WENDT BRISTOL HEALTH SERVICES CORP, POS AM, 1999-02-08

WENDT BRISTOL HEALTH SERVICES CORP
POS AM, 1999-02-08
SKILLED NURSING CARE FACILITIES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 2

TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

THE WENDT-BRISTOL HEALTH
SERVICES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 22-1807533 3842
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) CLASSIFICATION NUMBER)
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TWO NATIONWIDE PLAZA, SUITE 760
COLUMBUS, OHIO 43215
(614) 221-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

THE PRENTICE-HALL CORPORATION SYSTEM, INC.
1013 CENTRE ROAD
WILMINGTON, DELAWARE 19805-1297
(302) 998-0595
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE OF PROCESS)
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC: As
soon as practicable after this Registration Statement becomes effective and
after conditions in the Merger Agreement have been satisfied.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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. [ ]
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CALCULATION OF REGISTRATION FEE

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PROPOSED PROPOSED AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT MAXIMUM OFFERING MAXIMUM AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED TO BE REGISTERED PRICE PER UNIT OFFERING PRICE FEE
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Preferred Stock, Series 1, $1.00 par
value per share, $20 stated value..... 71,921 $20 $1,438,420 $425
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The registrant hereby amends this post-effective amendment to the
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.

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PROXY STATEMENT OF
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
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THIS PROXY STATEMENT ALSO SERVES AS
THE PROSPECTUS OF THE WENDT-BRISTOL
HEALTH SERVICES CORPORATION

SERIES 1 PREFERRED STOCK

This Joint Proxy Statement/Prospectus (the "Prospectus") relates to 71,921
shares of The Wendt-Bristol Health Services Corporation, a Delaware corporation
(the "Company"), designated Series 1, with a par value $1.00 per share and a
stated value of $20.00 per share, entitled to cumulative dividends at a rate of
$1.20 per annum and convertible to shares of common stock of the Company (the
"Common Shares") at a rate of 6 2/3 common shares per Series 1 preferred share
(the "Preferred Shares"), to be issued in connection with the merger (the
"Merger") of Wendt-Bristol Acquisition LLC ("LLC"), a Delaware limited liability
company and wholly-owned subsidiary of the Company, with and into Wendt-Bristol
Diagnostics Company L.P., a Delaware limited partnership (the "Partnership").
The maximum aggregate consideration to be paid in the Merger is $1,438,420,
i.e., 71,921 Preferred Shares at $20 per share.

The holders of Depository Units ("Units") representing assigned limited
partnership interests in the Partnership (the "Unitholders") are being asked to
approve the Merger as described in this Prospectus. If the Merger is approved,
the Unitholders will have their Depository Units canceled and converted to the
right to receive one (1) Preferred Share for every two (2) Units (the "Exchange
Value"). The Preferred Shares will be listed on the American Stock Exchange
("AMEX"), subject to approval for listing.

The purpose of the Merger is to afford the Company a greater degree of
control over its operations, thereby enhancing growth and revenues. Moreover,
the Company believes that exchange of the Units for the Preferred Shares will
increase trading activity and investor interest in the Company. Conditioned upon
the approval of the Company's listing application with the AMEX, the Preferred
Shares will also offer the Unitholders a more readily transferable security and
a specified return in the form of cumulative dividends. For further discussion
of the purpose of the transaction, see "THE MERGER - REASONS FOR THE MERGER."

THE MERGER INVOLVES CERTAIN RISKS THAT SHOULD BE CONSIDERED BY THE
UNITHOLDERS. SEE "RISK FACTORS" BEGINNING ON PAGE 9. IN PARTICULAR, UNITHOLDERS
SHOULD CONSIDER THE FOLLOWING:

- The possibility that the Company's listing application with AMEX could
be denied.

- There is a substantial risk that the Preferred Shares will trade at
price below the Exchange Value, which is further exacerbated by the
fact that the price of the Preferred Shares may be impacted by certain
additional transactions the Company will be simultaneously conducting.

- The differences in rights of Unitholders and holders of the Preferred
Shares, including the fact that the Preferred Shares are nonvoting,
the Partnership is a finite-life entity while the Company is of
perpetual duration, the manner in which distributions are made, and
the difference in the tax treatment of the entities.

- The terms of the Merger may have been impacted by certain additional
or conflicting interests held by the general partner and other parties
to the Merger.

- Certain adverse tax consequences for the Unitholders associated with
the Merger.

- The industries in which the Company operates are subject to extensive
governmental regulation and changes in those regulations could
adversely impact the Company's business.

- The Company's governing documents have limited the remedies which
shareholders may recover upon breaches of fiduciary duties by its
directors and have elected not to be governed by provision of state
law limiting the types and timing of transactions with interested
shareholders.

- The absence of dissenters' rights.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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The date of this Prospectus is February , 1999.

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TABLE OF CONTENTS

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PAGE
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Available Information....................................... 2
Summary..................................................... 3
Background and Reasons for Merger...................... 3
The Merger............................................. 3
Exchange Value......................................... 3
Partnership Special Meeting............................ 3
The Companies.......................................... 3
Reasons for the Merger................................. 4
Risk Factors........................................... 4
Fairness............................................... 5
The Preferred Shares................................... 5
Dissenters' Rights..................................... 5
Review Of Investor Lists............................... 5
Conflicts of Interest.................................. 5
Accounting Treatment of Merger......................... 5
Federal Income Tax Consequences........................ 5
Cautionary Statement Regarding Forward-Looking
Statements............................................ 5
RISK FACTORS................................................ 7
No Guarantee of Market Price........................... 7
Risks Associated with Additional Transactions.......... 7
Preferred Shares Do Not Have Voting Rights............. 8
Preferred Share Are Redeemable......................... 8
Risks Associated with Conflicts of Interest............ 8
Denial of Listing Application.......................... 8
Adverse Tax Consequences of Merger..................... 8
Competition of Company................................. 8
Risks Associated with the Company's Governing
Documents............................................. 8
Regulatory Concerns.................................... 9
Tax Treatment.......................................... 9
No Dissenters' Rights.................................. 9
Change in Nature of Investment......................... 9
SELECTED FINANCIAL INFORMATION.............................. 10
The Merger.................................................. 11
General................................................ 11
Background............................................. 11
Partnership Special Meeting............................ 11
Terms of Merger Agreement.............................. 12
No Fractional Preferred Shares......................... 13
Reasons for the Merger................................. 13
Consideration of Alternatives.......................... 13
Fairness Opinion....................................... 14
Effective Time of Merger............................... 14
Accounting Treatment of Merger......................... 14
Federal Income Tax Consequences........................ 14
Stock Exchange Listing................................. 16
Interests of Certain Persons in the Merger............. 16
Regulatory Approvals................................... 16
Expenses of Merger..................................... 16
Certain Information Concerning the Company.................. 17
Properties............................................. 20
Certain Information Concerning the Partnership......... 21
Certain Information Regarding Company Stock
and Partnership Units................................. 21
Management of the Company................................... 21
Directors and Officers of the Company.................. 21
Executive Compensation................................. 22
General................................................ 22
Options................................................ 23
Stock Option Plan...................................... 23
Split-Dollar Insurance Policies........................ 24
Section 401(k) Plan.................................... 26
Compensation of Directors.............................. 26
Security Ownership of Certain Beneficial Owners and
Management............................................ 27
Certain Relationships and Related Transactions......... 28
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(ii)
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PAGE
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The Preferred Shares........................................ 30
Comparison of Rights of Holders of Preferred Shares and
Units..................................................... 30
Voting Rights.......................................... 31
Management............................................. 31
Convertibility......................................... 31
Liquidity.............................................. 31
Nature of Interest..................................... 31
Dividends and Distributions............................ 31
Federal Taxation....................................... 31
Removal of Directors and the General Partner........... 32
Annual Meetings........................................ 32
Calling of Meetings.................................... 32
Notice of Meetings..................................... 32
Amendment of Governing Documents....................... 32
Preferences Upon Liquidation........................... 33
Indemnification........................................ 33
Term................................................... 33
Redemption............................................. 33
Investment Objectives.................................. 33
Borrowing Policies..................................... 34
Review of Investor Lists.................................... 34
Exchange Value.............................................. 34
Legal Matters............................................... 34
Management's Discussion and Analysis........................ 35
Glossary.................................................... 43
INDEX TO FINANCIAL STATEMENT................................ F-1
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(iii)
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AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the following Regional Offices of the
Commission: 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7
World Trade Center, 13th Floor, New York, New York 10048. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission and the address of the site is http://www.sec.gov.

The Company has filed with the Commission a registration statement on Form
S-4 (together with all amendments and exhibits, the "Registration Statement")
under the Securities Act of 1933, as amended (the "Securities Act") with respect
to the issuance of the Preferred Shares in connection with the Merger. This
Prospectus does not contain all the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Reference is made to the Registration Statement
and the Exhibits thereto for further information. Statements contained or
incorporated by reference herein concerning the provisions of any agreement or
other document filed as an Exhibit to the Registration Statement or otherwise
filed with the Commission are not necessarily complete and reference is hereby
made to the copy thereof so filed for more detailed information, each such
statement being qualified in its entirety by such reference.

The Company's securities are listed on the American Stock Exchange and
reports and other information concerning the Company can be inspected at 86
Trinity Place, New York, New York 10006-1881.

THIS PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT PRESENTED
HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE UPON REQUEST FROM
SANDRA W. WEBER, SECRETARY, THE WENDT-BRISTOL HEALTH SERVICES CORPORATION, TWO
NATIONWIDE PLAZA, SUITE 760, COLUMBUS, OHIO 43215, (614) 221-6000. IN ORDER TO
ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY MARCH 1,
1999.

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SUMMARY

The following is a brief summary of all material information contained
elsewhere in this Prospectus. This summary should be read in conjunction with,
and is qualified in its entirety by, the more detailed information and financial
statements included in this Prospectus. CERTAIN CAPITALIZED TERMS USED IN THIS
SUMMARY ARE DEFINED ELSEWHERE IN THIS PROSPECTUS AND CAN BE FOUND IN THE
GLOSSARY OF DEFINED TERMS LOCATED IN THE BACK OF THIS PROSPECTUS.

BACKGROUND AND REASONS FOR MERGER

The Merger is one component of the Company's overall restructuring effort,
entered into with the goal of consolidating the Company's holdings, thereby
giving the Company greater control over its operations. The Company believes
that this heightened control will lead to greater uniformity in its activities,
which has the potential to increase its efficiency and revenues. Since it is
anticipated that the Preferred Shares will be traded on AMEX and have quarterly
cumulative dividends, the Company believes that the Preferred Shares will be an
attractive investment for the Unitholders and others. This factor will
facilitate the Company's goal of increasing investor interest in the Company,
particularly since the Preferred Shares are convertible into Common Shares.

In furtherance of the foregoing goals, the Company began the process of
evaluating its business in 1997 and then began divesting itself of certain of
its businesses and expanding into promising markets. In June of 1998, the board
of directors of the Company and the General Partner (Wendt-Bristol Diagnostics
Company, as defined below) approved the taking of certain steps necessary to
consummate the Merger. No negotiations were entered into with any other parties
nor did the Company consider any other alternatives to the Merger.

THE MERGER

This Prospectus relates to the proposed merger (the "Merger") of
Wendt-Bristol Acquisition LLC, a Delaware limited liability company ("LLC"),
with and into Wendt-Bristol Diagnostics Company L.P., a Delaware limited
partnership (the "Partnership"). The merger is being proposed in accordance with
a Merger Agreement by and among the Company, the Partnership and LLC (the
"Merger Agreement").

The Depository Unit holders of the Partnership (the "Unitholders") are
being asked to approve the Merger as described in this Prospectus. Upon
completion of the Merger, the Unitholders shall receive Preferred Shares in
exchange for their Depository Units (the "Units"). The Unitholders, other than
the Company, will have the right to receive one (1) Preferred Share for every
two (2) Units owned by them. See "THE PREFERRED SHARES". Application is being
made for the Preferred Shares to be listed on the American Stock Exchange (the
"AMEX").

EXCHANGE VALUE

Every two (2) Units will be exchanged for one (1) Preferred Share. This
rate of exchange is based upon the amount the initial Unitholders paid for the
Units ($10) and the stated value of the Preferred Shares ($20). For further
discussion of this matter, see "EXCHANGE VALUE."

PARTNERSHIP SPECIAL MEETING

A special meeting of the Partnership will be held at the Company's center
located at 921 Jasonway Avenue, Columbus, Ohio 43214 on March 25, 1999 at 7:00
p.m., to consider and vote upon a proposal to approve and adopt the Merger
Agreement (the "Special Meeting"). Only holders of Units at the close of
business on February 2, 1999 are entitled to receive notice of and direct the
manner in which the Unitholder wants his vote to be cast by W-B Organizational
L.P., Inc. ("WBO"), the sole limited partner of the Partnership. Pursuant to the
Partnership Agreement, the Unitholders have no voting rights other than the
right to direct the casting of votes by WBO and to attend the Special Meeting.
A majority of the outstanding limited partnership interests, whether represented
in person or by proxy, is required in order for a quorum to be present at the
Special Meeting. The affirmative vote of a majority of the outstanding limited
partnership interests is necessary to approve and adopt the Merger Agreement and
authorize the Merger. There are currently 143,842 Units outstanding.

THE GENERAL PARTNER BELIEVES THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY TO BE FAIR AND IN THE BEST INTERESTS OF THE UNITHOLDERS AND
RECOMMENDS THAT UNITHOLDERS DIRECT WBO TO VOTE IN FAVOR OF THE MERGER.

