification.

Referrals are generated by physicians. It is imperative that A-One
continue to be able to attract and consult with the doctors in its service area
to generate referrals. Due to the Company's current cash flow difficulties,
A-One is not able to attract the physicians with the larger patient base within
its service area.

As outlined below, A-One provides a variety of services that are billed at
varying rates.

Services Cost
RN. . . . . . . . . . . . . . . $18.30/ visit
LPN . . . . . . . . . . . . . . 15.30/visit
HHA . . . . . . . . . . . . . . 12.00/visit
Medical Social Worker . . . . . 45.00/visit
Physical/Occupational Therapist 45.00/visit
Medical Directors . . . . . . . 750.00/month

E-MEDICAL/HME-DME DIVISION (E-MEDICAL) - ComTech currently has an
outstanding Letter of Intent to acquire all the operating assets of Gold Cross
Medical and affiliated web sites. E-Medical will concentrate its efforts on the
development of Independenceworld.com and Drynight.com. E-Medical will seek to
build independenceworld.com into the Web's most successful healthcare
superstore, taking a "clicks and bricks" approach to the business. A chain of
retail facilities located strategically as necessary will support both sites.
The Web superstore currently offers thousands of name brand products for sales
in a secure environment. Shoppers can view products' detailed photos,

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descriptions and pricing information from the Web's superstore 24 hours a day,
seven days a week. This subsidiary has the potential to contribute tremendous
revenue growth to ComTech's bottom line.

MARKETING ANALYSIS

ComTech subsidiaries operate in two basic market segments: technology and
healthcare. Each segment is highly fragmented with the major players putting
tremendous pressure on the smaller companies to complete. As a Micro-cap
company, ComTech is always searching for under-served or niche sectors of the
market. By identifying these opportunities, ComTech seeks to provide the
consumer with superior service while also partnering with the smaller retailers
nationally, giving them a competitive edge as they compete for market share
against the larger companies.

One such sector management has identified is the e-medical sector. This
sector has been slow to see the value of the New Economies convergence of
"clicks and bricks." Due to the tremendous pressure e-commerce only companies
are currently experiencing management feels that the predictable revenue stream
the retail locations will provide should help offset those net-only challenges.
This strategy will also give ComTech a national distribution channel for the Web
sites.

ComTech's mission in the e-medical sector is to provide the consumer with
the benefits of the Internet without losing the personal service touch and local
feel of the business.

The expertise of the professionals in the field will be an invaluable
resource to the success of the Web superstore. ComTech will build a national
support channel of retail DME/HME retail locations to support the Web e -
medical superstore through organic growth as well as acquisitions.

Management will also build out a business-to-business opportunity by
providing smaller DME/HME facilities with the ability to auction off used
equipment or excess inventory to other operators nationally. In addition to the
auction capabilities of the site, ComTech will buy and sell used and excess
inventory as needed. The site will also provide customers with valuable
regional content targeted at the problems facing today's senior population.

MARKETING PLAN

NETWORKS ON-LINE, INC.

The Company intends to increase marketing efforts across the board for all
subsidiaries in a cost-effective manner. Management will develop a defined and
targeted marketing campaign for Networks On-Line, Inc. through a variety of
print and media advertising and marketing programs. These programs will be
designed to expand the subscriber base of NOL, while generating additional
revenue streams for the company. Additional, experienced marketing personnel
will be brought on board to assist in implementing this marketing plan.

E-MEDICAL DIVISION

ComTech will market this division mainly through the Internet and targeted
media. As this division develops into an e-medical portal site, ComTech will
implement marketing programs and partnerships designed to drive significant
Internet traffic to these sites. The company is currently planning to leverage
the talent of Web developer and Internet marketing firm Interlucent.com in
addition to Networks On-Line, Inc. to complete an overhaul of the current sites
and implement an Internet marketing strategy.

FINANCIAL PLAN

Management's goals are to increase revenues to $5 to $10 million dollars
over the next 12-month period, with revenues increasing to over $20 million
dollars in 24 months. The company plans to grow revenue through internal growth
and acquisitions, with the acquisitions financed primarily through the issuance
of restricted common shares or preferred stock. Management plans to complete a
private placement of common stock to properly fund the operations of the parent
company.

The increase in profits generated by acquiring profitable companies and
providing superior, cost effective management and back office functions will
provide ComTech with the necessary capital to grow the company.

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CONCLUSION

By successfully executing the company's business plan ComTech will be able
to grow the company into a valuable profitable entity. With the tremendous
consolidation and spin-off opportunities available to the Company and its
shareholders, ComTech will play a major role in revolutionizing the e-medical
industry and at the same time provide its customers the best service and content
in the industry.

EXTRAORDINARY LOSSES

During 1999, a number of the health care facilities (6) in Louisiana owned
by the Company's subsidiary, Professional Management Providers, Inc. were
operating under Chapter 11 of the U.S. Bankruptcy Code. As a result of several
disputes and lawsuits with former management of the subsidiary, the Trustee in
bankruptcy closed the six subsidiary corporations of Home Care Center, Inc. in
July 1999. Thereafter, the Company closed three of the remaining four
facilities in Louisiana, and transferred ownership of the remaining one to the
parent company. The one remaining facility was still in operation at December
31, 1999.

In addition, the Company made several acquisitions during 1999 through its
Unique Dawning, Inc. (UDI) subsidiary without board approval or corporate
involvement. These facilities proved unmanageable, and as a result, Unique
Dawning, Inc. was placed in Chapter 11 of the Bankruptcy Code in September 1999.
Subsequently, the Trustee transferred the filing to Chapter 7, which provides
for liquidation. The Chief Financial Officer at the time and most of management
disagreed with a two-member Board decision to place Unique Dawning, Inc into
bankruptcy. The Board not only placed UDI into bankruptcy, the interim
President asked the bankruptcy count to appoint a trustee to manage the
operations of UDI. UDI was placed into bankruptcy based on an internal conflict
between two board members. Once the trustee was appointed, UDI doctors
transferred the patients to other health care facilities; therefore, the trustee
was forced to close the facility.

As a result of these events, the Company recognized losses on the closing
and disposal of the twelve facilities (nine under Professional Management
Providers, Inc. and three under Unique Dawning, Inc.). The losses were as
follows:

<TABLE>
<CAPTION>
<S> <C>
Professional Management Providers, Inc. $2,088,367
Unique Dawning, Inc. . . . . . . . . 639,273
----------
$2,727,640
==========
</TABLE>

The current management of the Company is certain that controls are in place
that will assure shareholders that sound business practices will be used in the
future.

LIQUIDITY

During February and March 2000, the Company raised $200,000 through a
private placement. The Company sold 2,000 shares of its Class E preferred stock
at $100 per share. The funds were used to pay for corporate operations. The
Company is currently in negotiations with a current investor to raise additional
equity capital for the Company. The Company also plans to obtain additional
equity financing through a private placement within the next sixty days. There
can be no assurance that the Company will be successful in these efforts.

CAPITAL RESOURCES

The Company's current assets represented 15% of current liabilities at
December 31, 1999 as compared to 74% at December 31, 1998. Current liabilities
exceeded current liabilities by $733,063 at December 31, 1999. At December 31,
1999, the Company primarily had two operational subsidiaries: one health care
subsidiary located in Louisiana and one Internet Service Provider located in
Houston, Texas. The net income from these operations is not sufficient to
support corporate expenses and pay current liabilities. Based on this liquidity
problem, the Company's external auditors' report on the 1999 consolidated
financial statements included a fourth paragraph noting a going concern problem.
Based on discussions with the external auditors, if the Company is able to
resolve this problem by obtaining additional equity funding, the auditors are

28
<PAGE>
willing to review the Company's current situation and, if conditions have
improved, the firm is willing to reissue their report without noting the going
concern problem.

Management believes that actions presently being taken to obtain additional
equity financing through a private placement and pursuing acquisitions and
increasing sales in the technology sector will provide the Company with the
opportunity to continue as a going concern.

RESULTS OF OPERATIONS BEFORE EXTRAORDINARY LOSSES: 1999 COMPARED TO 1998

Total revenues for 1999 of $9,452,081 represents an increase of $656,134
or 7.46% increase from revenues of $8,795,947 in 1998. This increase is due to
revenue from health care facilities being reported for six months in 1999 as
compared to five months in 1998.

FUTURE OPERATIONS

As noted in the description of the business section of the document,
management has changed the focus of the Company to pursue the technology
industry with emphasis on Internet related businesses. The Company intends to
acquire Internet related companies by issuing shares of the Company's stock
after stock registration. As of the date of this report, management of the
Company has had preliminary discussions with potential merger or acquisition
candidates, but there is no definitive agreement between the Company and any
merger candidates. In the event the Company does enter into an agreement with
such a third party, the new Board of Directors does intend to obtain certain
assurances of the value of the target entity assets prior to consummating such a
transaction. Current management has established a due diligence team to prevent
the type of transactions that have negatively impacted the Company in the past.

EMPLOYEES

The Company and its subsidiaries have 27 employees of which 20 are full
time.