THE COMPANIES

The Wendt-Bristol Health Services Corporation

The Company, a Delaware corporation, was originally organized under the
laws of the State of New Jersey on January 19, 1966, under the name of Temco
Products, Inc. and assumed its present name on October 26, 1992. The Company,
through its 100% subsidiary, The Wendt-Bristol Company ("W-B"), a Delaware
corporation that has been in existence since 1903, has evolved through the years
into an outpatient health care provider. The Company operates one nursing home
in Springfield, Ohio and is the owner or managing partner of four
multi-disciplinary diagnostic/radiology centers and a radiation therapy center.
The Company's address and phone number are as follows: Two Nationwide Plaza,
Suite 760, Columbus, Ohio 43215, (614) 221-6000.

Wendt-Bristol Diagnostics Company

WBDC was incorporated in the State of Ohio on February 17, 1987. W-B is a
controlling shareholder of WBDC. WBDC is the general partner of the Partnership
and was formed by W-B to facilitate the

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establishment of an outpatient medical diagnostic imaging center, which is
currently owned and operated by the Partnership. Throughout this Prospectus,
Wendt-Bristol Diagnostics Company is referred to as "WBDC" in its capacity as a
party to the Corporate Merger and as "General Partner" in its capacity as the
general partner of the Partnership. WBDC's address and phone number are as
follows: Two Nationwide Plaza, Suite 760, Columbus, Ohio 43215, (614) 221-6000.

Wendt-Bristol Diagnostics Company L.P.

The Partnership was organized in Delaware on May 28, 1987 and WBDC is its
sole general partner. W-B Organizational L.P., Inc. ("WBO") is the limited
partner of the Partnership and has assigned the economic rights to its limited
partnership interest to the Unitholders, as evidenced by the Units. The
Partnership owns and operates an outpatient medical imaging center specializing
in diagnostic imaging techniques, including magnetic resonance imaging (MRI), CT
Scans, Angio/Fluoroscopy Ultrasound, X-ray, Mammography, Bone Densitometry and
3-D imaging. The Partnership's address and phone number are as follows: Two
Nationwide Plaza, Suite 760, Columbus, Ohio 43215, (614) 221-6000.

Wendt-Bristol Acquisition LLC

LLC was organized in Delaware on September 17, 1998, solely for the purpose
of consummating the Merger and does not own or operate any business. LLC's sole
member is W-B. LLC's address and phone number are as follows: Two Nationwide
Plaza, Suite 760, Columbus, Ohio 43215, (614) 221-6000.

W-B Organizational L.P., Inc.

WBO was incorporated in Ohio on May 27, 1987 and is the sole limited
partner of the Partnership. WBO has assigned certain of its rights as a limited
partner to the Unitholders, as evidenced by the Units and to the extent set
forth in the Partnership Agreement. Consequently, the Unitholders are treated
as traditional limited partners for tax purposes and they have the power to
vote by directing WBO in how it votes the limited partnership interests it
holds. For all practical purposes, the Unitholders are limited partners. The
assignment mechanism was adopted to facilitate transferability of the Units. W-B
is the sole shareholder of WBO. WBO's address and telephone number are as
follows: Two Nationwide Plaza, Suite 760, Columbus, Ohio 43215, (614) 221-6000.

For an organizational chart depicting the relationship among the parties,
see "THE MERGER--GENERAL."

REASONS FOR THE MERGER

The following is a summary of the principal benefits of the Merger. This
summary is qualified in its entirety by the more detailed discussion in the
section entitled "THE MERGER--REASONS FOR THE MERGER" contained in this
Prospectus:

- The Merger creates the potential for substantially enhanced liquidity
of investment due to the conversion of the Units, which lack an
established trading market, into the publicly traded Preferred Shares
of the Company on an established exchange, conditioned upon the
approval of the Company's listing application.

- The Preferred Shares offer a specified return in the form of a
quarterly cumulative dividend, while the Units receive distributions
only when authorized under the Partnership Agreement.

- The Merger will afford the Company a greater degree of control over
its business operations and enhance the uniformity of its activities,
which has the potential to increase the efficiency of the Company and
favorably impact revenues and growth.

- The Preferred Shares are convertible into common stock of the Company,
which may increase the demand for common stock of the Company and
bolster the per share price of the Company's common stock.

- The Merger could result in greater trading activity in the Company's
common stock, enhancing investor interest in the Company and the
stock's price.

- The Preferred Shares will offer preferences over the Company's common
shareholders in the unlikely event of the liquidation of the Company.

RISK FACTORS

The Unitholders should consider the following risk factors, further
described at "RISK FACTORS", associated with Merger when evaluating the Merger:

- The possibility that the Company's listing application with AMEX could
be denied.

- The differences in rights of Unitholders and holders of the Preferred
Shares, including the fact that the Preferred Shares are nonvoting and
the Partnership is a finite-life entity while the Company is of
perpetual duration.

- The terms of the Merger may have been impacted by certain additional
or conflicting interests held by the General Partner and other parties
to the Merger.

- Certain adverse tax consequences for the Unitholders associated with
the Merger.

- The industries in which the Company operates are subject to extensive
governmental regulation and changes in those regulations could
adversely impact the Company's business.

- The absence of dissenter's rights.

- The Unitholders will be taking a different form of return on their
investment, namely, they will be moved from an investment with returns
based upon approved distributions subject to the Partnership Agreement
to dividends that must be declared by the Board of Directors of the
Company.

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FAIRNESS

The General Partner believes that the Merger is in the best interests of
and fair to the Unitholders. The Unitholders will receive a more liquid security
in exchange for those they presently hold, as it is anticipated that the
Preferred Shares will be traded on AMEX and they are convertible into the common
stock of the Company, which is already traded on the AMEX. Moreover, the
Preferred Shares are entitled to quarterly cumulative dividends and will afford
their holders preferences over the Company's common shareholders in the event of
the liquidation of the Company. The General Partner did not obtain a fairness
opinion with regard to the Merger. See "FAIRNESS OPINION."

THE PREFERRED SHARES

In connection with the Merger, the Company will issue to the Unitholders up
to 71,921 Preferred Shares on the basis of one (1) Preferred Share for every two
(2) Units. The total number of Preferred Shares issued in connection with the
Merger was based upon the Exchange Value and the total number of Units
outstanding at the time of the Merger.

The Preferred Shares will be nonvoting, convertible preferred stock of the
Company, designated Series 1, with a par value of $1.00 and a stated value of
$20.00. The Preferred Shares are entitled to cumulative dividends at a rate of
$1.20 per annum and are redeemable by the Company at a price of $24.00 per Share
and may be converted into the common stock of the Company (the "Common Shares")
at a rate of 6 2/3 Common Shares per 1 Preferred Share. See "THE PREFERRED
SHARES."

DISSENTERS' RIGHTS

If the Merger is approved, all Units will be converted to the right to
exchange the Units for Preferred Shares only. There are no dissenters' rights
under Delaware law.

REVIEW OF INVESTOR LISTS

Upon 20 days prior written notice, a Unitholder may receive a list of the
name and address of each partner and Unitholder of the Partnership, at such
Unitholder's expense.

CONFLICTS OF INTEREST

In considering the General Partner's recommendation that you vote in favor
of the Merger, you should be aware that the officers and directors of the
Company and its affiliates have interests in the Merger that are different from,
or in addition to, the interests of the Unitholders generally, including
interlocking management and certain ownership interests. For a more detailed
discussion of those matters, see "INTERESTS OF CERTAIN PERSONS IN THE MERGER."

ACCOUNTING TREATMENT OF MERGER

The transaction will be accounted for using the purchase method of
accounting in accordance with GAAP. Prior to the transactions, the Company,
through W-B, owns approximately 85% of WBDC and WBDC owns 50% of the
Partnership. Therefore, only the portion of the transactions resulting in the
Company acquiring the remaining interests of WBDC and the Partnership will be
accounted for under the purchase method of accounting.

FEDERAL INCOME TAX CONSEQUENCES

The Merger is taxable and Unitholders will be required to recognize gain
or loss as a result of the Merger. For further discussion of the tax
consequences of the Merger, see "THE MERGER--FEDERAL INCOME TAX CONSEQUENCES."

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

The following statements are or may constitute forward-looking statements:

(i) Certain statements, including possible or assumed future results
of operations of the Company contained in this Prospectus including any
forecasts, projections and descriptions of anticipated cost savings or
other synergies referred to herein, and certain statements incorporated by
reference from documents filed with the Commission by the Company including
any statements contained herein or therein regarding the development or
possible or assumed future results of operations of the Company's
businesses, the markets for the Company's services and products, regulatory
developments, and the effects of the Merger and Corporate Merger;

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(ii) any statements preceded by, followed by or that include the words
"believes," "expects," anticipates," "intends" or similar expressions; and

(iii) other statements contained or incorporated by reference herein
regarding matters that are not historical facts.

Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. You are cautioned not to place undue reliance on
such statements, which speak only as of the date thereof.

Among the factors that could cause actual results to differ materially are:
customer growth, the speed and degree to which competition enters those markets
in which the Company competes, acceptance by AMEX of the Company's application
for listing, state and federal regulatory and/or legislative initiatives, the
ability of the Merger and Corporate Merger to successfully enhance the
uniformity of the Company's activities and bolster its esteem among investors,
the economic climate, and other risks detailed from time to time in the reports
filed with the SEC by the Company and further discussed in this Prospectus. See,
"INVESTMENT CONSIDERATIONS."

The cautionary statements contained or referred to in this section should
be considered in connection with any subsequent written or oral forward-looking
statements that may be issued by the Company or persons acting on its behalf.
Except for its ongoing obligation to disclose material information as required
by the federal securities laws, the Company undertakes no obligation to release
publicly any revisions to any forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events, unless necessary to prevent such statements from becoming
misleading.

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RISK FACTORS

In addition to the other information contained in this Prospectus, the
following factors should be carefully considered in evaluating the Company and
its business in the context of the Merger.

NO GUARANTEE OF MARKET PRICE OF PREFERRED AND COMMON SHARES

There is no guarantee as to the prices at which the Preferred Shares will
trade after the merger and the Common Shares will trade upon conversion. This
uncertainty is, in part, attributable to the fact that Preferred Shares and
Common Shares will be issued in connection with other transactions. For a
further discussion of these transactions and how they might impact the value of
the shares, see "RISK FACTORS - RISKS ASSOCIATED WITH ADDITIONAL TRANSACTIONS."
Additionally, prior to the Merger, there has been no public market for the
Preferred Shares and there can be no assurance that an active trading market
will develop or be sustained. The market value of the Preferred Shares could
also be affected by numerous other factors, such as governmental regulatory
action, changes in the business, operations or prospects of the Company,
external market factors and the market's perception of the Merger and Corporate
Merger. If, as a result of these factors, the Preferred Shares decline
significantly in value, the market price of the Preferred Shares may not reflect
the Exchange Value.

RISKS ASSOCIATED WITH ADDITIONAL TRANSACTIONS

The Company will be simultaneously issuing and registering Preferred Shares
in connection with the merger of Wendt-Bristol Acquisition, Inc. (a wholly-owned
subsidiary of the Company) with and into WBDC (the "Corporate Merger"). In
addition, the Company intends to issue Preferred Shares for cash in non-U.S.
sales and register Preferred Shares for that purpose. The Preferred Shares to be
issued in connection with the cash offering and the Corporate Merger will be
Series 1 Preferred Stock, with the same rights and privileges of those shares
described in this Prospectus. Thus, there is the possibility that the Preferred
Shares may trade at prices below the value assigned to the Preferred Shares for
purposes of the Merger, due to the relatively high number of Preferred Shares
that could be issued. Also, the realization of all the potential benefits by the
Company of the Merger is partially dependent upon the approval of the Corporate
Merger and there is no assurance that the Corporate Merger will be approved by
the WBDC Shareholders, thereby adversely impacting the Company's strategy of
consolidating its operations.

PREFERRED SHARES DO NOT HAVE VOTING RIGHTS

The Preferred Shares are nonvoting and will not allow the holders of the
Preferred Shares to participate in the selection of the management of the
Company. Consequently, holders of the Preferred Shares will not be able to
directly influence the decision-making of the Company and forestall courses of
action they believe are adverse to their interests.

7
<PAGE> 11

PREFERRED SHARES ARE REDEEMABLE

The Preferred Shares are also subject to redemption by the Company. Thus,
the holders of Preferred Shares could lose their interest in the Company and
their right to receive future dividends at any time.

RISKS ASSOCIATED WITH CONFLICTS OF INTERESTS

The affiliated nature of the parties to the Merger raises the possibility
of conflicted interests playing a role in the structuring of the Merger. In
addition, the Company, Partnership and LLC share management and this
interlocking management structure could have caused the management of any of the
parties to base its decision-making on the interests of one of the other parties
to the Merger. Certain members of the management of the parties to the Merger
are shareholders of the Company and may have conflicted interests as a result.
Additionally, the Corporate Merger is being simultaneously conducted and WBDC is
the general partner of the Partnership. Furthermore, no unaffiliated
representative was retained by the parties to represent the interests of
Unitholders and no fairness opinion was obtained. Consequently, the structure of
the Merger and the terms of the Preferred Shares could have been motivated by
these conflicting interests rather than the best interests of the Unitholders.
See "THE MERGER - INTERESTS OF CERTAIN PERSONS IN THE MERGER."

DENIAL OF LISTING APPLICATION

The listing of the Preferred Shares on AMEX is conditioned upon the
acceptance of the Company's application for listing. If that application is
denied, the Preferred Shares will not be listed on an exchange and will not be
as readily transferable.

ADVERSE TAX CONSEQUENCES OF MERGER

The Merger will be taxable to the Unitholders, who will be required to
recognize gain or loss as a result of the Merger. For further discussion of the
tax consequences of the Merger, see "FEDERAL INCOME TAX CONSEQUENCES."