DIRECTORS, EXECUTIVE OFFICERS, AND CONTROL PERSONS

The following table sets forth information concerning executive officers
and directors of the Company, including their ages and positions with the
Company as of June 30, 2000.

<TABLE>
<CAPTION>
MANAGEMENT

Name Age Position
---- --- --------
<S> <C> <C>
Walter D. Davis. . . . . . . . 49 Chairman of the Board, President, Chief Executive
Officer and Director

Lamont Waddell. . . . . . . . . 58 Chief Financial Officer and Director

Vincent E. Alexander . . . . . 38 Director and Chairman of the Audit Committee

Beatrice Beasley. . . . . . . . 55 Director and Chairman of the
Compensation Committee

Jesse Funchess. . . . . . . . . 69 Director
</TABLE>

29
<PAGE>
Walter D. Davis, 49, has been chairman of the board and the chief executive
officer/president of CCGI since 1/20/00. He served as the chief financial
officer from 9/1/99-1/20/00. He also serves as trustee on the Houston Municipal
Pension Board.

Lamont Waddell, 58, is a director and has been the Chief Financial Officer since
1/20/00. He formerly served as Controller of CCGI from October 1, 1999 to
January 20, 2000, and prior to that he was the Vice President of Finance/Human
Resource/Controller of the Faro Pharmaceutical Corp.

Vincent E. Alexander, 38, serves as director and chair of the audit committee.
He was elected to the board in 12/99. He is a financial officer of the Infinity
Brokerage Corporation. He is also a member of the greater Houston partnership.

Dr. Beatrice Beasley, 55, has been a member of the board since 1/20/00 and the
chair of the compensation committee. She is a tenured professor at Texas
Southern University and is president of Beasley & Associates, a business
training and consulting firm. Dr. Beasley also serves on the board of the
Harris County Children's Protective Services Agency.

Attorney Jesse Funchess, 69, was elected to the board in 2/00. He is managing
partner of Jesse Funchess & Associates Attorneys at Law in Houston and Beaumont,
Texas. Attorney Funchess is also the Chairman of the board of the South Central
Houston Community Action Council, Inc.

30
<PAGE>
EXECUTIVE COMPENSATION

The following report do not constitute soliciting materials and are not
considered filed or incorporated by reference into any other Company filing
under the Securities Act of 1933 or the Securities Exchange Act of 1934, unless
the Company states otherwise.
<TABLE>
<CAPTION>

SUMMARY COMPENSATION TABLE
(2000)(1)

Annual Compensation
-------------------

Name and
Principal Position Year Salary Bonus Other Annual Compensation
------------------ -------- ---------- --------- -------------------------
<S> <C> <C> <C> <C>
WALTER DAVIS. . . . . . . . 2000 $ 120,000 $ 48,000 0
Chief Executive Officer

LAMONT WADDELL
Chief Financial Officer . . 2000 $ 95,000 $ 20,000 0
</TABLE>

<TABLE>
<CAPTION>
Long Term Compensation
----------------------

Name and Long-Term NUMBER OF STOCK
Principal Position Compensation Compensation Awards OPTIONS GRANTED
------------------ ------------ ------------------- ---------------
<S> <C> <C> <C>
WALTER DAVIS $ 0 $ 0 0
Chief Executive Officer

LAMONT WADDELL
Chief Financial Officer $ 0 $ 0 0

<FN>
-------------------------
1. Annualized compensation amounts projected for the year 2000. The current
Officers of the Company were not officers in 1999.
</TABLE>

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
% of TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING ALL EXERCISE GRANT DATE
OPTIONS EMPLOYEES PRICE EXPIRATION PRESENT
NAME GRANTED 2000 (1) (PER SHARE) DATE VALUE
<S> <C> <C> <C> <C> <C>

Walter Davis 0 0 -- -- 0

Lamont Waddell 0 0 -- -- 0

<FN>
________________________
1. The Company did not have an option plan prior to March 31, 2000. As of
the date of this Prospectus, the Company has not issued any options under its
2000 Employee Stock Option Plan.
</TABLE>

31
<PAGE>
<TABLE>
<CAPTION>
OPTION EXERCISES AND YEAR-END VALUE TABLE (1)

NUMBER
SECURITIES VALUE OF
NUMBER OF UNDERLYING UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED VALUE OPTIONS AT OPTION AS OF
NAME ON EXERCISE REALIZED MARCH 31, 2000 MARCH 31, 2000
---- --------------- --------------- ----------------------- ----------------------
EXERCISABLE NOT EXERCISABLE NOT
---- --------------- --------------- ----------------------- ----------------------
<S> <C> <C> <C> <C>

Walter Davis 0 -- -- --

Lamont Waddell 0 -- -- --

<FN>
_______________________________
1. The Company did not have an option plan in 1999.
</TABLE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 31, 2000, information with
respect to (a) each person (including "group" as that term is used in section
13(d)(3) of the Securities Exchange Act of 1934 who is known to the Company to
be the beneficial owner of more than five percent (5%) of the outstanding Common
Stock of the Company and (b) the number and percentage of the Company's Common
Stock owned by (i) each of the directors and the executive officers named on the
Summary Compensation Table above and (ii) all directors and executive officers
of the Company as a group. The Company believes that, unless otherwise
indicated, each of the shareholders has sole voting and investment power with
respect to the shares beneficially owned.

<TABLE>
<CAPTION>
CLASS NAME AND ADDRESS AMOUNT PERCENT
----- ------------------------- ------ -------
<S> <C> <C> <C>
Common. . . . . . . . . . . . . . Arlie Enterprise, Inc. 1,363,619 6.2%
11500 NE 76th St., A3#66
Vancouver, WA 98662

Common. . . . . . . . . . . . . . Dorothy M. Stewart 1,366,000 6.2%
1143 Bayou Island Drive
Houston, TX 77063

Common. . . . . . . . . . . . . . Officers and Directors 53,600 0.2%
(One Officer)

The balance of the Company's outstanding Common Shares is held by approximately
3,600 holders.
</TABLE>

32
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 100,000,000 shares of
Common Stock and 1,000,000 shares of Preferred Stock. The following summary
description of certain terms of the capital stock of the Company is qualified in
its entirety by reference to the Company's Articles of Incorporation, which is
included as an exhibit to the Registration Statement of which this Prospectus is
a part.

Common Stock

The Company has authorized 100,000,000 shares of Common Stock, par value
$.00967 per share. As of the date of this Prospectus, assuming the successful
completion of the Offering, 47,027,000 shares of Common Stock will be
outstanding. In addition, options to purchase 2,333,000 shares of Common Stock
and warrants to purchase -0- shares of Common Stock will be outstanding. Except
as required by applicable law, including the Delaware General Corporation Laws
("DGCL"), the holders of Common Stock are entitled to vote on all matters and
are entitled, subject to the preferential rights of holders of Preferred Stock,
to receive such dividends, if any, as may be declared by the Board of Directors
from time to time out of legally available funds. Upon liquidation or
dissolution of the Company, the holders of Common Stock are entitled to share in
all assets of the Company that are legally available for distribution, after
payment of all debts and other liabilities and subject to the prior rights of
any holders of Preferred Stock then outstanding. Holders of Common Stock have
no preemptive rights to acquire new securities issued by the Company, have no
rights to cumulate their votes for the election of directors and have no rights
to convert their Common Stock into any other securities of the Company.

Preferred Stock

The Company is authorized to issue 1,000,000 shares of Preferred Stock, par
value $100.00 per share ("Preferred Stock"). The Preferred Stock may be issued
in one or more series, the terms of which may be determined at the time of
issuance by the Board of Directors of the Company, without further action of the
shareholders, and may include voting rights (including the right to vote as a
series on particular matters), preferences as to dividends and liquidation,
conversion, redemption rights and sinking fund provisions.

The Company has an aggregate of 22,831 shares of Preferred Stock
outstanding as of the date of this Prospectus. The Company has no present plans
for the issuance of additional shares of Preferred Stock.

Class B Preferred Stock

The Board of Directors has authorized the issuance of 19,365 shares of
Class B Preferred Stock, stated value $100 per share ("Class B Preferred
Stock"). As of the date of this Prospectus, 19,365 shares of Class B Preferred
Stock are outstanding. The terms and preferences of the Class B Preferred Stock
are set forth below.

Ranking. The Class B Preferred Stock ranks senior to the Company's Common
Stock with respect to dividends and rights upon liquidation or dissolution of
the Company.

Voting Rights. Except as required by applicable laws, holders of Class B
Preferred Stock are not entitled to vote.

Dividend Rights. The holders of Class B Preferred Stock are entitled to
receive out of funds of the Company legally available therefore, dividends at an
annual rate of 8% per share. Such dividends are payable at term in arrears .
Dividends accrue and cumulate from the date of first issuance and are paid to
holders of record as of the record date of the last day of the stated term .
Accumulated dividends do not bear interest. So long as any shares of Class B
Preferred Stock are outstanding, the Company may not declare or pay any dividend
on the Common Stock until all accumulated, unpaid dividends on the Class B
Preferred Stock have been paid in full.

Conversion and Mandatory Conversion. Shares of Class B Preferred Stock are
convertible by the holder at any time after twelve months after the date of
issuance into Common Stock at a conversion rate of 80% of the then current
market price of the Common Stock. The Class B Preferred Stock has a face value
of $100 per share. At the end of twenty-four months the shares of Class B
Preferred Stock are automatically converted into shares of Common Stock at a
conversion rate equal to 80% of the then market bid price of the Common Stock.

33
<PAGE>
Redemption. Each share of Class B Preferred Stock is redeemable by the
Company at anytime in exchange for a cash payment equal to $100, the face amount
of each share, plus accumulated and unpaid dividends.

Liquidation Rights. In the event of liquidation or dissolution of the
Company, whether voluntary or otherwise, after payment or provision for payment
of the debts and other liabilities of the Company, the holders of the Class B
Preferred Stock are entitled to receive, out of the remaining net assets of the
Company available for distribution to shareholders before any distribution or
payment made to holders of Common Stock or other junior capital stock, the Class
B Preferred Stock stated value of $100 per share, plus any accrued and unpaid
dividends thereon. Upon payment of the full amount of such stated value plus
any unpaid dividends, the holders of Class B Preferred Stock are not entitled to
any further participation in any distribution of assets of the Company.

Piggyback Rights. Each holder of shares of Class B Preferred Stock is
entitled to piggyback registration rights when and if the Company files a
registration statement offering its shares of Common Stock. In such event, the
participating holder of Class B Preferred Stock is responsible for its fees and
expenses associated with the registration of its shares.

Class E Preferred Stock.

The Board of Directors has authorized the issuance of 2,000 shares of Class
E Preferred Stock, stated value $100 per share ("Class E Preferred Stock"). As
of the date of this Prospectus, 2,000 shares of Class E Preferred Stock are
outstanding. The terms and preferences of the Class E Preferred Stock are set
forth below.

Ranking. The Class E Preferred Stock ranks senior to the Company's Common
Stock with respect to dividends and rights upon liquidation or dissolution of
the Company and pari passu to the Company's Class B Preferred Stock with
respect to dividends and rights upon liquidation or dissolution of the Company.
Voting Rights. Except as required by applicable laws, holders of Class E
Preferred Stock are not entitled to vote.

Dividend Rights. The holders of Class E Preferred Stock are entitled to
receive out of funds of the Company legally available therefore, dividends at an
annual rate of 8% per share. Such dividends are at term in arrears. Dividends
accrue and cumulate from the date of first issuance and are paid to holders of
record as of the term. Accumulated dividends do not bear interest. So long as
any shares of Class E Preferred Stock are outstanding, the Company may not
declare or pay any dividend on the Common Stock until all accumulated, unpaid
dividends on the Class E Preferred Stock have been paid in full.

Conversion and Mandatory Conversion. Shares of Class E Preferred Stock are
convertible by the holder at any time after the date of issuance into Common
Stock at a conversion rate of 650 shares of Common Stock for each share of Class
E Preferred Stock. The Class E Preferred Stock has a face value of $100 per
share. Dividend payment of 8% is accrued and due on conversion.

Redemption. Each share of Class B Preferred Stock is redeemable by the
Company at anytime in exchange for a cash payment equal to $100, the face amount
of each share, plus accumulated and unpaid dividends.

Warrants
There are none authorized or issued.

34
<PAGE>
Transfer Agent

The Transfer Agent and Registrar for the Common Stock is Holladay Stock
Transfer, Inc., 2939 67th Place, Scottsdale, AZ ,85251

INTEREST OF NAMED EXPERTS AND COUNSEL

NONE.
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION
----------------------------------------------------
FOR SECURITIES ACT LIABILITIES

The Company's organizing documents - charter and bylaws - do not provide
for indemnification of its directors, officers and control persons. In the
future, the Company may adopt such indemnification provisions in its organizing
documents. Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended (the "Securities Act"), may be permitted to
directors, officers and controlling persons of the Company pursuant to the
foregoing provisions or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In January 1999, the Company sold 645,625 shares of common stock for
$129,125 ($.20 per share) to a company owned by a relative of the Chairman of
the Board at the time (the Chairman was subsequently removed by the Board). The
Chairman of the Board charged the Company a fee in the amount of $5,125 to
consummate this transaction. This private placement was never approved by the
Board of Directors.

In January 1999, the Company issued 1,251,995 shares of common stock to
companies owned by relatives of the Chairman of the Board at the time. The
shares were issued to retire loans made to the Company by the Chairman of the
Board and a company owned by the deceased former Chairman of the Board. The
Board of Directors never approved these transactions. The Chairman resigned from
the Board. The shares were never returned and are still outstanding. In March
2000, the Company signed a settlement agreement and mutual release in return for
another private placement of stock (see note 14). In addition, the former
President of the Company agreed to return 200,000 shares of common stock in
settlement of his involvement in the issuance of the shares.

In April 1999, the Company issued 130,000 shares ($.20 per share) of common
stock to the Chairman of the Board at the time for compensation for services
performed.

In December 1999, the Company issued 53,600 shares ($.40 per share) of
common stock to the Chief Financial Officer for compensation for services
performed and the repayment of $11,500 in loans made to the Company.

On July 2, 1998, the Company completed a private offering of 1,500,000
shares of its common stock at an offering price of $.001 per share. Of the
1,500,000 offered, 1,499,138 shares were issued and sold. 283,000 shares were
sold to a company owned by the son of the Chairman of the Board at the time,
666,138 shares were sold to the Chairman of the Board at the end of 1998, and
500,000 shares were sold to a close business associate of the Chairman of the
Board, of which, 320,000 shares were subsequently transferred to the Chairman of
the Board. The shares were issued for less than the par value of the shares.
The excess of the par value over the proceeds from the placement has been
charged to Additional paid-in capital.

At December 31, 1998, $40,000 of the cash balance was pledged as collateral
for a personal loan made by the president of PMP. The Board of Directors of the
Company did not approve this transaction.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is traded on the OTC Bulletin Board under the
symbol "CCGI." The Company' authorized capital stock consist of 100,000,000

35
<PAGE>
shares of common stock, $.00967 par value, of which 22,105,000 shares were
issued and outstanding as of February 16, 2000 and 1,000,000 shares of preferred
stock, $.01 par value, of which 31,046 shares were issued and outstanding.

As of March 31, 2000, the approximate number of holders of record of the
common stock of the Company was [3,600].

The Company has never paid any cash dividends in the past and anticipates
that for the foreseeable future all earnings, if any, will be retained to
finance growth and to meet working capital requirements.

The Common Stock is traded over the counter on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ"). The high and low of
the sales price for the Common Stock is as follows:

<TABLE>
<CAPTION>
DATE HI SALES PRICE LOW SALES PRICE

Second Quarter 1999 (1) 1.20 .18

Third Quarter 1999 1.02 .375

Fourth Quarter 1999 .65 .25

First Quarter 2000 .85 .28

<FN>
1. The Company filed its original Form 10 on May 17, 1999 and that
--------------------------------------------------------------------------------
registration became effective and the Company became a fully reporting publicly
--------------------------------------------------------------------------------
trading company on August 18, 1999.
---------------------------------
</TABLE>

SELLING SECURITY HOLDERS

This Prospectus also relates to the resale of up to 7,146,821 shares of
Common Stock by Selling Shareholders (collectively, the "Selling Shareholders")
in connection with certain registration rights granted to the Selling
Shareholders. See attached Exhibit A. In connection with the sale of its shares
in the Offering, the Selling Shareholders have agreed not to sell any additional
shares of Common Stock for a period of 90 days. The Company intends to grant to
the Selling Shareholders certain registration rights with respect to their
remaining shares.

The table below sets forth information concerning the resale by the Selling
Shareholders of shares of Common Stock.

36
<PAGE>
<TABLE>
<CAPTION>
RESALES OF COMMON STOCK

HOLDER SHARE HELD AMOUNT OFFERED SHARED HELD PERCENTAGE HELD
(ASSUMING ALL AFTER OFFERING AFTER OFFERING
ARE SOLD)
<S> <C> <C> <C> <C>
1 Capital Corp. . 1,500,000 1,500,000 0.00%
About Face Comm . 750,000 750,000 0.00%
Beatrice Beasley. 13,889 13,889 13,889 100.00%
Carolyn Harris. . 19,636 19,636 0.00%
CCGI Settlement . 200,000 200,000 0.00%
CFG Inc.. . . . . 52,250 52,250 0.00%
Charterbridge . . 450,000 450,000 0.00%
Chris Spohn . . . 125,000 125,000 0.00%
Clarence Campbell 199,650 199,650 0.00%
D. Stewart. . . . 65,000 65,000 0.00%
Don Brown . . . . 310,869 310,869 0.00%
E. Horton . . . . 96,387 96,387 0.00%
Ian Rappoport . . 250,000 250,000 0.00%
J. Hagan. . . . . 192,930 192,930 0.00%
Jesse Funchess. . 9,723 9,723 9,723 100.00%
Jim Thuney. . . . 1,300,000 1,300,000 0.00%
Lamont Waddell. . 259,056 259,056 259,056 100.00%
Nancy Moreson . . 125,000 125,000 0.00%
R. Sullivan . . . 100,614 100,614 0.00%
R. Walker . . . . 137,817 137,817 0.00%
S. Smith. . . . . 62,990 62,990 0.00%
Steve Clemons . . 129,167 129,167 129,167 100.00%
T. Smith. . . . . 24,942 24,942 24,942 100.00%
Vince Alexander . 9,723 9,723 9,723 100.00%
Walter D, Davis . 637,178 637,178 637,178 100.00%
Wayne Franks. . . 125,000 125,000 0.00%
Total . . . . . . 7,146,821 7,146,821 1,083,678 15.16%
</TABLE>

PLAN OF DISTRIBUTION

ISSUER SALES

The Company intends to sell the Common Stock through its offices and
directors without the assistance of underwriters or brokers.