COMPETITION OF COMPANY

The health care industry is highly competitive and the Company faces
competition from other entities and institutions, both public and private. Some
of these institutions have greater financial and other resources than the
Company. These competitive forces, when coupled with changes in economic,
political or market conditions, could have an adverse impact upon the Company's
financial performance and the value of the Preferred Shares.

RISKS ASSOCIATED WITH THE COMPANY'S GOVERNING DOCUMENTS

Certain components of the Company's organizational structure also present
risks. The Company's Certificate of Incorporation contains provisions limiting
the remedies shareholders of

8
<PAGE> 12

the Company may seek for breaches of fiduciary duties by its directors. More
specifically, no director of the Company shall be personally liable to the
Company or its shareholders for monetary damages for a breach of fiduciary duty
unless the director breached such director's duty of loyalty, for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, upon the unlawful payment of dividends or an unlawful
stock purchase or redemption, or for any transaction from which the director
derived an improper personal benefit. These provisions could negatively impact
your ability to recover damages resulting from a breach of fiduciary duties by
the directors. The Company has also elected in its Certificate of Incorporation
not to be governed by the provisions of Delaware General Corporation Law, which
limit the types and timing of business combinations with interested shareholders
of the Company, making the Company more vulnerable to business combinations
initiated by interested shareholders.

REGULATORY CONCERNS

The health care industry is subject to extensive state and federal
regulation and changes in these regulations or a failure to comply with them
could have an adverse impact on the Company's business and the value of the
Preferred Shares. See "CERTAIN INFORMATION CONCERNING THE COMPANY."

DIFFERENT TAX TREATMENT OF COMPANY AND PARTNERSHIP

The tax treatment of the Partnership and the Company is vastly different,
as the Company is subject to federal tax as a C corporation, while the
Partnership is not subject to federal tax at all.

NO DISSENTERS' RIGHTS

Dissenting Unitholders are not entitled to receive cash based on an
appraisal of their Units or other dissenters' rights under Delaware laws. Thus,
if the Merger is approved, all of the Units will be subject to exchange for
Preferred Shares only.

CHANGE IN NATURE OF INVESTMENT

The Merger involves a fundamental change in the nature of the Unitholders'
investment in a finite-life entity with a life of 30 years from the date of its
formation and in which the Unitholders might receive a distribution upon
liquidation, to an investment in an infinite-life entity in which Shareholders
will recover their investment from the sale of their Preferred Shares and not
from liquidation proceeds. Consequently, the return of one's investment in the
Preferred Shares is dependent on the formation of a successful market for the
Preferred Shares. Additionally, the Unitholders will be moved from an investment
with returns based upon approved distributions subject to the Partnership
Agreement to one driven by dividends that must be declared by the board of
directors of the Company. The Company has not declared a dividend on its Common
Shares in the last several years, so there is the possibility that dividends
will not be regularly declared on the Preferred Shares, forcing the accumulation
of the quarterly dividends to which the holders of Preferred Shares are
entitled.

9
<PAGE> 13

FINANCIAL INFORMATION

SELECTED WENDT-BRISTOL HEALTH SERVICES CORPORATION
HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
AT OR FOR
THE NINE MONTHS
ENDED AT OR FOR THE YEAR ENDED DECEMBER 31,
SEP 30, 1998 ---------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues $ 5,416 $ 17,130 $ 17,534 $ 17,193 $ 16,024 $ 16,067
Income (loss) from continuing operations $ (59) $ 1,782 $ (246) $ 217 $ 204 $ (238)
Income (loss) from continuing operations
per common share (A) $ (0.01) $ 0.26 $ (0.04) $ 0.04 $ 0.03 $ (0.03)
Cash dividends declared per common share 0.00 0.00 0.00 0.00 0.00 0.00
Ratio of earnings to fixed charges .814 2.864 .704 1.167 1.220 1.010

BALANCE SHEET DATA:
Book value per common share $ 1.02 $ 1.04 $ 0.76 $ 0.79 $ 0.88 $ 0.86
Total assets $ 16,530 $ 17,645 $ 19,910 $ 19,394 $ 23,441 $ 20,033
Long-term debt $ 6,808 $ 6,034 $ 9,085 $ 6,432 $ 6,340 $ 6,927
Redeemable preferred stock $ - $ - $ - $ - $ - $ -
Stockholders' equity $ 6,308 $ 6,445 $ 4,742 $ 4,543 $ 7,200 $ 6,964
Shares outstanding at end of period 6,168,579 6,181,226 6,236,020 5,719,758 8,195,244 8,141,796

(A) Calculated on a diluted share basis
</TABLE>

Reference is hereby made to the Section entitled "CERTAIN INFORMATION
CONCERNING THE COMPANY" for information relating to the development of the
Company between 1993 and 1997. Such description provides those factors that
should be considered in the comparison of the financial information presented
above.

SELECTED WENDT-BRISTOL DIAGNOSTICS CO. L.P.
HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
AT OR FOR
THE NINE MONTHS
ENDED AT OR FOR THE YEAR ENDED DECEMBER 31,
SEP 30, 1998 ----------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues ..................................... $ 3,481 $ 4,143 $ 4,218 $ 4,087 $ 3,824 $ 3,821
Income (loss) from continuing operations ..... $ (131) $ (155) $ 405 $ 622 $ 212 $ 315
Income (loss) from continuing operations
per limited partner's unit ................ $ (1.74) $ (2.12) $ (0.14) $ 0.83 $ (1.38) $ (0.99)
Income (loss) from continuing operations
per general partner's share ............... $119,500.00 $149,527.00 $425,177.00 $501,856.00 $410,423.00 $456,992.00
Cash distributions per unit .................. $ 0.00 $ 1.00 $ 0.00 $ 1.00 $ 1.40 $ 2.10
Limited partners' share of income (loss) ..... $ (250) $ (305) $ (20) $ 120 $ (198) $ (142)

BALANCE SHEET DATA:
Book value per limited partners' unit ........ $ -- $ -- $ -- $ -- $ -- $ 1.65
Total assets ................................. $ 5,811 $ 5,677 $ 5,704 $ 4,685 $ 3,972 $ 4,612
Long-term debt ............................... $ 2,828 $ 3,118 $ 2,996 $ 1,448 $ 1,624 $ 2,322
Redeemable preferred stock ................... $ -- $ -- $ -- $ -- $ -- $ --
Total Partners' Capital ...................... $ 916 $ 1,047 $ 1,490 $ 1,085 $ 751 $ 942
Limited Partners' Capital .................... $ (214) $ (214) $ (206) $ (186) $ (162) $ 238
Units outstanding at end of period ........... 143,842 143,842 143,842 143,842 143,842 143,842
</TABLE>

Reference is hereby made to the Sections entitled "CERTAIN INFORMATION
CONCERNING THE COMPANY" and "CERTAIN INFORMATION CONCERNING THE PARTNERSHIP" for
information related to the development of the Company and the Partnership
between 1993 and 1997. Such description provides those factors that should be
considered in the comparison of the financial information presented above.

<TABLE>
<CAPTION>
Wendt-Bristol Health Services
--------------------------------------------------------------------------------
Historical Pro Forma
-------------------------------------- -------------------------------------
At or for the At or for the At or for the At or for the
Nine months year ended Nine mos year ended
9/30/98 12/31/97 9/30/98 12/31/97
---------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Book value per share $ 1.02 $ 1.04 $ 1.27 $ 1.33

Cash dividends/distributions
per share $ 0.00 $ 0.00 $ 0.00 $ 0.00

Income (loss) per share
from continuing operations $ (0.01) $ 0.26 $ (0.06) $ 0.21
</TABLE>

<TABLE>
<CAPTION>
Wendt-Bristol Diagnostics Co. L.P.
--------------------------------------------------------------------------------
Historical Pro Forma
------------------------------------- -------------------------------------
At or for the At or for the At or for the At or for the
Nine months year ended Nine mos year ended
9/30/98 12/31/97 9/30/98 12/31/97
---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C>
Book value per share $ 0.00 $ 0.00 $ 2.53 $ 2.65

Cash dividends/distributions
per share $ 0.00 $ 1.00 $ 0.00 $ 0.00

Income (loss) per share
from continuing operations $ (1.74) $ (2.12) $ (0.12) $ 0.42
</TABLE>

10
<PAGE> 14

THE MERGER

GENERAL

W-B has proposed the Merger in which (i) the Partnership and the LLC will
be merged, (ii) the separate existence of the LLC will cease and the Partnership
will be the surviving entity, (iii) every two (2) Units (other than those held
by WBDC) will be converted to the right to receive one (1) Preferred Share
(i.e., "Exchange Value"), and (iv) W-B Organizational L.P., Inc. ("WBO") and
WBDC will be the only limited partners of the Partnership and the General
Partner shall remain the general partner of the Partnership and those limited
partner rights assigned to the Unitholders via the Units will be vested in WBO.
Unitholders, upon 20 days prior written notice, may receive a list of the name
and address of each partner and Unitholder, at such Unitholder's own expense.

The Company, the Partnership and the LLC will consummate the Merger
pursuant to the terms thereof promptly after the affirmative vote of WBO based
upon the directions of Unitholders holding Units representing a majority of the
limited partnership interests. The Company will bear the costs associated with
the solicitation.

The following is a graphical representation of the relationship of those
parties that are participating in the Merger and the Corporate Merger:

PRE-MERGERS

The Wendt-Bristol Health Services Corporation(1)

The Wendt-Bristol Company

Wendt-Bristol Wendt-Bristol Wendt-Bristol Wendt-Bristol
Diagnostics Organizational Acquisition, Inc. Acquisition LLC
Company(2) L.P., Inc.

Wendt-Bristol
Diagnostics
Company L.P.(3)

POST-MERGERS

The Wendt-Bristol Health Services Corporation

The Wendt-Bristol Company

Wendt-Bristol Diagnostics Company Wendt-Bristol Organizational L.P., Inc.

Wendt-Bristol Diagnostics Company, L.P.

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

(1) Except as otherwise noted, each company is 100 percent owned. The Company
also has a number of other affiliated entities which are not reflected on
this chart and are not party to the transaction described herein.

(2) W-B owns approximately 85 percent of WBDC with the remaining shares held by
approximately 205 shareholders.

(3) WBDC is the sole general partner of the Partnership and Wendt-Bristol
Organizational L.P., Inc. is the limited partner, but has assigned its
rights as limited partner to the Depository Unitholders, who are the
general public. There are approximately 140 Depository Unitholders.

BACKGROUND

In hopes of strengthening its position in the markets in which it competes
and in the esteem of investors, the Company decided to seek ways in which to
energize its and its affiliates businesses and share prices. This process began
as a very broad-based evaluation of the Company's business prospects in early
1997 and narrowed to an investigation of the possibility of restructuring its
affiliates later in that same year. In furtherance of this restructuring and
throughout the course of 1997, the Company and its affiliates divested
themselves of certain of their businesses and expanded into promising markets.
For a discussion of the other steps the Company and its affiliates have taken in
furtherance of this restructuring, see "CERTAIN INFORMATION ABOUT THE COMPANY."

In mid-1998, the Company's management determined that providing investors
who held minority interests in its affiliates a more liquid investment in
exchange for their interests, which lack an established trading market, would be
beneficial in a number of different ways. First and foremost, it will allow
investors who no longer wanted to retain an ownership interest in the
Partnership to receive an interest in the Company and, if they choose, trade the
Preferred Shares in an established trading market. The Company believes that
this increased investment activity should favorably impact investors' interest
in the Company. In addition, the holders of the Preferred Shares will hold a
preferred position in relation to the holders of Common Shares in the unlikely
event of the liquidation of the Company. These benefits are further strengthened
by the fact that the Preferred Shares will grant quarterly cumulative dividends,
offering the Unitholders a specified return on their investment.

The Merger, when coupled with the Corporate Merger, will also afford the
Company a greater degree of control over its business operations and enhance the
uniformity of its activities, which has the potential to increase the efficiency
of the Company and favorably impact revenues and growth. The Preferred Shares
are also convertible into the Common Shares, which may increase the demand for
the Common Shares and bolster the per share price of the Common Shares. For a
more complete discussion of the benefits of the Merger, see "REASONS FOR THE
MERGER."

In furtherance of these plans, in June 1998, the Board of Directors of the
Company authorized the issuance of the Preferred Shares, the filing of a
registration statement with the Securities and Exchange Commission, the listing
of the Preferred Shares on the AMEX and the basic terms of the Merger.
Similarly, in June 1998, the Board of Directors of the General Partner approved
the basic terms of the Merger and approved the basic terms of the Corporate
Merger as a party thereto. Finally, effective September 16, 1998, the Board of
Directors of the Company authorized the issuance and registration of the
Preferred Shares to sell for cash.

The Company and its affiliates did not consider any alternative plans to
the Merger and Corporate Merger for the restructuring of its operations. For
further discussion of this matter, see "THE MERGER--CONSIDERATION OF
ALTERNATIVES." Consequently, no negotiations were entered into with other
parties nor were any contracts entered into regarding alternative transactions,
including mergers, consolidations, the sale of a significant portion of the
Partnership's assets or a change in control of the Partnership or any other
limited partnership.

PARTNERSHIP SPECIAL MEETING

A special meeting of the Partnership will be held on March 25, 1999 at
7:00 p.m., to consider and vote upon a proposal to approve and adopt the Merger
Agreement (the "Special Meeting"). Only holders of Units

11
<PAGE> 15

at the close of business on February 2, 1999 are entitled to receive notice of
and direct the manner in which the Unitholder wants his vote to be cast by WBO.
Pursuant to the Partnership Agreement, WBO will cast its voting of the limited
partnership interests in the manner directed by the Unitholders. A majority of
the outstanding limited partnership interests, whether represented in person or
by proxy, is required in order for a quorum to be present at the Special
Meeting. The affirmative vote of a majority of the outstanding limited
partnership interests is necessary to approve and adopt the Merger Agreement and
authorize the Merger. Approximately 6% of the outstanding Units are held by the
directors and officers of the Company and the General Partner. For a chart
reflecting this Unit ownership, see "MANAGEMENT OF THE COMPANY--SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."

TERMS OF MERGER AGREEMENT

The following is a summary of the material terms of the Merger Agreement.
This summary does not purport to be complete and is subject to, and qualified in
its entirety by, the terms of the Merger Agreement.

EFFECT OF THE MERGER. Under the terms of the Merger Agreement (i) the
Partnership and the LLC will be merged, (ii) the separate existence of the LLC
will cease and the Partnership will be the surviving entity, (iii) every two (2)
Units (other than those held by WBDC) will be converted to the right to receive
one (1) Preferred Share based upon the Exchange Value, and (iv) WBO along with
WBDC will be the only limited partners and the General Partner will remain the
general partner of the Partnership after the Merger and those rights assigned to
the Unitholders via the Units shall be vested in WBO. The directors and officers
of the Company and WBDC will remain unchanged.

CONDITIONS TO THE CONSUMMATION OF THE MERGER. The closing for the Merger
will take place promptly after the receipt of consents of Unitholders holding
units representing a majority of the limited partnership interests. Other
conditions to the closing, all of which may be waived in writing by the
appropriate party, are (i) the declaration of the effectiveness of the
registration statement for the Preferred Shares under the Securities Act of
1933, as amended, (ii) the approval of the Preferred Shares for listing on AMEX,
subject to official notice of issuance, (iii) all actions to be taken by the
Partnership and LLC in connection with the consummation of the Merger, and (iv)
all certificates, opinions, instruments and other documents required to effect
the Merger are completed to the satisfaction of the Partnership and LLC.

CONVERSION OF UNITS TO THE PREFERRED SHARES. Upon the effectiveness of the
Merger, each Unitholder will have such Unitholder's Units converted into the
right to receive those number of Preferred Shares represented by the product of
the Exchange Value multiplied by such Unitholder's Units. The "Exchange Value"
shall be one Preferred Share for two Units. The Exchange Value is based upon the
initial price the Unitholders paid for their Units, namely, $10, and the stated
value of the Preferred Shares, $20. This approach was used in an attempt to
allow Unitholders to receive a security that matched the value they originally
paid for their Units as consideration for the Merger.

The Company will not pay any dividend or make any distribution on the
Preferred Shares to any record holder of Units until the holder surrenders for
exchange his or its certificates which represent the Units. The Company will
instead pay the dividend or make the distribution to an exchange agent
designated by it (the "Exchange Agent") in trust for the benefit of the holder
pending surrender and exchange. The Company may cause the Exchange Agent to
return Shares and any dividends and distributions thereon remaining unclaimed
180 days after the effectiveness of the Partnership Merger, and thereafter each
remaining record holder of outstanding Units shall be entitled to look to the
Company (subject to abandoned property, escheat, and other similar laws) as a
general creditor with respect to the Shares and any dividends and distributions
thereon.

AMENDMENT OF THE MERGER AGREEMENT. The parties to the Merger Agreement may
amend any of its provisions at any time prior to the approval of the Merger by
the Unitholders with the prior authorization of their respective board of
directors, manager or general partner, as the case may be; provided, however,
that any amendment effected subsequent to the approval of Unitholders will be
subject to the restrictions contained in the Delaware Code. In order to be
valid, any amendment must be in writing and signed by all of the parties to the
Merger Agreement.

12
<PAGE> 16

TERMINATION OF THE MERGER AGREEMENT. Any time prior to the filing of the
Certificate of Merger with the Secretary of State of Delaware and with the prior
authorization of their respective board of directors, manager or general
partner, the Partnership, LLC and the Company may, by mutual written consent,
terminate the Merger Agreement. In the event the Merger and the Merger Agreement
fails to receive the requisite approval of the Unitholders, the Partnership, LLC
or the Company may terminate the Merger Agreement at any time upon written
notice to the other parties to the Merger Agreement.

For a discussion of the differences between the rights of the Unitholders
and the holders of the Preferred Shares, see "COMPARISON OF THE RIGHTS OF
HOLDERS OF PREFERRED SHARES AND UNITS."

NO FRACTIONAL PREFERRED SHARES

No fractional Preferred Shares will be issued by the Company in the Merger.
In lieu of receiving any fractional Preferred Share, each Unitholder who would
otherwise have been entitled to a fractional Preferred Share upon surrender of
Unit certificates for exchange will receive cash (without interest) in an amount
rounded to the nearest whole dollar.

REASONS FOR THE MERGER

The Company believes that the exchange of the Units, which lack an
established trading market, for the Preferred Shares, which (upon the approval
of the Company's listing application) will be traded on the AMEX, will result in
greater trading activity in the Company's securities, thereby bolstering
investor interest in the Company. Additionally, the Preferred Shares are also
convertible into the Common Shares, which may increase the demand for the Common
Shares and bolster the price of the Common Shares. Thus, the Unitholder will
also gain a more liquid and readily transferable security as a result of the
Merger. The Preferred Shares will have preferences over the Company's common
shareholders in the event of the liquidation of the Company. Moreover, the
Preferred Shares offer a specified return in the form of a quarterly cumulative
dividend, while the Units are entitled to distributions only when authorized
under the Partnership Agreement.

The Merger will also afford the Company a greater degree of control over
its business operations and enhance the uniformity of its activities, which has
the potential to increase the efficiency of the Company and favorably impact
revenues and growth. It is hoped that unifying the Company's holdings will
facilitate future restructurings and allow the Company to better position itself
to compete in the various markets in which it is involved. The Company believes
that these factors, when coupled with the Company's efforts over the past
several years to focus more directly on those markets which it believes to be
the most promising, may help bolster the Company's stock price and better face
the competitive challenges of the markets in which it competes.

CONSIDERATION OF ALTERNATIVES

W-B proposed the Merger, but the General Partner participated in
structuring the merger to the extent that the parties to the Merger share
management. For a discussion of this shared management structure, see "INTERESTS
OF CERTAIN PERSONS IN THE MERGER." Though the potential alternative of
continuing the operations of the Partnership as presently conducted was not
considered, such a course of action would have resulted in the Unitholders
retaining their less liquid securities that do not have the benefits of a
specified return or liquidation preference. The Company's restructuring
strategy, moreover, would have fallen short of its objective of refocusing its
businesses and increasing revenues through greater control over its operations.
In addition, the hope for a favorable impact on the Common Shares would not be
realized. The General Partner believes that these factors outweigh the benefits
of the continuation of the Partnership, which include (i) the Unitholders
maintaining an interest in the Partnership to pursue the same investment
objectives; (ii) the Unitholders being afforded the same tax advantages and not
be subject to federal income tax on the Partnership level; and (iii) the
Unitholders avoiding the risks associated with the Merger.

Additionally, the potential alternative of liquidating the Partnership was
not considered. Potential benefits of liquidating the Partnership would include
the avoidance of the risks associated with the Merger and the continued
operation of the Partnership. Liquidation would provide for final liquidation of
the Unitholders' investment and a possible distribution of cash, though not
necessarily in an amount that would allow

13
<PAGE> 17

Unitholders to realize their original investment. Also, the Unitholders would
have the potential to reinvest those funds received upon liquidation into
similar or different investments.

However, such a course of action would not allow the Unitholders or the
Company to realize those benefits associated with the Merger. The enhanced
liquidity due to the Preferred Shares AMEX listing (assuming the Company's
listing application is approved), and specified return in the form of cumulative
dividends associated with the Preferred Shares would not be realized.
Furthermore, the Company's restructuring strategy would fall short of its
objectives, since focusing on those businesses conducted by the Partnership is
central to the restructuring plan and liquidating the Partnership would,
therefore, be counterproductive. Also, the impact on the Common Shares might be
less significant and could potentially be negative.

The following table represents the value of consideration associated with
the alternatives discussed above:

<TABLE>
<CAPTION>
PREFERRED
UNITS SHARES
----- ------
<S> <C> <C>
NUMBER OUTSTANDING 143,842 (A)

EXCHANGE VALUE $10.00 $20.00

MARKET VALUE (B) (C)

NET BOOK VALUE ($1.49) N/A

GOING CONCERN VALUE ($1.49)(D) $20.00

LIQUIDATION VALUE $0.00 (E) $20.00(F)

ANNUAL DISTRIBUTIONS/
DIVIDENDS (@6%) $0.00 (G) $1.20
</TABLE>

(A) Authorized, Unissued 500,000
Proposed issuance: -------
S-4 Merger 71,921
S-4 Corporate Merger 42,857
S-1 Cash..Best efforts 325,000
-------
439,778

(B) Prices not available since units are not listed on any exchange. However,
initial offering (1987-1988) price was $10.00/unit. Recent broker quotes
have been approximately $3.00/unit.

(D) Same as net book value which is measuring the balance sheet on a going
concern basis.

(E) Unitholders share in the excess of liquidation
Proceeds after: (see 9/30/98 balance sheet)
Restoration of Unitholders capital $214,300
Distribution of General Partner's capital $1,130,000
----------
$1,344,300
Expected liquidation proceeds no greater than excess
of total assets less total liabilities $916,100

(F) Redemption value: $24.00/share

(G) It is expected that for the foreseeable future cash will not be available
for distribution due to operating requirements and repayments of advances
due to the General Partner.

FAIRNESS OPINION

The General Partner believes that the terms of the Merger and, more
specifically, the benefits afforded by the conversion of the Units to Preferred
Shares, are in the best interests of the Unitholders and the Partnership. The
General Partner did not obtain a fairness opinion regarding the Merger nor is
its opinion of the fairness of the Merger based on any report, opinion or
appraisal. The following are the factors the General Partner considered most
significant in determining the Merger to be fair to the Unitholders and the
Partnership:

- The Preferred Shares offer a specified return in the form of a
quarterly cumulative dividend, while the Units receive distributions
only when authorized under the Partnership Agreement.

- A majority of the assigned limited partnership interests must direct
WBO to approve the Merger for the transaction to take place.

The General Partner also considered the following factors in determining to
proceed with the Merger, though the General Partner assigned less weight to
these factors in its decision-making than those listed above:

- The Preferred Shares are convertible into common stock of the Company,
which may increase the demand for common stock of the Company and
bolster the per share price of the Company's common stock.

- The Merger could result in greater trading activity in the Company's
common stock, enhancing investor interest in the Company and the
stock's price.

- The Preferred Shares will offer preferences over the Company's common
shareholders in the unlikely event of the liquidation of the Company.

The following factors could materially impact the value of the Preferred
Shares and the fairness of the Merger to the Unitholders, and are discussed in
greater detail at "RISK FACTORS":

- The Unitholders will not have dissenters' rights.

- The possibility that the Company's listing application with AMEX could
be denied.

- The risk that the price of the Preferred Shares will fall below the
Exchange Value, which could prevent the Unitholders from realizing the
recovery of their original investment. The Company is engaging in
certain additional transactions which have the potential to impact the
price of the Preferred Shares.

- There are adverse tax consequences for the Unitholders associated with
the Merger. See "FEDERAL INCOME TAX CONSEQUENCES."

- The fact that the terms of the Merger may have been influenced by
certain additional or conflicting interests held by the General
Partners and the other parties to the Merger.

- The nature of the investment and the rights of the holders of the
Preferred Shares and of the Units are different in various ways, which
could impact the fairness of the Merger to the Unitholders.

EFFECTIVE TIME OF MERGER

The Merger shall be effective at the time the Certificate of Merger with
respect to the Merger is filed with the Delaware Secretary of State, or at such
later time as may be specified in the Certificate of Merger or such later date
as the parties may agree. It is anticipated that such filing will be made as
promptly as is practicable after the requisite approval of the Unitholders has
been obtained and the other conditions to the Merger have been satisfied or
waived.

ACCOUNTING TREATMENT OF MERGER

FEDERAL INCOME TAX CONSEQUENCES

No opinion of tax counsel relating to the Merger was obtained, however, the
following discussion describes the material federal income tax consequences that
may result from the Merger. This discussion is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"), applicable existing and
proposed Treasury Department regulations promulgated thereunder (the
"Regulations"), rulings of the Internal Revenue Service (the "Service"), and
applicable court decisions, all of which are subject to change. Any such change,
which may or may not be retroactive, could alter the tax consequences as
described herein. Furthermore, there is no assurance that there will not be
differences of opinion as to the interpretation of provisions of the Code and
Regulations and their application to the Merger.

Readers of this Prospectus should be aware that this discussion does not
address all United States federal income tax consequences that may be relevant
to certain individuals or entities in light of their particular circumstances,
such as those who are dealers in securities, subject to the alternative minimum
tax provision of the Code, foreign persons, insurance companies, banking
institutions, regulated investment companies, real estate investment trusts, or
other persons or entities to which special rules apply by virtue of the nature
of their specific activities. In addition, the following discussion does not
address the tax consequences under foreign, state or local tax laws.

CERTAIN TAX DIFFERENCES BETWEEN THE OWNERSHIP OF UNITS AND PREFERRED
SHARES. The Unitholders are treated as limited partners of the Partnership for
federal income tax purposes. The Partnership is not subject to federal income
taxation and, instead, each Unitholder is required to take into account his or
her share of

14
<PAGE> 18

income, deductions or loss of the Partnership, regardless of whether any cash is
distributed. The character of income to each Unitholder is dependent upon its
character to the Partnership. Upon consummation of the Merger, the Unitholders
will, in essence, receive Preferred Shares in exchange for their Units and
thereby become shareholders of the Company which is a corporation for federal
income tax purposes.