SELLING SHAREHOLDER SALES

The Selling shareholder intends to sell after a 90 day holding period.

LEGAL MATTERS

The validity of the shares of Common Stock to be issued pursuant to the
Offering will be passed upon for the Company by Warner & Washington LLP,
Houston, Texas.

37
<PAGE>
EXPERTS

The financial statements included in the Prospectus and in the Registration
Statement have been audited by R. E. Bassie & Co., P.C., independent certified
public accountants, to the extent and for the periods set forth in their report
(which contains an explanatory paragraph regarding the Company's ability to
continue as a going concern) appearing elsewhere herein and in the Registration
Statement, and are included in reliance upon such report given upon the
authority of such firm as experts in auditing and accounting.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ADDITIONAL INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"). The Company has filed a
Registration Statement on Form SB-2 (together with all amendments, schedules and
exhibits thereto, the "Registration Statement") with the Commission under the
Securities Act, with respect to the Common Stock offered hereby. This
Prospectus, which is included as part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
portions of which have been omitted in accordance with the rules and regulations
of the Commission. Statements contained in this Prospectus as to the contents
of any contract or other document referred to herein are not necessarily
complete, and in each instance that a reference is made to a contract or other
document filed as an exhibit to the Registration Statement, each such examined
without charge at the Commission's principal offices at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the regional offices of the Commission located at
7 World Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of all or
any part of the Registration Statement may be obtained from the Public Reference
Section of the Commission upon payment of certain fees prescribed by the
Commission. Copies of such materials may also be obtained over the Internet at
http://www.sec.gov.

The Company currently furnishes its shareholders with annual reports
containing consolidated financial statements audited and reported upon by its
independent public accounting firm quarterly consolidated financial statements
unaudited and reported on by its independent public accounting firm and current
periodic reports as are required by the 1934 Act.

38
<PAGE>
R.E. BASSIE & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL CORPORATION
--------------------------------------------------------------------------------

COMTECH CONSOLIDATION
GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999 AND 1998

(WITH INDEPENDENT AUDITORS'
REPORT THEREON)

R.E. BASSIE & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL CORPORATION
--------------------------------------------------------------------------------
7171 Harwin Drive, Suite 306
Houston, Texas 77036-2197
Tel: (713) 266-0691
Fax: (713)266-0692
E-Mail: [email protected]

INDEPENDENT AUDITORS' REPORT
--------------------------------------------------------------------------------

The Board of Directors
ComTech Consolidation Group, Inc.:

We have audited the consolidated financial statements of ComTech Consolidation
Group, Inc. and subsidiaries as listed in the accompanying index. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ComTech
Consolidation Group, Inc. and subsidiaries as of December 31, 1999 and 1998, and
the results of their operations and their cash flows for the two-year period
ended December 31,1999, in conformity with generally accepted accounting
principles.

As shown in the consolidated financial statements, the Company incurred a net
loss of $3,091,578 in 1999. At December 31, 1999, current liabilities exceed
current assets by $733,063. These factors, and others discussed in Note 13,
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments
relating to the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in the event
the Company cannot continue in existence.

39
<PAGE>
/s/ R. E. Bassie & Co., P.C.

Houston, Texas
March 24, 2000

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS

December 31, 1999 and 1998

Assets 1999 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash (note 3) . . . . . . . . . . . . . . . . . . . . . . . $ 21,710 $ 150,624
Accounts receivable, less allowances for contractual
adjustments and doubtful accounts of $1,000
in 1999 and $4,310,771 in 1998 (note 12). . . . . . . . . 110,007 3,097,506
Prepaid expenses. . . . . . . . . . . . . . . . . . . . . . -- 262,463
Total current assets. . . . . . . . . . . . . . . . . . . 131,717 3,510,593

Note receivable (note 2). . . . . . . . . . . . . . . . . . . 20,000 --

Property and equipment, net of accumulated
depreciation and amortization (notes 4 and 5) . . . . . . . 146,014 595,687

Excess of cost over net assets of businesses
acquired, less accumulated amortization of
$34,000 in 1999 and $22,171 in 1998 (notes 2 and 12). . . . 646,000 2,457,829

Other assets. . . . . . . . . . . . . . . . . . . . . . . . . 4,340 244,457
Total assets. . . . . . . . . . . . . . . . . . . . . . . $ 948,071 $ 6,808,566
============ ============

Liabilities and Stockholders' Equity
------------------------------------

Current liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . 617,392 1,287,893
Accrued salaries and related liabilities. . . . . . . . . . 131,686 1,232,006
Due to third-party payors . . . . . . . . . . . . . . . . . -- 1,503,623
Loans payable to shareholders . . . . . . . . . . . . . . . 42,482 277,882
Notes payable . . . . . . . . . . . . . . . . . . . . . . . 10,000 186,888
Convertible subordinated debentures (note 8). . . . . . . . -- 195,000
Current installments of long-term debt (note 5) . . . . . . 63,220 39,562
--------------- -------------
Total current liabilities (note 12) . . . . . . . . . . . 864,780 4,722,854
Long-term debt, less current installments (note 5). . . . . . 545,114 443,943
--------------- -------------
Total liabilities . . . . . . . . . . . . . . . . . . . . 1,409,894 5,166,797
------------ ------------

Stockholders' equity (notes 2, 3, 6, 8, 12 and 14):
Preferred stock, $.01 par value. Authorized
1,000,000 shares: issued and outstanding,
31,028 shares in 1999 and 31,450 in 1998
Class B, 8% cumulative and convertible . . . . . . . . . . . 310 324
Common stock, $.00967 par value. Authorized

40
<PAGE>
30,000,000 shares: issued and outstanding,
22,077,072 shares in 1999 and 16,970,849
shares in 1998. . . . . . . . . . . . . . . . . . . . . . 213,485 164,108
Additional paid-in capital. . . . . . . . . . . . . . . . . 2,024,806 1,033,383
Retained earnings (deficit) . . . . . . . . . . . . . . . . (2,700,424) 443,954
------------ ------------
Total stockholders' equity (deficit). . . . . . . . . . . (461,823) 1,641,769

Commitments and contingent liabilities
(notes 6, 8, 9, 11, 13, 14 and 15)
------------ ------------
Total liabilities and stockholders' equity. . . . . . . . $ 948,071 $ 6,808,566
============ ============

See accompanying notes to consolidated financial statements.

COMTECH CONSOLIDATION GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended December 31, 1999 and 1998

1999 1998
------------ ------------
Revenues:
Net patient service revenue. . . . . . . . . . . . . . . . $ 8,861,052 $ 6,772,967
Management fees. . . . . . . . . . . . . . . . . . . . . . -- 1,271,422
Internet service revenue . . . . . . . . . . . . . . . . . 591,029 751,558
------------ ------------
Total revenues. . . . . . . . . . . . . . . . . . . . . . . . 9,452,081 8,795,947
------------ ------------

Operating expenses:
Health care operations . . . . . . . . . . . . . . . . . . 7,953,888 6,960,452
Internet operations. . . . . . . . . . . . . . . . . . . . 578,323 763,542
Corporate operations . . . . . . . . . . . . . . . . . . . 1,221,083 251,687
Amortization . . . . . . . . . . . . . . . . . . . . . . . 25,996 19,817
Depreciation . . . . . . . . . . . . . . . . . . . . . . . 25,715 56,757
------------ ------------
Total operating expenses. . . . . . . . . . . . . . . . . . . 9,805,005 8,052,255
------------ ------------

Operating income (loss) . . . . . . . . . . . . . . . . . . . (352,924) 743,692

Other income (expenses):
Interest income. . . . . . . . . . . . . . . . . . . . . . - 3,040
Interest expense . . . . . . . . . . . . . . . . . . . . . (11,014) (31,147)
------------ ------------
Total other income (expenses) . . . . . . . . . . . . . . . . (11,014) (28,107)
------------ ------------

Net income (losses) before extraordinary
losses. . . . . . . . . . . . . . . . . . . . . . . . . . . (363,938) 715,585

Extraordinary losses (note 12) . . . . . . . . . . . . . . . (2,727,640) -
------------ ------------
Net earnings (loss) (note 8). . . . . . . . . . . . . . . . . $(3,091,578) $ 715,585
============ ============