In contrast to the tax treatment of the Partnership, the Company is subject
to corporate income taxation. The Company's shareholders will only be taxed
based on the amount of distributions received from the Company. Each shareholder
of the Company will receive a Form 1099-DIV reporting the amount of taxable and
nontaxable distributions paid to him or her during the preceding year. The
extent to which such distributions are taxable depends upon the amount of the
Company's earnings and profits. The character of distributions to the Company
shareholders is not dependant on its character to the Company and is generally
characterized as ordinary dividend income to the Company shareholders. In
addition, such income is classified as portfolio income under the passive loss
rules. Furthermore, deductions and losses are not passed through to the Company
shareholders.

TAX CONSEQUENCES OF THE MERGER TO UNITHOLDERS. As the result of the
Merger, a Unitholder will, for federal income tax purposes, recognize gain or
loss equal to the difference, if any, between (i) such Unitholder's income tax
basis in his or her Units and (ii) the sum of the Exchange Value of the
Preferred Shares (i.e., $20.00 per Preferred Share) plus any cash such
Unitholder receives in lieu of a fractional Preferred Share. Except as described
below in the discussion pertaining to sec. 751 of the Code, the gain or loss
will be taxed as a capital gain or loss.

Section 751 of the Code to some extent requires a Unitholder to treat, for
federal income tax purposes, the disposition of his or her Units as a
disposition of the Unitholder's share of each of the Partnership's assets. In
particular, under Section 751 of the Code, the portion of gain or loss
recognized by a Unitholder which is attributable to the Unitholder's interest in
Partnership "unrealized receivables" (as defined in Section 751(c)) and
"inventory items" (as defined in Section 751(d)) is characterized as ordinary
income or loss. "Unrealized receivables" include (i) rights or payments for
goods delivered (or to be delivered) or services rendered (or to be rendered) to
the extent not previously included in the Partnership's income and (ii) ordinary
income the Partnership would be required to include in income under various
depreciation recapture provisions of the Code if the Partnership were to sell
all of its assets. "Inventory" includes, in addition to inventory or property
held primarily for sale in the ordinary course of business, any other property
of the Partnership which, on sale or exchange by the Partnership, would be
considered property other than a capital asset and other than Section 1231
property. The Partnership's "unrealized receivables" and "inventory" are
sometimes referred to as its "Section 751 assets".

After the Partnership's Section 751 assets are determined, the amount
realized, or purchase price, for a Unitholder's Units must be allocated among
the Partnership's Section 751 assets ("Unitholder's Section 751 Asset Price").
Generally, the allocation should be based on the Unitholder's share (based on
his proportionate partnership interest) of the fair market value of each of the
Partnership's assets. Recapture gain associated with depreciated property would
generally be allocated to those Unitholders who benefitted from depreciation
deductions attributable to the depreciated property during the life of the
Partnership.

Additionally, the portion of each Unitholder's basis in his Units
attributable to the Partnership's Section 751 assets must be determined
("Unitholder's Section 751 Asset Basis"). Generally, this determination is made
by finding the basis the Unitholder would have in his proportionate share of the
Partnership's assets if they were distributed to the Unitholder immediately
prior to the Merger.

The difference between the Unitholder's Section 751 Asset Purchase Price
and the Unitholder's Section 751 Asset Basis is ordinary income (or loss). The
difference between the balance of the amount realized by the Unitholder and the
balance of the Unitholder's tax basis is capital gain (or loss).

Regulation sec. 1.751-1(a)(3) requires each Unitholder to submit with his
or her income tax return for the tax year including the Merger a statement
containing certain information pertaining to the foregoing Section 751 analysis.
The Partnership will provide to each Unitholder a summary of information the
Unitholder may use in preparing such statement.

15
<PAGE> 19

STOCK EXCHANGE LISTING

Conditioned upon approval for listing, the Preferred Shares will be
publicly traded on AMEX.

INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the General Partner's recommendation that you vote in favor
of the Merger, you should be aware that the officers and directors of the
Company, the General Partner and their affiliates have interests in the Merger
that are different from, or in addition to, the interests of the shareholders of
the Company and the Unitholders. As a fiduciary of the Unitholders, the General
Partner owes the Unitholders both a duty of good faith and a duty of loyalty.
The General Partner's decision-making must be driven by the best interests of
the Partnership and not by dividend loyalties.

Interlocking Management. Marvin D. Kantor, Sheldon A. Gold and Reed A.
Martin (the "Management Group") are members of the boards of directors and
officers of the Company and WBDC and Mr. Gold is the manager of LLC. WBDC is the
general partner of the Partnership and a party to the Corporate Merger.

Ownership Interests. The entities that are parties to the Merger have
interlocking ownership structures, as they are affiliated companies. The Company
holds 100% of the outstanding common stock of W-B and W-B is the sole member of
LLC. W-B also holds 100% of the outstanding common stock of WBO and in excess of
85% of WBDC. WBDC is the sole general partner of the Partnership. The Management
Group also holds common stock in the Company. See "SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT."

No Unaffiliated Representative Retained. The Company and the General
Partner did not retain an unaffiliated representative to act on behalf of the
Unitholders for the purposes of negotiating the terms of the Merger or
determining the Exchange Value.

REGULATORY APPROVALS

Compliance with certain federal and state regulatory requirements relating
to offering the Preferred Shares and the consummation of the Merger is required.

EXPENSES OF MERGER

General. The terms "Merger Costs" mean all the costs associated with the
Merger. Assuming the Merger is approved, the Merger Costs are estimated to be as
follows:

SOLICITATION/COMMUNICATION COSTS

<TABLE>
<S> <C>
Printing.................................................... $4,000
Postage..................................................... $ 500
------
Subtotal.......................................... $4,500
</TABLE>

PRECLOSING MERGER COSTS

<TABLE>
<S> <C>
Legal Fees.................................................. $40,000
Registration, Listing and Filing Fees....................... $ 1,500
Accounting.................................................. $10,000
-------
Subtotal.......................................... $51,500
</TABLE>

16
<PAGE> 20

MERGER CLOSING COSTS

<TABLE>
<S> <C>
Miscellaneous............................................... $ 1,000
TOTAL MERGER COSTS.......................................... $57,000
=======
</TABLE>

Allocation of Costs. If the Merger is approved, all Merger Costs will be
paid by the Company. If the Merger is rejected, all Merger Costs will be borne
by the Company.

CERTAIN INFORMATION CONCERNING THE COMPANY

The Company, a Delaware corporation, was originally organized under the
laws of the State of New Jersey on January 19, 1966 under the name of Temco
Products, Inc. and assumed its present name on October 26, 1992. The Company,
through its 100% subsidiary W-B, a Delaware corporation that has been in
existence since 1903, has evolved through the years as an outpatient health care
provider. The Company's operations consist of ownership and operation of a
nursing home, acting as managing partner of two multi-disciplinary
diagnostic/radiology centers and a radiation therapy center, and wholly-owning a
third diagnostic center. These centers provide diagnostic imaging techniques,
including magnetic resonance imaging (MRI), CT Scans, ultra-sound, x-ray, bone
densitometry, mammography, fluoroscopy, out-patient angiography and, where
applicable, radiation therapy.

The nature of the Company's business has undergone changes over the past
several years. In 1993, the Company owned and operated three retail pharmacies,
two of which were located in Columbus, Ohio and one of which was located in
Canal Winchester, Ohio. The two nursing homes the Company owned and operated
were located in Columbus and Springfield, Ohio and had 147 and 100 beds
respectively. Through a wholly-owned subsidiary, Wendt-Bristol Home Health Care
Company, the Company conducted a Medicare-certified home health care agency,
which provided home health care services throughout the Franklin County, Ohio
area. WBDC, a subsidiary of the Company, was the general partner in the
Partnership, which owns and operates a multi-disciplinary diagnostic center.
Finally, W-B was a general partner in a limited partnership that owned a medical
office building located in Columbus, Ohio. These businesses activities employed
approximately 350 people.

By the end of 1994, that number had grown to approximately 400 employees.
The Company, through WBDC, opened its Alzheimer Patient Care Center in October
of that year in Columbus, a 75 bed long-term care facility that also contained a
geriatric day care center and physician offices for geriatric assessment. In
December of 1994, the medical office building referred to above was sold. By
early 1996 the Company employed approximately 450 people and in the fourth
quarter of that year, the center owned and operated by the Partnership opened a
remodeled suite to accommodate a new angiography/fluoroscopy unit.

In 1997, the Company sold, through its subsidiaries, two of its three
nursing homes, including its Alzheimer's and related syndromes facility, and two
of its three retail pharmacies. The Company also ceased operations of its
Medicare-certified home health agency, which had conducted business through
Wendt-Bristol Home Health Care Company, a wholly-owned subsidiary of the
Company. The number of persons employed by the Company stood at approximately
400 in early 1997. Additionally, in the fourth quarter of 1997, the Company
opened a radiation therapy center in which it is a partner and manages the
facility.

The Company plans to selectively and aggressively expand its diagnostics
and radiation therapy business activity. During October of 1998, the Company has
commenced construction of a major 31,000 square feet, two-building center
including radiology, nuclear medicine, cytology, radiation therapy, Positron
Emission Tomography (the first PET Scanner in central Ohio), and a therapy and
rehab center. WBDC has a participating partnership relationship (20%) in the
rehab center, a 22 1/2% interest and management in the radiation therapy, and
100% ownership in the radiology, PET, nuclear and cytology operations. WBDC also
has a 50% interest in the land and buildings associated to the new center. The
Company also broke ground on previously acquired land adjacent to its Kenny Road
diagnostic and radiology facility, to construct a Women's Health Center
dedicated to the early detection of breast disease including an ambulatory
surgery unit for breast surgery. The Company's final retail pharmacy, located in
a downtown Columbus, Ohio department store, was sold in December 1998.

The Company receives a fee (a percentage of collected revenues) for those
operations where it serves as a managing partner.

The Company's primary activities are currently located in Central Ohio.

COMPETITION. Though the Company's business activities are subject to a
number of competitive forces, they are fairly regional in scope. Generally
speaking, the Company's nursing home faces competition primarily from nursing
homes located within driving distance of Springfield, Ohio. Similarly, the
customers of diagnostic and radiation therapy centers generally do not travel
far from home to have those services performed, and the competitors of the
Company are, therefore, located in the metropolitan Columbus and Newark, Ohio
area.

The diagnostic and radiation therapy centers component of the Company's
business is subject to competition from not only other independent centers, but
hospitals and hospital-affiliated centers as well. In recent years, the
pressures imposed by "managed care" insurers have forced the Company's centers
to reduce their prices significantly. Moreover, hospitals in the Columbus, Ohio
market have fairly recently begun to expand and build new centers. The hospitals
are at a competitive advantage related to their ability to come into contact
with potential customers immediately when the patient is hospitalized when they
becomes aware of the need for therapy. The Company's centers, however, do not
have to deal with the complications of admitting their customers and they also
have more flexible hours of business, which appeals to many customers.

The nursing home operated by the Company faces competition from both long
and short-term care facilities. The Springfield area has recently renovated
facilities, which gives those nursing homes an advantage in attracting new
residents. However, the Company's facility has recently converted one wing in
order to accommodate Alzheimer's patients.

NURSING HOMES. The Company owned and operated two nursing homes in
Columbus, Ohio (147 beds and 75 beds) until December 31, 1997 and leases (with
an option to buy) the premises and operates the one remaining nursing home in
Springfield, Ohio (100 beds).

MEDICAL AND RELATED SERVICES. During February 1987, W-B formed WBDC for
the purpose of establishing an outpatient medical diagnostic imaging center. The
center was financed through the formation of the Partnership, of which WBDC is
the general partner and currently receives management fees in addition to its
share of the profits. The center opened in April 1988 in Columbus, Ohio. The
center specializes in diagnostic imaging techniques, including magnetic
resonance imaging (MRI), CT Scans, Ultrasound, X-ray, Mammography, Bone
Densitometry and 3-D imaging. In the fourth quarter of 1996, the Center opened a
suite to accommodate a new angiography/fluoroscopy unit.

EMPLOYEES: LABOR RELATIONS. The Company had approximately 215 employees at
December 31, 1998. The Company considers its relations with its employees to be
good.

PATENTS AND TRADEMARKS. The Company owns registered trademarks, including
"the Best of Health!", which are utilized in connection with the marketing of
Company services and products.

17
<PAGE> 21

INDUSTRY SEGMENTS. The operations of the Company and its subsidiaries fall
within two industry segments: Nursing homes; and Medical services and other.
Additional information about each of the industry segments, for the respective
periods indicated, follows:

Financial information by industry segments for the years ended December 31,
1997, 1996 and 1995 is as follows:

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues/sales to unaffiliated customers
Nursing homes..................................... $13,428,624 $13,147,964 $12,604,828
Medical services and other........................ 3,701,627 4,386,166 4,587,733
Operating income (loss):
Nursing homes..................................... 1,560,091 865,837 857,040
Medical services and other........................ (698,442) (727,606) (262,639)
Equity in earnings of affiliates:
Nursing homes..................................... -- -- --
Medical services and other........................ 348,206 425,176 501,856
Identifiable assets:
Nursing homes..................................... 9,291,623 13,311,345 12,353,302
Medical services and other........................ 8,129,602 6,392,437 6,854,823
Investment in net assets of affiliates:
Nursing homes..................................... -- --
Medical services and other........................ 1,909,443 1,696,179 1,271,003
Depreciation expense
Nursing homes..................................... 209,502 354,152 365,780
Medical services and other........................ 150,134 155,844 147,239
Capital expenditures
Nursing homes..................................... 278,606 184,143 178,880
Medical services and other........................ 315,341 34,900 152,846
</TABLE>

REGULATION OF THE HEALTH CARE INDUSTRY. The Company must comply with
extensive federal, state and local government regulations applicable to the
health care industry and the pharmacy business.