41
<PAGE>
Earnings per share from continuing operations:
(Before extraordinary items)
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (0.02) $ 0.05
============ ============
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . $ (0.01) $ 0.04
============ ============
Weighted average common shares
Primary . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,954,922 14,719,450
============ ============
Fully diluted . . . . . . . . . . . . . . . . . . . . . . . . 24,634,045 16,312,361
============ ============

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended December 31, 1999 and 1998

1999 1998
------------ ------------
Cash flows from operating activities:
Net earnings (loss). . . . . . . . . . . . . . . . . . . . $(3,091,578) $ 715,585
Less losses from extraordinary item (note 12)
2,727,640 -
------------ ------------
Net earnings (loss) from continuing operations . . . . . . (363,938) 715,585
Adjustments to reconcile net earnings (loss) to net
cash used in operating activities:
Depreciation and amortization of property
and equipment . . . . . . . . . . . . . . . . . . . . . . 25,715 56,757
Amortization of excess of cost over net
assets of businesses acquired . . . . . . . . . . . . . . 25,966 19,817
Bad debt expense. . . . . . . . . . . . . . . . . . . . . . 86,000 211,497
Stock issued for various services . . . . . . . . . . . . . 366,221 --
Loss on disposal of equipment . . . . . . . . . . . . . . . 2,963 --
(Increase) decrease in accounts receivable. . . . . . . . . (667,749) (1,705,145)
Increase in prepaid expenses. . . . . . . . . . . . . . . . 25,953 (210,137)
Increase in other assets. . . . . . . . . . . . . . . . . . 74,837 (241,784)
Increase (decrease) in accounts payable
and accrued expenses. . . . . . . . . . . . . . . . . . . 536,356 (102,039)
Increase (decrease) in accrued salaries and
related liabilities . . . . . . . . . . . . . . . . . . . (314,393) 564,532
Decrease in amount due to third-party payors. . . . . . . . (40,735) (40,532)
------------ ------------
Net cash used in operating activities. . . . . . . . . . . . (242,804) (731,449)
------------ ------------

Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . . . (11,647) (69,172)
Cash received from acquired subsidiaries . . . . . . . . . -- 520,034
------------ ------------
Net cash provided by (used in)
investing activities . . . . . . . . . . . . . . . . . . . (11,647) 450,862
------------ ------------

Cash flows from financing activities:
Proceeds from borrowing from shareholders. . . . . . . . . -- 33,750
Repayments to shareholders . . . . . . . . . . . . . . . . -- (37,038)
Proceeds from long-term debt . . . . . . . . . . . . . . . -- 79,850
Principal payments on long-term debt . . . . . . . . . . . (13,588) (30,477)
Proceeds from short-term note payable. . . . . . . . . . . 10,000 --
Principal payments on short-term notes payable . . . . . . -- (18,896)
Proceeds from issuance of shares under

42
<PAGE>
private placement . . . . . . . . . . . . . . . . . . . . . . 129,125 1,499
Proceeds from sales of subordinated debentures . . . . . . -- 400,000
------------ ------------
Net cash provided by financing activities. . . . . . . . . . 125,537 428,688
------------ ------------
Net increase (decrease) in cash. . . . . . . . . . . . . . . (128,914) 148,101

Cash at beginning of year. . . . . . . . . . . . . . . . . . 150,624 2,523
------------ ------------
Cash at end of year. . . . . . . . . . . . . . . . . . . . . $ 21,710 $ 150,624
============ ============

Supplemental schedule of cash flow information:
Interest paid. . . . . . . . . . . . . . . . . . . . . . . $ 11,014 $ 31,147
============ ============
</TABLE>

Supplemental disclosures:

Non-cash investing and financing activities (notes 2, 3, 8 and 12))

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

Years ended December 31, 1999 and 1998

Total
Additional Retained stockholders'
Preferred Common paid-in earnings equity
Stock Stock capital (deficit) (deficit)
--------------- --------------- -------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1997 . . . . . . . $ - $ 124,996 $ 75,978 $ (271,631) $ (70,657)

Issuance of 1,029,410 shares
for acquisitions (note 2) . . . . . . . . 324 9,670 743,948 -- 753,942

Issuance of 1,499,138 shares
under private placement
(note 3). . . . . . . . . . . . . . . . . -- 14,497 (12,998) -- 1,499

Issuance of 182,000 shares -
for marketing services. . . . . . . . . . -- 1,760 34,640 -- 36,400

Conversion of debentures
for 1,363,511 shares
of common stock (note 9). . . . . . . . . -- 13,185 191,815 -- 205,000

Net earnings . . . . . . . . . . . . . -- -- -- 715,585 715,585
--------------- --------------- -------------- -------------- -----------

Balance, December 31, 1998 . . . . . . . 324 164,108 1,033,383 443,954 1,641,769

Issuance of 3,500 shares of preferred
stock for acquisitions (note 2) . . . . . 35 -- 62,166 -- 62,201

Issuance of 645,625 shares of
common stock under private
placement (note 3). . . . . . . . . . . . -- 6,243 122,882 -- 129,125

43
<PAGE>
Issuance of 1,251,995 shares of
common stock for retirement of
debt (note 3) . . . . . . . . . . . . . . -- 12,108 38,291 -- 250,399

Conversion of debentures
for 1,223,787 shares
of common stock (note 9). . . . . . . . . -- 11,834 183,166 -- 195,000

Issuance of 376,078 shares
for investor relations. . . . . . . . . . 15 3,622 300,184 -- 303,821

Issuance of 183,600 shares of common
stock for contractual services
(note 3). . . . . . . . . . . . . . . . . -- 1,775 45,665 -- 47,440

Conversion of 6,400 shares of
preferred stock for 1,530,222
shares of common stock (note 6) . . . . . (64) 14,797 (14,733) -- --

Issuance of 96,392 shares of
common stock for preferred
stock dividends (note 6). . . . . . . . . -- 932 51,868 (52,800) --

Retirement of 200,000 shares
of common stock (note 3). . . . . . . . . -- (1,934) 1,934 -- --

Net loss . . . . . . . . . . . . . . . -- -- -- (3,091,578) (3,091,578)
--------------- --------------- -------------- -------------- -----------

Balance, December 31, 1999 . . . . . . . $ 310 $ 213,485 $ 2,024,806 $ (2,700,424) $ (461,823)
=============== =============== ============== ============== ===========
</TABLE>

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

THE COMPANY

ComTech Consolidation Group, Inc., a Delaware corporation, was incorporated on
July 13, 1987. The Company is a Houston, Texas based consolidation company that
is focused on acquiring and building growth oriented businesses through
acquisitions in the technology related industries. The Company has operations
in Texas and Louisiana.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of ComTech
Consolidation Group, Inc. and its wholly owned subsidiaries (the Company). All
material intercompany profits, transactions and balances have been eliminated.

The accounts of purchased companies are included in the consolidated financial
statements from the dates of acquisition. The excess of cost over the fair value
of net assets of businesses acquired is being amortized using the straight-line
method over a 40-year period commencing with the dates of acquisition.

PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment are stated at cost. Depreciation of property and
equipment is calculated using the straight-line method over the estimated useful
lives of the assets, which range from three to ten years.

EARNINGS PER SHARE

Earnings (losses) per common share have been computed by dividing net earnings
(losses) by the weighted average number of common shares outstanding during the
respective periods.

STATEMENTS OF CASH FLOWS

44
<PAGE>
For purposes of the statements of cash flows, the Company considers all highly
liquid investments with original maturities of three months or less to be cash
equivalents.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.

PATIENT SERVICE REVENUE

The Company's health care subsidiaries have agreements with third-party payors
(primarily Medicare and Medicaid programs) that provide for payments to the
Company at amounts different from its established rate for services and
supplies. Payment arrangements include prospectively determined rates,
reimbursed costs, discounted charges, and other arrangements. Patient service
revenue is reported at the estimated net realizable amounts from patients,
third-party payors, and others for services rendered, including estimated
retroactive adjustments under reimbursement agreements with third-party payors.
Retroactive adjustments are recorded on an estimated basis in the period the
related services are rendered and adjusted in the future periods, as final
settlements with the payors are determined.

CONCENTRATION OF CREDIT RISK

Medicare and Medicaid Programs

Net revenue from the majority of the Company's subsidiaries is generated from
services rendered to Medicare and Medicaid program (the Programs) beneficiaries.
The reimbursement from the Programs is determined under cost-based reimbursement
formulas. The ultimate reimbursement to which the Company is entitled is based
on the submission of annual cost reports, which are subject to audit, by the
Programs through the Programs' intermediaries. Management has made allowances
for potential cost disallowances. Differences between allowances and final
settlements are reported as modification to net patient service revenue in the
year of settlement. Since the Company receives a substantial portion of its
funding from the Programs, it is dependent on funding from the Medicare and
Medicaid programs to support fifty percent of its operations.

RECLASSIFICATIONS

Certain 1998 amounts have been reclassified to conform to the 1999 presentation.