Nursing homes are subject to federal and state government regulation,
including the necessity of obtaining and maintaining a license, certification
for participating in the Medicare and/or Medicaid programs, and/or registration.
There are also licensing requirements for nurses and other professional staff of
the nursing home. The operations and activities of nursing homes are also
affected by the Medicare/Medicaid conditions of participation and other relevant
federal and local laws. Activities of nursing homes which are regulated,
include, but are not limited to, release of medical records, patient
confidentiality rights and the dispensing of drugs. In addition, there are
federal and state requirements as to patient rights. Failure to abide by the
federal and state laws governing the operations of nursing homes, including the
requirements governing the foregoing areas, leads to termination of licensure
and/or decertification and loss of reimbursement, private enforcement rights by
the patient, and other sanctions.

The State of Ohio currently licenses nursing homes which are privately
owned and operated. A private owner cannot operate a nursing home without a
license. In addition to licensure requirements, in the case of long-term care
facilities, the Ohio Department of Health, the Ohio Department of Human
Services, and the United States Department of Health and Human Services are the
principal regulatory agencies to whose jurisdiction the Company is subject.

The Company remains in good standing with all requisite agencies.

18
<PAGE> 22

The Company also may be affected, directly or indirectly, by legislation
affecting medical cost reimbursements. In recent years, Congress has enacted
legislation aimed at controlling the cost to certain patients of medical
products and services through the regulation of the primary federal and state
reimbursement programs: Medicare, a federal program for certain elderly or
disabled patients and certain patients suffering from end stage renal disease,
and Medicaid, a jointly sponsored federal and state program which focuses on
assisting certain qualified recipients.

Legislative proposals to regulate or control health care costs and to
institute a national health insurance program have been made from time to time
and are currently receiving further consideration. Because these proposals vary,
their potential effect on the health care industry also vary. If, in the future,
legislation or regulations were to be adopted that would significantly reduce
governmental reimbursement rates or rates charged to private-pay patients, such
legislation or regulations could have a material adverse effect on the Company.
Because a significant portion of all nursing home revenues on an industry-wide
basis are derived from the federal and state governments, the Company and the
industry as a whole will continue to be affected by changes in government
programs and regulations.

REQUIREMENT OF CERTIFICATE OF NEED. Under the current Certificate of Need
("CON") law, codified in sections 3702.51-3702.68 of the Ohio Revised Code,
there is a moratorium on the approval of new nursing home beds until June 30,
1999. In recent years, CON laws and regulations have been relaxed and even
eliminated in certain instances.

The acquisition of an MRI does not require a CON and is not reviewable
(unless the cost is $2 million or more), but does require filing a notice of
intent with the Director of Health and the local health care agency 60 days
prior to the purchase.

New construction or renovation of a nursing home costing $2 million or more
requires a CON. Capital expenditures of $2 million or more on behalf of a health
care facility in connection with the provision of a health service do require
filing a notice of intent with the Director of Health and the local health
agency 60 days prior to obligating the capital expenditure.

The Company's business operations and plans must comply with the foregoing
laws. There can be no guarantee that such laws will not be expanded in the
future.

MANUFACTURE OF MEDICAL EQUIPMENT. Until October 1991, the Company was also
engaged in the business of manufacturing durable medical equipment and furniture
through its Healthcare Division located in Passaic, New Jersey.

On October 1, 1991, the Company sold all of the assets (other than the real
estate and plant thereon, which is presently leased to the buyer) of its
Healthcare Division to a wholly-owned subsidiary of Graham-Field Health
Products, Inc., pursuant to an Agreement dated August 31, 1991, between the
Company and Graham-Field, Inc., as amended on October 1, 1991.

19
<PAGE> 23

The New Jersey Department of Environmental Protection and Energy (the
"Department") determined that the Passaic, New Jersey, real estate of the
Company did not completely comply with applicable New Jersey laws and
regulations pertaining to the environment. The contamination in question had
resulted primarily from underground tanks, long abandoned by prior owners of the
site, and the contents thereof. All of such tanks have been removed by the
Company. In part the contamination was also attributable to the method,
initiated by prior operators, of disposal of solvents. The Company has incurred
total costs of $1,078,000 related to environmental matters in New Jersey, of
which $241,000 was spent in the five fiscal (calendar) years ended December 31,
1997.

PROPERTIES

The Company leases approximately 7,200 square feet of space in a downtown
Columbus, Ohio, office building which serves as the Company's, WBDC's, LLC's and
the Partnership's general offices.

In addition, a warehouse (1,000 square feet) is leased in Columbus, Ohio to
store records and durable medical equipment. The Company closed two pharmacies
during 1997: one leased premises in Columbus, Ohio (4,000 square feet) and one
leased premises in Canal Winchester, Ohio (4,000 square feet). The Company sold
its only remaining pharmacy in 1998, which leased space in a department store in
downtown Columbus, Ohio (3,300 square feet).

The facilities of the Partnership consist of an 8,000 square foot,
two-story building in Columbus, Ohio, which serves as its general offices and
diagnostic and radiology center; such owned facilities are subject to mortgage
indebtedness in the amount of approximately $676,000 at December 31, 1998.

In February 1998, a subsidiary of the Company opened a 3,200 square feet
diagnostic center in Granville, Ohio. This one story center, Wendt-Bristol
Erinwood, operates on leased premises.

The nursing homes of the Company operated during 1997 consisted of one
owned 147-bed home in Columbus, Ohio, (sold at December 31, 1997), one owned
75-bed Alzheimer's and related syndromes center (sold at December 31, 1997) and
one 100-bed home with leased facilities in Springfield, Ohio. The lease expires
in July, 2015. In November, 1994 the Company acquired approximately 2 acres of
land adjacent to the Alzheimer's center for approximately $144,000. The property
is not subject to any mortgage indebtedness and is being considered by the
Company for the future development of a diagnostic, Women's Health and/or
radiation therapy center.

The present aggregate annual rentals of all remaining property leases
referred to are approximately $528,000 and their terms have expiration dates
ranging through July 2015.

The Company believes that the facilities described or referred to above are
adequate and sufficient for its present needs and requirements. It should also
be noted that the Company has been pursuing the acquisition/lease of facilities
to accommodate the operations of additional radiological and diagnostic ventures
formed with unrelated third parties.

The Company owns land and a plant located in Passaic, N.J., which were
formerly used by its Healthcare Division (manufacturer of durable medical
equipment), which was sold on October 1, 1991. This property was leased to the
purchaser at the time of the transaction and the mortgage amortization schedule
coincides with the term of the lease.

20
<PAGE> 24

CERTAIN INFORMATION CONCERNING THE PARTNERSHIP

The Partnership was formed as a Delaware limited partnership on May 28,
1987 with the purpose of establishing an outpatient medical diagnostic imaging
center. The center opened in April 1988 in Columbus, Ohio. WBDC is its general
partner and WBO the limited partner, though its limited partnership rights have
been assigned. WBDC currently receives 50% of the profits before depreciation in
addition to management fees. The center specializes in diagnostic imaging
techniques, including magnetic resonance imaging (MRI), CT Scans, Ultrasound,
X-ray, Mammography, Bone Densitometry, Angio/Fluoroscopy and 3-D imaging. In the
fourth quarter of 1996, the center opened a second floor addition for its
support services in order to accommodate a new angiography/fluoroscopy suite on
the first floor. The Partnership directly employs 44 individuals and its
business activities are confined to the Columbus regional area.

The Partnership's business activities are limited to the medical
diagnostics field and it does not participate in any other industries. As such,
the Partnership's business is not seasonal in nature and not dependent on any
particular raw material. The Partnership serves a variety of patients in the
central Ohio area and is not dependent upon one particular customer or source of
customers or contractual relationships with the government., with the exception
of governmental medical reimbursement programs (which are a minimal portion of
its revenues). The Partnership has contractual relationships with insurance
companies which are important to its business. The Partnership does not engage
in research and development activities.

INVESTMENT OBJECTIVES. Upon formation, the Partnership engaged in a public
offering of the Units. The offering raised approximately $1.5 million dollars,
all of which was spent during 1987 and 1988 in connection with the establishment
and commencement of operations of the Partnership. Original Unitholders have
received in excess of 100% of their initial purchase price for the Units. The
Partnership's sole purpose initially was to establish an outpatient medical
diagnostic imaging center and this objective has been accomplished. The
Partnership's present investment objectives are to preserve invested capital,
maximize the potential for capital appreciation and to expand its revenues. The
Partnership has maintained its objective of ensuring that it can offer a wide
range of imaging techniques utilizing equipment that is upgraded to the highest
standards in the industry. In addition to these upgrades, the center has added
new procedures as indicated by the addition of angiography/fluoroscopy. While
there is a market development period for any new procedures, management believes
that utilization is improving and will continue to improve with newly developed
sources of customer base. During this growth period (sales increased
approximately $355,000 during the nine months of 1998 compared to 1997), costs
have increased to accommodate the expected further growth. As a result of the
number of modalities offered, managed care insurers are able to exercise their
preference for "one-stop" multiple procedure facilities such as the center.
Additionally, the ability to offer similar services at other WBDC centers, as
well as shares marketing, has enabled the center to attract insurers interested
in procedures that are offered in several metropolitan Columbus locations.

FINANCIAL DEVELOPMENTS. Neither the Partnership nor the General Partner has
experienced any material adverse financial developments since the beginning of
the most recently completed fiscal year (1997). This absence of material adverse
financial development is evidenced by the fact that WBDC has separately opened
or commenced the initial stages of opening additional facilities (most notably
the November 1998 opening of a 20,000 square foot combination imaging center
including P.E.T., the first in central Ohio) and radiation therapy facility;
this facility also features nuclear medicine. Additionally, WBDC, in combination
with the Partnership, will be opening (in the first quarter of 1999) a Women's
Health Center as an addition to the existing Partnership center.

CERTAIN INFORMATION REGARDING COMPANY STOCK AND PARTNERSHIP UNITS

Prices are not available for the Units, as they are not listed on any
exchange.

Price Range of Common Stock of the Company:

<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C> <C> <C>
1996
1st Quarter................................................. 3/4 7/16
2nd Quarter................................................. 1 1/2 1/2
3rd Quarter................................................. 1 3/4
4th Quarter................................................. 1 3/4 1 1/8

1997
1st Quarter................................................. 1 5/8 1 1/4
2nd Quarter................................................. 1 7/16 1
3rd Quarter................................................. 1 1/2 1
4th Quarter................................................. 1 7/16 1 1/16

1998
1st Quarter................................................. 1 3/8 1 1/16
2nd Quarter................................................. 1 5/8 1 1/8
3rd Quarter................................................. 1 5/8 1 1/2
4th Quarter................................................. 1 3/8 1
</TABLE>

As of December 31, 1998, there were approximately 1,000 shareholders of the
Company's Common Stock.

PERFORMANCE GRAPHS

This chart shows the Company's performance in the form of cumulative total
return to shareholders from December 31, 1992 until December 31, 1997 in
comparison to Standard and Poor's 500 and Standard and Poor's 500 Healthcare
Composite Index.

TOTAL SHAREHOLDER RETURNS
(DIVIDENDS REINVESTED)

<TABLE>
<CAPTION>
ANNUAL RETURN PERCENTAGE
YEARS ENDING
------------------------------------------
COMPANY/INDEX DEC 93 DEC 94 DEC 95 DEC 96 DEC 97
------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Wendt-Bristol Health Svc Cp....................... (25.00) (41.73) 28.60 166.90 (16.67)
Health Care-500................................... (8.40) 13.12 57.85 20.75 43.72
S&P 500 Index..................................... 10.08 1.32 37.58 22.96 33.36
</TABLE>

<TABLE>
<CAPTION>
INDEXED RETURNS
YEARS ENDING
---------------------------------------------------
BASE
PERIOD
COMPANY/INDEX DEC 92 DEC 93 DEC 94 DEC 95 DEC 96 DEC 97
------------- ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Wendt-Bristol Health Svc Cp............... 100 75.00 43.70 56.20 150.00 125.00
Health Care-500........................... 100 91.60 103.61 163.55 197.49 283.82
S&P 500 Index............................. 100 110.08 111.53 153.45 188.68 251.63
</TABLE>

No cash dividends have been declared to date on the Common Shares. In
November of 1990, the Company paid a stock dividend on the Common Shares.

21
<PAGE> 25

MANAGEMENT OF THE COMPANY

DIRECTORS AND OFFICERS OF THE COMPANY

The following table and the text following the table set forth certain
information with respect to the Directors and Executive Officers (being all of
the directors of the Company, except for Dr. Penn, Mr. Del Ponte, Mr. Levine and
Mr. Fernie) of the Company. Each Director serves until the next annual meeting
of stockholders of the Company and until his successor is elected and qualifies,
unless such Director resigns or dies prior thereto. Each Executive Officer
serves at the pleasure of the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE CURRENT POSITIONS WITH COMPANY
- ---- --- ------------------------------
<S> <C> <C>
Marvin D. Kantor........... 70 Chairman of the Board, Director
Sheldon A. Gold............ 55 President, Treasurer, Chief Executive Officer,
Director, member of Audit Committee
Reed A. Martin............. 45 Executive Vice President, Chief Operating Officer
and Director
Harold T. Kantor........... 65 Vice Chairman of the Board, Director
Paul H. Levine............. 58 Director, member of Audit Committee
Gerald M. Penn............. 61 Director, Vice President of Medical Affairs (1998)
Clemente Del Ponte......... 47 Director
Charles R. Cicerchi........ 39 Vice President of Finance, Principal Financial and
Accounting Officer
David E. Fernie............ 51 Director; member of Audit Committee
</TABLE>

Marvin D. Kantor has been Chairman of the Board since May 1988; prior to
June 1993 he had also been President and Chief Executive Officer of the Company
and W-B since May 1988. In addition, he is a Director of all of the Company's
subsidiaries. He is a brother of Harold T. Kantor.