(2) ACQUISITIONS

Effective January 1, 1999, the Company, through its wholly-owned subsidiary,
PMP, issued 1,000 shares of its Class B preferred stock (see note 6) for all of
the outstanding stock of Clinical Concepts, Inc., a Louisiana health care
corporation. On the same day, the Company sold Clinical Concepts Inc. to an
individual for a long-term note receivable in the amount of $30,000. The note
receivable is due in six annual installments of $5,000.

Effective March 26, 1999, the Company, through its wholly-owned subsidiary,
Unique Dawning, Inc., issued 2,500 shares of its Class B preferred stock (see
note 6) for all of the outstanding stock of two Texas health care corporations.

Effective February 15, 1998, the Company issued 500,000 shares of its common
stock in exchange for all of the outstanding stock of Professional Management
Providers, Inc. (PMP), a Louisiana health care management corporation.

Effective April 1, 1998, the Company issued 500,000 shares of its common stock
in exchange for all of the outstanding stock of Unique Dawning, Inc., a Texas
health care corporation.

Effective June 30, 1998, the Company, through its wholly-owned subsidiary, PMP,
issued 2,000 shares of its Class B preferred stock for all of the outstanding
stock of Superior Quality Health Care, Inc., a Texas health care corporation.

Effective July 30, 1998, the Company, through its wholly-owned subsidiary, PMP,
issued 11,000 shares of its Class B preferred stock for all of the outstanding
stock of Home Care Center, Inc., a Louisiana health care corporation (see note
11).

Effective August 13, 1998, the Company, through its wholly owned subsidiary,
PMP, issued 1,300 shares of its Class B preferred stock for all of the
outstanding stock of Magnolia Home Health, Inc., a Louisiana health care
corporation.

Effective October 3, 1998, the Company, through its wholly-owned subsidiary,
PMP, issued 600 shares of its Class B preferred stock for all of the outstanding
stock of A-1 Bayou Health 2000, Inc., a Louisiana health care corporation.

45
<PAGE>
Between July 1, 1998 and December 29, 1998, the Company, through its
wholly-owned subsidiary, PMP, issued 16,550 shares of its Class B preferred
stock for certain net assets of twelve Louisiana health care corporations.

All of the above acquisitions have been accounted for using the purchase method
with the purchase price allocated to the acquired assets and liabilities based
on their respective estimated fair values at the acquisition dates. Such
allocations were based on evaluations and estimations. A valuation adjustment
in the amount of $2,000,000 has been assigned to the value of existing contracts
for entities acquired in 1998.

The purchase allocation is summarized as follows:

<TABLE>
<CAPTION>
1999 1998
------------- ------------
<S> <C> <C>
Current assets $133,849 $3,630,796
Noncurrent assets. . . . . . . 25,000 -
Property and equipment . . . . - 439,745
Excess of cost over net assets
of businesses acquired . . . . - 2,000,000
Current liabilities. . . . . . (96,648) (5,229,128)
Long-term liabilities. . . . . - (87,471)
------------- ------------

$ 62,201 $ 753,942
============= ============
</TABLE>

Goodwill is being amortized over a period of 40 years.

(3) RELATED PARTY TRANSACTIONS

In January 1999, the Company sold 645,625 shares of common stock for $129,125
($.20 per share) to a company owned by a relative of the Chairman of the Board
at the time (the Chairman was subsequently removed by the Board). The Chairman
of the Board charged the Company a fee in the amount of $5,125 to consummate
this transaction. This private placement was never approved by the Board of
Directors.

In January 1999, the Company issued 1,251,995 shares of common stock to
companies owned by relatives of the Chairman of the Board at the time. The
shares were issued to retire loans made to the Company by the Chairman of the
Board and a company owned by the deceased former Chairman of the Board. The
Board of Directors never approved these transactions. The Board subsequently
removed the Chairman from the Board. The shares were never returned and are
still outstanding. In March 2000, the Company signed a settlement agreement and
mutual release in return for another private placement of stock (see note 14).
In addition, the former President of the Company agreed to return 200,000 shares
of common stock in settlement of his involvement in the issuance of the shares.

In April 1999, the Company issued 130,000 shares ($.20 per share) of common
stock to the Chairman of the Board at the time for compensation for services
performed.

In December 1999, the Company issued 53,600 shares ($.40 per share) of common
stock to the Chief Financial Officer for compensation for services performed and
the repayment of $11,500 in loans made to the Company.

On July 2, 1998, the Company completed a private offering of 1,500,000 shares of
its common stock at an offering price of $.001 per share. Of the 1,500,000
offered, 1,499,138 shares were issued and sold. 283,000 shares were sold to a
company owned by the son of the Chairman of the Board at the time, 666,138
shares were sold to the Chairman of the Board at the end of 1998, and 500,000
shares were sold to a close business associate of the Chairman of the Board, of
which, 320,000 shares were subsequently transferred to the Chairman of the
Board. The shares were issued for less than the par value of the shares. The
excess of the par value over the proceeds from the placement has been charged to
Additional paid-in capital. The Company has not determined whether the issuance
met the requirements of state law.

At December 31, 1998, $40,000 of the cash balance was pledged as collateral for
a personal loan made by the president of PMP. The Board of Directors of the
Company did not approve this transaction.

<TABLE>
<CAPTION>
(4) PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows:

46
<PAGE>
December 31,
-------------------------

1999 1998
---------- -----------
<S> <C> <C>
Equipment $ 240,317 $ 301,922
Furniture and fixtures. . . . . . 1,600 429,087
Leasehold improvements. . . . . . -- 336,163
---------- -----------
Total property and equipment . . . . 241,917 1,067,172
Less accumulated depreciation and
amortization . . . . . . . . . . . . 95,903 471,485
---------- -----------
Net property and equipment . . . . . $ 146,014 $ 595,687
========== ===========
</TABLE>

<TABLE>
<CAPTION>
(5) LONG-TERM DEBT

Long-term debt is summarized as follows:

December 31, 1999 1998
-------- -------
<S> <C> <C>

Notes payable (8), due March 10, 2001, with
interest at 6.5% (see note 11) $ 251,100 $ -
Note payable in monthly installments of $868
through September 2003; with interest at
10.5%, unsecured . . . . . . . . . . . . . . . . . 34,075 40,393
Note payable in monthly installments of $970
through September 2004, with monthly
installments increasing to $5,500 through
August 2005, with interest, unsecured. . . . . . . 115,126 119,006
Note payable in monthly installments of $3,700
through August 2004, unsecured . . . . . . . . . . 208,033 219,169
Note payable to a bank, with interest at
the lender's prime rate plus 2%, due
March 5, 2000 (note 12), . . . . . . . . . . . . . -- 67,322
Note payable, with interest at 13.24%, due
January 2003; collateralized by transpor-
tation equipment (note 12) . . . . . . . . . . . . -- 16,235
Note payable, with interest at 3.90%, due
November 2003; collateralized by transpor-
tation equipment (note 12) . . . . . . . . . . . . -- 21,380

Total long-term debt . . . . . . . . . . . . . . 608,334 483,505
Less current installments. . . . . . . . . . . . . 63,220 39,562

Long-term debt, less
current installments . . . . . . . . . . . . . . . $545,114 $443,943
======== ========
</TABLE>

Aggregate yearly maturities of long-term debt for the periods after December 31,
1999 are as follows:

<TABLE>
<CAPTION>
Years
-----
<S> <C>
2000 $ 63,220
2001 . . . . 315,111
2002 . . . . 64,889
2003 . . . . 66,115
2004 . . . . 60,193
Thereafter . 38,806
--------
$608,334
========
</TABLE>

47
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(6) PREFERRED STOCK

In 1999, the Company issued 3,500 shares of its Class B preferred stock in
exchange for all of the outstanding stock of three health care companies (see
note 2). In 1998, the Company issued 31,450 shares of its Class B preferred
stock in exchange for all of the outstanding stock of four health care companies
and certain net assets of twelve health care companies (see note 2). The Class B
preferred shares have a face value of $100 per share, with an annual cumulative
dividend equal to 8%, with a term of 24 months.
The Class B preferred shares are convertible by the shareholders for the
Company's common stock at anytime after 12 months from the date of issuance at a
conversion rate equal to 80% of the then market price of the Company's common
stock. The Class B preferred shares are redeemable by the Company at any time in
exchange for cash payment equal to the full-face amount of the shares plus
accumulated dividends. At the end of the 24 month term, if not redeemed by the
Company for cash equal to the face amount of the preferred shares, the shares
automatically convert to common stock at a conversion rate equal to 80% of the
then market bid price of the Company's common stock. See note 14 for subsequent
events related to the creation and subsequent sale of the Company's Class E
preferred stock.

(7) FEDERAL INCOME TAX EXPENSE

The estimated federal income tax expense for the year ended December 31, 1998 is
eliminated by net operating loss carry forwards.