Sheldon A. Gold is a certified public accountant and has been President and
Chief Executive Officer of the Company since June 1993. Prior thereto and since
March 1992 he had been Vice Chairman of the Board and since May 1988 he had been
Executive Vice President, Treasurer, and Chief Financial and Accounting Officer
of the Company. He again became Treasurer and Chief Financial and Accounting
Officer of the Company in July 1992, until May, 1996. In addition, he has been a
Director of the Company since May 1988. He has also been the President of W-B
since June 1993, Executive Vice President between 1979 and June 1993, and Chief
Financial and Accounting Officer of W-B since 1979 through May 1996.

Reed A. Martin, elected as a Director in May 1992, has since June 1993 been
Executive Vice President and Chief Operating Officer, since May 1991 he had been
a Senior Vice President of the Company supervising operations. Mr. Martin is a
son-in-law of Marvin D. Kantor.

Harold T. Kantor has been Vice-Chairman since June 1993 and a Director of
the Company since May 1988. In addition, he has been Vice President of W-B since
October 1985. He is a brother of Marvin D. Kantor.

Paul H. Levine has been a Director since January, 1990 and serves on the
audit and stock option committee. He is President of Nichols and Levine Asset
Management, Inc., a registered investment advisor. Mr. Levine is an attorney and
a certified public accountant and has been active in venture capital, investment
banking and financial consulting since 1972. He is also a Director of Learning
Technologies, Inc.

Dr. Gerald M. Penn, M.D., Ph.D., was elected as a director on February 8,
1995 and became the Vice President of Medical Affairs of the Company on January
1, 1998. He serves on the stock option committee and also served on the audit
committee through December 31, 1997. Dr. Penn was previously Chairman and
Medical Director of the Department of Pathology at Grant Medical Center
1981-1996. Educated at The Ohio State University, Doctor Penn received his
medical degree from the College of Medicine and a doctoral

22
<PAGE> 26

degree in biochemistry. He completed a pathology residency at University
Hospital and postgraduate training at The Rockefeller University, New York, NY.
He is board certified in clinical and anatomical pathology, immunopathology and
hematopathology. He serves on the Board of Trustees of the Columbus Medical
Association Foundation.

Clemente Del Ponte was elected as a director of the Company on June 18,
1997. For the past five years he has been the managing director of McBridge
Advisory, Ltd., an import/export consulting agency. Prior thereto, he was an
independent consulting agent. Mr. Del Ponte resides in Lugano, Switzerland.

Charles R. Cicerchi is a certified public accountant and has been Vice
President of Finance since joining the Company in September, 1994. Prior
thereto, he was Controller of Speer Industries, a mechanical contractor, where
he was responsible for all accounting and treasury functions from the period
1990 to 1994. Since May, 1996 he has been the Principal Financial and Accounting
Officer of the Company.

David E. Fernie was elected as a director of the Company on July 30, 1998
and is a member of the Audit Committee. He has been Professor of Education at
Ohio State University since 1984. Prior to that, he was an Assistant Professor
at the University of Houston. He received his Ed.D. from University of
Massachusetts at Amherst and his Bachelors degree in political theory from
Harvard College.

After the consummation of the Merger, the directors of the Company will be
unchanged.

EXECUTIVE COMPENSATION

GENERAL

The following table sets forth the total annual compensation paid or
accrued by the Company and its subsidiaries to or for the account of (i) the
President (the chief executive officer) of the Company and (ii) for the
Company's most highly compensated executive officers other than the chief
executive officer who were serving as executive officers at December 31, 1997
and with respect to each of whom such compensation exceeded $100,000. The
Chairman of the Board, Marvin D. Kantor, determines executive officer
compensation.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
NAME AND -------------------- OPTIONS/ ALL OTHER
PRINCIPAL POSITION YEAR SALARY ($) SARS(#) COMP. ($)**
- ------------------ ----- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Sheldon A. Gold................................ 1997 $160,000 * $15,532
President and Chief Executive Officer 1996 $150,000 50,000/0 --
1995 $140,000 * --
Marvin D. Kantor............................... 1997 $140,000 * $65,028
Chairman of the Board 1996 $130,000 * $75,866
1995 $127,404 * $65,028
</TABLE>

- ---------------
* Not applicable

** Includes life insurance premiums paid by the Company for each of named
persons (see Note 11 of the Notes to the Consolidated Financial Statements
herein). For the fiscal year ended December 31, 1997, the amounts paid by the
Company for each of the named persons is:

<TABLE>
<CAPTION>
LIFE
NAME INSURANCE
- ---- ---------
<S> <C>
Sheldon A. Gold............................................. $15,532
Marvin D. Kantor............................................ $65,028
</TABLE>

23
<PAGE> 27

OPTIONS

The following table sets forth information respecting the grant by the
Company of options to purchase shares of its Common Stock and other information
related to options granted by the Company:

OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
--------------------------------------------------------------------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE
UNDERLYING GRANTED TO OR BASE GRANT DATE
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION PRESENT
NAME GRANTED (#) FISCAL YEAR ($/SH) DATE VALUE ($)
- ---- ------------ ------------ -------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sheldon A. Gold................ 25,000/0 8.2%/0 1.3125 10/15/2003 32,813
</TABLE>

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS
FY-END-# SHRS AT FY END-S
SHARES --------------- -------------
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
ON EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
----------- -------- --------------- -------------
<S> <C> <C> <C> <C>
Sheldon A. Gold.......................... 0 0 0/0 $103,125/0
</TABLE>

All options held by Mr. Sheldon A. Gold were exercisable at December 31,
1998. All were "in-the-money". American Stock Exchange reported quotations for
the Common Stock of the Company on December 31, 1998, are: high, $1.375; low
$1.125; and close, $1.375; such prices on January 27, 1999 are: high, $1.125;
low, $1.0; and close, $1.125. The exercise price of the options of Mr. Sheldon
A. Gold range from $.875 to $1.3125 and the options expire ranging from May 23,
2001 to October 15, 2003.

STOCK OPTION PLAN

In 1983, the Company adopted an Incentive Stock Option Plan which was
amended in 1989 and 1998 (as amended, the "Plan"). Pursuant to the Plan, the
Company is authorized to grant stock options to purchase up to 500,000 shares of
Common Stock of the Company, subject to anti-dilution provisions, to key
personnel, including eligible directors, officers and employees of the Company.
In the event that any option granted under the Plan shall terminate prior to its
exercise in full for any reason, then the shares subject to the option not
acquired by exercise of the option shall be added to the shares otherwise
available for the grant of options under the Plan. Options granted under the
Plan may be those intended to qualify as "incentive stock options", as defined
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
those not intended so to qualify. At December 31, 1998, options to purchase an
aggregate of 48,000 shares of Common Stock of the Company, subject to
anti-dilution provisions, could still be granted under the Plan.

The Plan is currently administered by a Committee of the Board of Directors
of the Company consisting of Messrs. Levine and Penn, which have the authority
(except with respect to stock options to non-employee directors which are
mandated by the Plan) to determine the grantees of the options, whether options
granted are to be "incentive stock options" or non-incentive stock options
except that non-employee directors must receive non-incentive stock options, the
number of shares to be covered by each option, the time at which each option is
exercisable, the method of payment, and certain other provisions of the option.
Options may be granted for a term not to exceed 10 years (five years with
respect to a 10% stockholder) and are not transferable or assignable other than
by will or the laws of descent and distribution.

An option may be exercised within twelve months after the death or
disability of the optionee, to the extent the option was exercisable at the time
of death or disability. The exercise price of all options (other than
non-incentive stock options granted to persons other than non-employee
directors) must be at least equal

24
<PAGE> 28

to the fair market value of shares of Common Stock of the Company on the date of
grant, or 110% of such fair market value with respect to any optionee who is a
10% stockholder of the Company.

The Plan will terminate on April 25, 2001. The Board of Directors of the
Company may, however, terminate the Plan at any time prior to such date.
Termination of the Plan will not alter or impair, without the consent of the
optionee, any of the rights or obligations under any option theretofore granted
under the Plan.

The Plan provides that no option granted thereunder shall be exercisable if
the Company shall, at any time and in its sole discretion, determine that (i)
the listing upon any securities exchange, registration or qualification under
any state or federal law of any shares otherwise deliverable upon such exercise,
or (ii) the consent or approval of any regulatory body of the satisfaction of
withholding tax or other withholding liabilities, is necessary or appropriate in
connection with such exercise. In any of such events, the exercisability of the
option is suspended and is not effective unless and until such withholding,
listing, registration, qualification or approval shall have been effected or
obtained free of any conditions not acceptable to the Company in its sole
discretion, notwithstanding any termination of any option or any portion of any
option during the period when exercisability has been suspended.

The Plan also provides that the Board or, if so designated, the Committee
(of directors of the Company appointed to administer the Plan) may require, as a
condition to the right to exercise an option, that the Company receive from the
option holder, at the time of any such exercise, the representation, warranties
and agreements to the effect that the shares acquired upon exercise of such
options are being purchased by the option holder only for investment and without
any present intention to sell or otherwise distribute such shares and that the
option holder will not dispose of such shares in transactions which, in the
opinion of counsel to the Company, would violate the registration provisions of
the Securities Act of 1933 and the rules and regulations thereunder. The
certificates issued to evidence such shares will bear appropriate legends
summarizing such restriction on the disposition thereof.

SPLIT-DOLLAR INSURANCE POLICIES

The following table sets forth information as of December 31, 1997,
concerning split-dollar insurance policies on the lives of the named persons in
the Summary Compensation Table(1):

<TABLE>
<CAPTION>
INITIAL FACE INSURANCE PREMIUMS
AMOUNT OF ADVANCED IN EXCESS OF
NAME OF INSURED(2) POLICY ISSUED CASH VALUE(5)
- ------------------ ------------ -------- ---------------------
<S> <C> <C> <C>
Marvin D. Kantor................................ $1,500,000(3) 06/08/92 $421,000
Sheldon A. Gold................................. $ 375,000(4) 09/11/86 $ 67,000
</TABLE>

- ---------------
(1) See footnote to the Summary Compensation Table for information respecting
Company premium payments for the fiscal year ended December 31, 1997.

(2) The beneficiaries of the policies are the spouses of the insured.

(3) The policy is an increasing death benefit policy (through use of dividends)
and has replaced a previous universal life policy.

(4) The policy is of the universal life nature, whereby the cash value is added
to the face value at all times, including death.

(5) Represents monies advanced by the Company in excess of cash value available
in the policies.

The Company, pursuant to split-dollar agreements, has purchased life
insurance on the lives of certain officers (including named persons in the
Summary Compensation Table) and key employees on a "split-dollar" basis. The
program is designed so that advances of premium payments (the "advances") the
Company makes on behalf of each insured are collateralized by assignment of the
related life insurance policy (i.e., the accumulated policy cash value and the
policy death benefit).

The insured person owns the policy and, with the consent of the Company, is
permitted to borrow from the cash surrender value of the policy.

25
<PAGE> 29

Under the "split-dollar" agreements, the Company upon death or other
separation from service of the insured receives the return of the advances from
the death benefits or cash surrender value, if any, of the policy, as the case
may be.

The Company has represented its intention and obligation to maintain the
policies. The individuals have enhanced the realization of these receivables by
pledging a portion of their common stock ownership in the Company.

SECTION 401(k) PLAN

Effective July 1, 1989, the Company established a Plan and Trust (the
"401(k)Plan") intended to comply with the provisions of Section 401(k) of the
Internal Revenue Code.

All full-time (as defined) employees of the Company and of its subsidiaries
(collectively referred to under this sub-caption as the "Company") who were
employees on July 1, 1989, and persons who became employees thereafter and are
continuously employed for one year are eligible to participate in the 401(k)
Plan. Under the 401(k) Plan, an eligible employee who elects to participate
defers a portion (the "Portion") of his compensation, as defined, the Portion
being up to the maximum which will not cause the 401(k) Plan to favor
Highly-Compensated Employees, as defined, or cause the 401(k) Plan to exceed the
maximum amount allowable as a deduction to the company under Section 404 of the
Code. The Company contributes under the 401(k) Plan, for the account of such
eligible employee, an amount equal to the Portion; in substance the contribution
is being made by the eligible employee.

The 401(k) Plan provides that the Company shall make a contribution (which
is in addition to the contribution referred to in the preceding sentence and
shall be in shares of Common Stock of the Company) equal to 10% of the aggregate
amount of all contributions made by participants, except that for this purpose a
maximum of 10% of the compensation of each participant is taken into account.
The 401(k) Plan also provides that the Company may contribute a discretionary
amount to all participants out of its current or accumulated Net Profit, as
defined, for the applicable Fiscal Year, as defined.