(8) CONVERTIBLE SUBORDINATED DEBENTURES

On August 3, 1998, the Company entered into an agreement to issue, as needed,
$750,000 of 8% senior subordinated convertible redeemable debentures (the
Debentures) due August 3, 1999. Interest on the outstanding balance is due and
payable monthly commencing September 3, 1998. The Debentures may be converted
into shares of the Company's stock at the lower of 75% of the closing bid price
of the Company's stock the day immediately preceding the date of receipt by the
Company of notice of conversion or by 75% of the closing bid price of the
Company's stock on the five days immediately preceding the date of subscription
by the holder as reported by the National Association of Securities Dealers
Electronic Bulletin Board ("NASDAQ"). As of December 31, 1998, the Company had
borrowed $400,000 of the $750,000. The holders of the Debentures subsequently
converted $205,000 of the borrowings into 1,363,511 shares of the Company's
common stock. The remaining $195,000 is recorded as a current liability at
December 31, 1998. In 1999, the Company converted the remaining $195,000 into
1,223,787 shares of the Company's common stock.

(9) LEASES

The Company leases certain office space, furniture and equipment under operating
leases. Future minimum lease payments under noncancellable operating leases at
December 31, 1999 are as follows:
<TABLE>
<CAPTION>

Year
----
<S> <C>
2000 $73,633
2001 19,168
-------
Total $92,801
=======
</TABLE>

48
<PAGE>
(10) INDUSTRY SEGMENTS

The Company operated in two industries (health care and Internet service
providers) and two geographical locations (Texas and Louisiana) during 1999 and
1998. Professional Management Providers, Inc. provided health care services in
the state of Louisiana (see note 12), and Unique Dawning, Inc. provided health
care services in the state of Texas (see note 12). Networks On-Line, Inc. is an
Internet service provider (ISP) in Texas. Segment and geographical information
for the years ended December 31, 1999 and 1998 is as follows:

<TABLE>
<CAPTION>
1999 1998
------------- -----------
<S> <C> <C>
Net revenues:
Health care - Louisiana $ 7,198,930 $7,253,787
Health care - Texas. . . 1,662,122 790,602
ISP - Texas. . . . . . . 591,029 751,558
------------- -----------
$ 9,452,081 $8,795,947
============= ===========

Operating income (loss):
Health care - Louisiana. $ 775,039 $ 992,443
Health care - Texas. . . 122,885 57,557
ISP - Texas. . . . . . . (29,765) (54,621)
Corporate expenses . . . (1,221,083) (251,687)
------------- -----------
$ (352,924) $ 743,692
============= ===========

Identifiable assets:
Health care - Louisiana. $ 292,103 $5,221,722
Health care - Texas. . . - 780,408
ISP - Texas. . . . . . . 630,916 644,874
Corporate. . . . . . . . 25,052 161,562
------------- -----------
$ 948,071 $6,808,566
============= ===========
</TABLE>

<TABLE>
<CAPTION>
Corporate expenses for the year ended December 31, 1999 are summarized as
follows:

<S> <C>
Settled and pending litigation $400,000
Investor relations . . . . . . 373,702
Contractual services . . . . . 112,727
Bad debt expenses. . . . . . . 86,000
Legal fees . . . . . . . . . . 71,198
Accounting and audit fees. . . 47,696
Salaries and payroll taxes . . 38,131
Other administrative expenses. 91,629
-----------
Total. . . . . . . . . . . . . $1,221,083
===========
</TABLE>

(11) LITIGATION

The Company has certain pending and threatened litigation and claims incurred in
the ordinary course of business (primarily related to acquisitions and
disposition of subsidiaries and related employment agreements). Management has
not determined whether or not the probable resolution of such contingencies will
have any additional material affect on the financial position of the Company or
the results of operations. Included in long-term debt is $251,100 of
liabilities related to settled litigation. In addition, approximately $150,000
is included in accounts payable and accrued expenses for pending litigation.

49
<PAGE>
(12) DISPOSAL OF HEALTH CARE FACILITIES

During 1999, a number of the facilities (6) in Louisiana owned by the Company's
subsidiary, Professional Management Providers, Inc. were operating under Chapter
11 of the U.S. Bankruptcy Code. As a result of several disputes and lawsuits
with former management of the subsidiary, the Trustee in bankruptcy closed the
six subsidiary corporations of Home Care Center, Inc. in July 1999. Thereafter,
the Company closed three of the remaining four facilities in Louisiana, and
transferred ownership of the remaining one to the parent company. The one
remaining facility was still in operation at December 31, 1999.

In addition, the Company made several acquisitions during 1999 through its
Unique Dawning, Inc. subsidiary without board approval or corporate involvement.
These facilities proved unmanageable, and as a result, Unique Dawning, Inc. was
placed in Chapter 11 of the Bankruptcy Code in September 1999. Subsequently, the
Trustee transferred the filing to Chapter 7, which provides for liquidation.

As a result of these events, the Company recognized losses on the closing and
disposal of the twelve facilities (nine under Professional Management Providers,
Inc. and three under Unique Dawning, Inc.). The losses were as follows:

<TABLE>
<CAPTION>
<S> <C>
Professional Management Providers, Inc. $2,088,367
Unique Dawning, Inc.. . . . . . . . 639,273
----------
$2,727,640
==========
</TABLE>

The loss has been reflected in the accompanying statement of income as an
extraordinary item. No income tax credit has been provided against the loss due
to the unavailability of recoverable taxes in prior periods.

(13) OPERATIONAL STATUS

The current company is the survivor of a reverse merger, which occurred in 1997
and has expanded since then through both internal growth and acquisitions.
During this growth period, the Company reported significant revenues in 1998 and
1999; however, the revenues reported for both years represented approximately
one-half of a year's operations. This situation was due to significant
acquisitions occurring in mid-year 1998 and the disposition (note 12) of a
majority of those businesses in mid-year 1999. The management of the acquisition
process and the management of those subsequent operations exposed the Company to
significant legal liabilities (note 11).

At December 31, 1999, current liabilities exceeded current assets by $733,063.
At December 31, 1999, the Company primarily had two operational subsidiaries:
one health care subsidiary located in Louisiana and one Internet Service
Provider located in Houston, Texas. The net income from these operations is not
sufficient to support corporate expenses and pay current liabilities.

In view of these matters, realization of a major portion of the assets in the
accompanying consolidated balance sheet is dependent upon continued operations
of the Company, the success of a secondary placement and future acquisitions and
operations. Management believes that actions presently being taken to obtain
additional equity financing through a secondary offering and acquisitions and
increasing sales in the technology sector will provide the opportunity to
continue as a going concern.

(14) SUBSEQUENT EVENT

During February and March 2000, the Company raised $200,000 through a private
placement. The Company agreed to sell 2,000 shares of its Class E preferred
stock at $100 per share. Each share of the Class E preferred stock, has an
annual cumulative dividend equal to 8%, with a term of 12 months, and is
convertible into 650 shares of the Company's common stock.

50
<PAGE>
R. E. BASSIE & CO., P.C.
CERTIFIED PUBLIC ACCOUNTANTS
A PROFESSIONAL CORPORATION

7171 Harwin Drive, Suite 306
Houston, Texas 77036-2197
Tel: (713) 266-0691
Fax: (713) 266-0692
E-Mail: [email protected]

INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------

The Board of Directors
Comtech Consolidation Group, Inc.:

We have reviewed the accompanying condensed consolidated balance sheet of
Comtech Consolidation Group, Inc. and subsidiaries as of March 31, 2000, and the
related condensed consolidated statements of operations and cash flows for the
three-month periods ended March 31, 2000 and 1999. These financial statements
are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

The accompanying condensed financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 5 to the
condensed financial statements (and Note 13 to the annual financial statements
for the year ended December 31, 1999 (note presented herein), certain conditions
raise substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 5 (and
Note 13) to the respective financial statements.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of ComTech Consolidation Group, Inc.
and subsidiaries as of December 31, 1999, and the related consolidated
statements of operations, stockholders' equity, and cash flows for the year then
ended (not presented herein); and in our report dated March 24, 2000, we
expressed an unqualified opinion on those consolidated financial statements and
included an explanatory paragraph concerning matters that raise substantial
doubt about the Company's ability to continue as a going concern. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1999 is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has been
derived.

/s/ R. E. Bassie & Co., P.C.

Houston, Texas
May 13, 2000

51
<PAGE>
<TABLE>
<CAPTION>
COMTECH CONSOLIDATION GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

March 31, 2000 and December 31, 1999 (Audited)
(Unaudited - see accompanying accountants' review report)

Assets 2000 1999
------------------------------------------------------- ------------- --------------
<S> <C> <C>

(Audited)

Current assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . . $ 64,082 $ 21,710
Accounts receivable, less allowances for contractual
adjustments and doubtful accounts of $1,000
in 2000 and 1999. . . . . . . . . . . . . . . . . . 272,578 110,007
Prepaid expenses. . . . . . . . . . . . . . . . . . . 66,000 -
------------- --------------
Total current assets. . . . . . . . . . . . . . . . 402,660 131,717
------------- --------------

Note receivable . . . . . . . . . . . . . . . . . . . . 20,000 20,000

Property and equipment, net of accumulated
depreciation and amortization . . . . . . . . . . . . 134,285 146,014

Excess of cost over net assets of businesses
acquired, less accumulated amortization of
$38,250 in 2000 and $34,000 in 1999 . . . . . . . . . 641,750 646,000

Other assets. . . . . . . . . . . . . . . . . . . . . . 4,340 4,340
------------- --------------
Total assets. . . . . . . . . . . . . . . . . . . . $ 1,203,035 $ 948,071
============= ==============

Liabilities and Stockholders' Equity
-------------------------------------------------------

Current liabilities:
Accounts payable and accrued expenses . . . . . . . . 499,580 617,392
Accrued salaries and related liabilities. . . . . . . 144,598 131,686
Loans payable to shareholders . . . . . . . . . . . . 42,482 42,482
Notes payable . . . . . . . . . . . . . . . . . . . . 8,250 10,000
Current installments of long-term debt. . . . . . . . 308,754 63,220
------------- --------------
Total current liabilities . . . . . . . . . . . . . 1,003,664 864,780
Long-term debt, less current installments . . . . . . . 294,014 545,114
------------- --------------
Total liabilities . . . . . . . . . . . . . . . . . 1,297,678 1,409,894
------------- --------------

Stockholders' equity:
Preferred stock, $.01 par value. Authorized
1,000,000 shares: issued and outstanding,
31,562 shares in 2000 and 31,028 shares in 1999 . . 316 310
Common stock, $.00967 par value. Authorized
30,000,000 shares: issued and outstanding,
24,308,634 shares in 2000 and 22,077,072
shares in 1999. . . . . . . . . . . . . . . . . . . 235,064 213,485
Additional paid-in capital. . . . . . . . . . . . . . 2,351,071 2,024,806
Retained earnings (deficit) . . . . . . . . . . . . . (2,681,094) (2,700,424)
------------- --------------
Total stockholders' equity (deficit). . . . . . . . (94,643) (461,823)

Commitments and contingent liabilities

Total liabilities and stockholders' equity. . . . . $ 1,203,035 $ 948,071
============= ==============

See accompanying notes to consolidated financial statements.
</TABLE>

52
<PAGE>
<TABLE>
<CAPTION>
COMTECH CONSOLIDATION GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended March 31, 2000 and 1999
(Unaudited - see accompanying accountants' review report)

2000 1999
------------------ -------------------
<S> <C> <C>
Revenues:
Patient service revenue, net $ 355,978 $ 4,815,313
Internet service revenue . . 169,184 159,295
------------------ -------------------
Total revenues . . . . . 525,162 4,974,608
------------------ -------------------

Operating expenses:
Health care operations . . . 243,547 3,979,773
Internet operations. . . . . 147,006 141,939
Corporate operations . . . . 99,239 76,697
Amortization . . . . . . . . 4,250 8,175
Depreciation . . . . . . . . 11,729 16,631
------------------ -------------------
Total operating expenses . 505,771 4,223,215
------------------ -------------------

Operating income . . . . . 19,391 751,393

Other income (expenses):
Interest income. . . . . . . - 18
Interest expense . . . . . . (61) (3,532)
------------------ -------------------
Net earnings . . . . . . . $ 19,330 $ 747,879
================== ===================

Net earnings per share . . . . $ 0.00 $ 0.04
================== ===================

Weighted average common shares 22,521,890 17,726,000
================== ===================

See accompanying notes to consolidated financial statements.
</TABLE>

53
<PAGE>
<TABLE>
<CAPTION>
COMTECH CONSOLIDATION GROUP, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended March 31, 2000 and 1999
(Unaudited - see accompanying accountants' review report)

2000 1999
---------------- ------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . $ 19,330 $ 747,879
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation and amortization of property
and equipment. . . . . . . . . . . . . . . . . . . 11,729 16,631
Amortization of excess of cost over net
assets of businesses acquired. . . . . . . . . . . 4,250 8,175
Increase in accounts receivable. . . . . . . . . . . (162,571) (1,303,762)
Increase in prepaid expenses . . . . . . . . . . . . (66,000) (29,178)
Decrease in other assets . . . . . . . . . . . . . . - 2,207
Increase in accounts payable and accrued
expenses . . . . . . . . . . . . . . . . . . . . . 31,788 264,188
Increase in accrued salaries and related
liabilities. . . . . . . . . . . . . . . . . . . . 12,912 246,201
Decrease in amount due to third-party payors . . . . - (24,811)
---------------- ------------------
Net cash used in operating activities. . . . . . (148,562) (72,470)
---------------- ------------------

Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . . - (13,916)
---------------- ------------------
Net cash used in investing activities. . . . . . - (13,916)
---------------- ------------------

Cash flows from financing activities:
Principal payments on long-term debt . . . . . . . . . . (5,566) (17,678)
Repayment of short-term note payable . . . . . . . . . . (3,500) -
Proceeds from issuance of shares under private placement 200,000 104,000
---------------- ------------------
Net cash provided by operating activities. . . . 190,934 86,322
---------------- ------------------

Net increase (decrease) in cash. . . . . . . . . 42,372 (64)

Cash at beginning of year. . . . . . . . . . . . . . . . . 21,710 150,624
---------------- ------------------
Cash at end of period. . . . . . . . . . . . . . . . . . . $ 64,082 $ 150,560
================ ==================

Supplemental schedule of cash flow information:
Interest paid. . . . . . . . . . . . . . . . . . . . . . $ 61 $ -
================ ==================

See accompanying notes to consolidated financial statements.
</TABLE>

54
<PAGE>
COMTECH CONSOLIDATION GROUP, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) GENERAL

Comtech Consolidation Group, Inc. (Comtech or the Company) is a Houston, Texas
based consolidation Company that is focused on acquiring and building businesses
through acquisitions, with an emphasis toward technology. The Company currently
has technology operations in Houston, Texas operating under the name Networks
On-line, Inc. and healthcare operations in Louisiana, operating under the name
A-1 Bayou. All acquired companies become the direct property of Comtech and are
run as wholly owned subsidiaries. Comtech directly manage the financial and
administrative functions of all of its subsidiaries.

The unaudited consolidated financial statements have been prepared on the same
basis as the audited consolidated financial statements and, in the opinion of
management, reflect all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation for each of the periods presented. The
results of operations for interim periods are not necessarily indicative of
results to be achieved for full fiscal years.

As contemplated by the Securities and Exchange Commission (SEC) under Rule 10-01
of Regulation S-X, the accompanying consolidated financial statements and
related footnotes have been condensed and do not contain certain information
that will be included in the Company's annual consolidated financial statements
and footnotes thereto. For further information, refer to the Company's 1999
audited consolidated financial statements and related footnotes.

(2) PROPERTY AND EQUIPMENT

Property and equipment is summarized as follows at March 31, 2000 and December
31, 1999:

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

Equipment $ 240,317 $ 240,317
Furniture and fixtures 1,600 1,600
---------- ----------
Total property and equipment 241,917 241,917
Less accumulated depreciation 107,632 95,903
---------- ----------

Net property and equipment $ 134,285 $ 146,014
========== ==========

(3) LONG-TERM DEBT

Long-term debt at March 31, 2000 and December 31, 1999 are as follows:

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

Long-term debt $ 602,768 $ 608,334
Less current installments 308,754 63,220
---------- ----------
$ 294,014 $ 545,114
========== ==========

(4) FEDERAL INCOME TAX EXPENSE

The estimated federal income tax expense for the three-month periods ended March
31, 2000 and 1999 is eliminated by net operating loss carryforwards.

55
<PAGE>
(5) OPERATIONAL STATUS

At March 31, 2000, current liabilities exceeded current assets by $601,004. At
March 31, 2000, the Company primarily had two operational subsidiaries: one
Internet Service Provider located in Houston, Texas and one healthcare
subsidiary located in Louisiana. The net income from these operations is not
sufficient to support corporate expenses and pay current liabilities. However,
a new Board was elected in late January 2000, which hired a new management team.
The new management installed management practices, which resulted in a
substantial reduction of corporate expenses. New management also negotiated
settlements on a substantial portion of corporate debt, decreasing debt by over
$112,000 in the first quarter. To overcome the shortfall in operating expenses,
management has raised over $250,000 in operating capital through private
placements of preferred stock. Total assets at March 31, 2000 increased by
$274,964 compared to December 31, 1999.

Management believes that actions presently being taken to obtain additional
equity financing through a secondary offering will provide adequate working
capital over the next 12 months, without creating new debt. Acquisitions and
increasing sales in the technology sector will provide the opportunity for the
Company to continue as a going concern. A more complete profile of management
plans is shown in the 1st quarter 10QSB, Item 2.

(6) SUBSEQUENT EVENTS

On May 12, 2000, the shareholders voted to increase the number of authorized
shares of the Company's common stock from 30,000,000 shares to 100,000,000
shares. In addition, the shareholders also approved a performance based stock
option plan for the Company. The Board of Directors gave authorization for
management to proceed with the preparation of SEC Form SB-2 to register a
certain number of shares of common stock to be sold to obtain funds for working
capital, retire debt and for use in making acquisitions of technology related
entities, some of which the Company has already signed letters of intent to
purchase. An investment banking firm has been engaged to assist with this
placement of stock.

56
<PAGE>