All contributions of the participant vest immediately. Contributions of the
Company vest in accordance with the number of years of service of the
participant with vesting of 20% after one year of service and thereafter
increasing by 20% increments for each year so that after five years or more of
service, the Company's contributions become fully vested. Notwithstanding the
foregoing, the Company's contributions fully vest upon the retirement, death,
disability of a participant (all as defined in the 401(k) Plan) or in the event
that the 401(k) Plan is terminated in whole, or to the extent particular
participants are affected thereby, in part.

The Trustee under the 401(k) Plan, Merrill Lynch Trust Company, invests
cash contributed or otherwise held under the Plan as it is instructed by the
employee participants, who have the discretion of fund selection.

Distributions from the 401(k) Plan are made available on a participant's
retirement, death, disability, or the termination of employment for any reason
other than the foregoing. Advance distributions on account of hardship may be
made in limited circumstances as provided in the 401(k) Plan.

Payment of vested amounts are made in accordance with directions of the
Committee, appointed by the Company to act under the 401(k) Plan, either in one
lump sum payment or in annual cash installments over a period not to exceed 10
years.

COMPENSATION OF DIRECTORS

Non-employee Directors of the Company receive $650 for each meeting of the
Board of Directors of the Company which they attend and such Directors are also
reimbursed for any expenses incurred. In addition, beginning January 1, 1995 all
non-employee directors are compensated $500 per month for serving as director of
the Company. No additional amounts are paid for committee participation.

In addition, Non-Employee Directors have been granted stock options under
the Plan to purchase shares of Common Stock of the Company. "Non-Employee
Directors" are defined in the Plan as Directors of the

26
<PAGE> 30

Company who are not also employees of the Company, who have served as Directors
for twelve consecutive full months, and who at the end of such period are
continuing to serve as Directors. The Plan also provides for a grant of
additional stock options to each Director who received an option for the
purchase of 10,000 shares of common stock (the "Initial Option"), each of such
additional options to provide for the purchase of an aggregate maximum of 1,000
shares of Common Stock of the Company at a price per share equal to the fair
market value of the Common Stock of the Company on the date of grant, subject to
anti-dilution provisions, one of such additional options to be granted on each
successive anniversary of the date of grant of the Initial Option, provided that
such Director continues on such anniversary to be a Non-Employee Director.
Pursuant to the Second Amendment of the Stock Option Plan, on each fifth
anniversary of receiving the initial 10,000 stock option, such Non-Employee
Director will receive an option for 10,000 shares instead of 1,000 shares. Each
of the stock options set forth in the chart below are exercisable commencing on
the date of grant and ending on the fifth anniversary of such date. None of the
options set forth in the chart below have been exercised. All of the options are
subject to anti-dilution provisions. The following table illustrates the options
issued as discussed above.

<TABLE>
<CAPTION>
======================================================================================================================
NON-EMPLOYEE DIRECTOR DATE OF GRANT SHARES SUBJECT OPTION PRICE
TO OPTION
- ------------------------------------------------- ------------------------- --------------------- --------------------
<S> <C> <C> <C>
Paul H. Levine 7/11/94 1,000 $.6875
- ------------------------------------------------- ------------------------- --------------------- --------------------
Paul H. Levine 7/11/95 1,000 $.4375
- ------------------------------------------------- ------------------------- --------------------- --------------------
Paul H. Levine 7/11/96 1,000 $.875
- ------------------------------------------------- ------------------------- --------------------- --------------------
Paul H. Levine 7/11/97 1,000 $1.1875
- ------------------------------------------------- ------------------------- --------------------- --------------------
Paul H. Levine 7/30/98 10,000 $1.375
- ------------------------------------------------- ------------------------- --------------------- --------------------
Gerald M. Penn 2/1/95 10,000 $.375
- ------------------------------------------------- ------------------------- --------------------- --------------------
Gerald M. Penn 2/1/96 1,000 $.375
- ------------------------------------------------- ------------------------- --------------------- --------------------
Gerald M. Penn 2/1/97 1,000 $1.435
- ------------------------------------------------- ------------------------- --------------------- --------------------
Gerald M. Penn 2/1/98 1,000 $1.25
- ------------------------------------------------- ------------------------- --------------------- --------------------
Clemente Del Ponte 10/16/98 10,000 $1.3125
======================================================================================================================
</TABLE>

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The table below presents as of December 31, 1998, certain information (1)
with respect to any person (including any "group" as that term is used in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended ) who is
known to the Company to be the beneficial owner of more than five percent of any
class of the Company's voting securities and (2) as to each class of equity
securities of the Company or any of its parents or subsidiaries, other than
directors' qualifying shares, beneficially owned by each director and executive
officer of the Company and by all directors and executive officers of the
Company as a group.

27
<PAGE> 31

<TABLE>
<CAPTION>
AMOUNT AND NATURE AND PERCENT
TITLE OF CLASS NAME BENEFICIAL OWNERSHIP(1) OF CLASS(2)
- -------------- ---- ----------------------- ------------
<S> <C> <C> <C>
Common Stock Marvin D. Kantor 888,120 14.08%
Two Nationwide Plaza
Suite 760
Columbus, Ohio 43215
Common Stock Harold T. Kantor 297,475(3) 4.72%
Common Stock Sheldon A. Gold 131,375(4) 2.08%
Common Stock Reed A. Martin 40,726(5) --
Common Stock Paul H. Levine 14,500(6) --
Common Stock Dr. Gerald M. Penn 21,000(7) --
Common Stock Clemente Del Ponte 668,200(8) 10.60%
Dollard House
Wellington Quay
Dublin 2 Ireland
Common Stock David E. Fernie 200 --
Common Stock All Directors and Executive 2,061,596(9) 32.69%
Officers as a Group (7 persons)
Common Stock Gerald F. Schroer 413,800(10) 6.56%
25109 Detroit Road
Westlake, Ohio 44145
</TABLE>

- ---------------
(1) The individuals named have direct ownership and sole voting and investment
power, except as otherwise indicated.

(2) Percent of class shown net of treasury shares (see (9) below). Except as
otherwise indicated, shares owned by the individuals named represent less
than 1% of the outstanding shares of Common Shares of the Company.

(3) Includes 75,000 shares of Common Shares which Mr. Kantor may acquire by
exercising options granted to him under the Company's Stock option plan.

(4) Includes 13,750 shares of Common Shares which Mr. Gold may acquire by
exercising Warrants and 75,000 shares of Common Shares which Mr. Gold may
acquire by exercising options granted to him under the Company's Stock
Option Plan.

(5) Includes 1,100 shares of Common Shares which Mr. Martin may acquire by
exercising Warrants and 35,000 shares of Common Shares which he may acquire
by exercising options granted to him under the Company's Stock Option Plan.

(6) Includes 14,000 shares of Common Shares which Mr. Levine may acquire by
exercising options granted under the Company's Stock Option Plan.

(7) Includes 13,000 shares of Common Shares which Dr. Penn may acquire by
exercising options granted under the Company's Stock Option Plan.

(8) Includes 10,000 shares of Common Shares which Mr. Del Ponte may acquire by
exercising options granted to him under the Company's Stock Option Plan.
The remainder of the shares are in the record name of McBridge Advisory,
Ltd. of which Mr. Del Ponte is the managing director of said company.

(9) Includes 14,850 shares of Common Shares which may be acquired by exercise
of Warrants and 222,000 shares which may be acquired by exercise of options
granted under the Company's Stock Option Plan.

(10) Pursuant to a July 6, 1998 letter from Mr. Schroer.

The table below presents as of December 31, 1998, certain information with
respect to the beneficial ownership of Units by each director and executive
officer of the Company and the General Partner, WDBC (with Marvin Kantor,
Sheldon Gold and Reed Martin serving as directors and executive officers of
WBDC and the Company and Charles Cicerchi and Sandra Weber serving solely as
executive officers of WBDC).

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS NAME BENEFICIAL OWNERSHIP CLASS
-------------- ---- -------------------- -----
<S> <C> <C> <C>
Depository Units Marvin D. Kantor 3,000(1) 2.086%
Depository Units Harold T. Kantor 3,000(2) 2.086%
Depository Units Sheldon A. Gold 2,500 1.738%
Depository Units Reed A. Martin 500(3) .348%
Depository Units Paul H. Levine 0 0%
Depository Units Gerald M. Penn 0 0%
Depository Units Clemente Del Ponte 0 0%
Depository Units David E. Fernie 0 0%
Depository Units Charles R. Cicerchi 0 0%
Depository Units Sandra W. Weber 0 0%
Depository Units All Directors and Executive
Officers as a Group (10 persons) 9,000 6.257%
</TABLE>

- ------------------
(1) Includes Sybil Kantor's Unit ownership.

(2) Includes Catherine Hartwig Kantor Unit ownership.

(3) As custodian.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

MHK Corp., of which Marvin D. Kantor and Harold T. Kantor are the sole
shareholders, has incurred indebtedness to the Company. The largest amount of
such indebtedness outstanding in 1997 was $717,000; 1996 was $809,435; and 1995
was $773,638. On December 31, 1998, the amount of such indebtedness, exclusive
of interest, outstanding was approximately $724,000. Interest at 9% totaling
$68,328 and $61,823 has been charged, through December 31, 1997 and 1996,
respectively. A significant portion of this indebtedness arose

28
<PAGE> 32

effective January 1, 1995, when the Company sold the operating assets of a
subsidiary's retail liquor store and two lounges in Florida to MHK Corp. The
purchase price was equivalent to the net book value of the net assets which
totaled $574,949 as adjusted for certain 1995 transactions. The remainder of the
debt is attributable to loans made to MHK Corp. for accrued interest and working
capital in 1995 and 1996. Collateral for this indebtedness includes the
operating assets of MHK Corp. and additional commercial real estate property
owned by the Kantors in Dayton, Ohio.

The President and CEO of the Company, Mr. Sheldon Gold, has incurred
borrowings from the Company. The largest amount of such indebtedness outstanding
in 1997 was $243,412; 1996 was $243,412; and 1995 was $204,975. On December 31,
1998, the amount of such indebtedness was approximately $198,000. No interest is
paid or charged on such indebtedness. The President/CEO has granted collateral
to the Company to enhance the realization of the indebtedness, in the form of
stock in the Company and a residential mortgage. The loan is evidenced by a
promissory note providing for minimum annual payments of $15,000, as amended.

Certain executive officers and directors of the Company are limited
partners owning less than an aggregate 10% interest in the Partnership and WBDC
is the general partner of the Partnership.

29
<PAGE> 33

THE PREFERRED SHARES

Pursuant to the Company's Certificate of Incorporation, the total amount of
shares of capital stock the Company is authorized to issue is 12,500,000,
consisting of 12,000,000 shares of common stock, par value $.01 per share and
500,000 shares of preferred stock, par value $1.00 per share. The board of
directors of the Company is authorized by the Certificate of Incorporation to
determine the power, preferences and rights of any preferred shares issued by
the Company. The board of directors by resolution as set forth in The Wendt-
Bristol Health Services Corporation Terms of Series 1 Cumulative Dividend
Convertible Preferred Stock has determined that the Preferred Shares will
nonvoting, preferred stock, designated Series 1, with a par value of $1.00 and a
stated value of $20.00 and redeemable by the Company at a price of $24.00 per
Preferred Share. The Preferred Shares are entitled to quarterly cumulative
dividends at a rate of $1.20 per Preferred Share per annum on such conditions
and at such times as set forth in the board of directors' resolutions declaring
such dividends. The board of directors has authorized the issuance of up to
115,000 Preferred Shares in connection with the Merger and the Corporate Merger
and an additional 325,000 Preferred Shares to be sold in an offering for cash.
The Preferred Shares are not entitled to preemptive rights. There are no
restrictions on the repurchase or redemption of the Preferred Shares by the
Company while there is an arrearage in the payment of dividends or sinking fund
installments.

The holders of the Preferred Shares shall have the right to convert each
Preferred Share into 6 and 2/3rds Common Shares. This conversion ratio places a
value of $3.00 on each Common Share. In arriving at this ratio, the Company's
management considered the following factors:

- The current and historical value of the Common Shares

- The conversion price of outstanding warrants of the Company

- The conversion features of outstanding debt of the Company

After careful consideration of these factors, management concluded that $3.00
was an appropriate value for the Common Shares.

In the event that the Preferred Shares are called for redemption by the
Company, the right to convert such shares shall cease and terminate at the close
of business on the date fixed for redemption by the Company. In order to convert
Preferred Shares into Common Shares, the holder shall surrender at the office of
any transfer agent for the Preferred Shares designated for that purpose by the
board of directors, or at any such other office as may be designated by the
board of directors, the certificate or certificates therefor, duly endorsed or
assigned to the Company or in blank, and shall give written notice to the
Company of the election to convert. No payment or adjustment shall be made upon
any conversion on account of any dividends accrued on the Preferred Shares
surrendered for conversion or on account of any dividends on the Common Shares
issued upon conversion. Preferred Shares shall be deemed to have been converted
immediately prior to the close of business on the day of the surrender for
conversion and the person or persons entitled to receive the Common Shares
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Shares at such time.

No fractional shares of Common Shares shall be issued upon conversion, but,
instead of any fraction of a share that would otherwise be issuable, the Company
shall pay a cash adjustment in respect of such fraction in an amount equal to
the same fraction of the market price of the Common Shares at the close of
business on the day of conversion. The market value of the Common Shares shall
be the last reported sale price on the AMEX on the last business day prior to
the conversion date when the AMEX is open, or, if there is no reported sale on
such day, the last reported closing bid price on the AMEX at the close of
trading on that day. If the Common Shares are not then listed on the AMEX, the
market value shall be the prevailing market value of the Common Shares on any
other securities exchange or in the open market, as determined by the Company.

If the Company subdivides or combines in a larger or smaller number of
shares its outstanding Common Shares, then the number of Common Shares issuable
upon the conversion of the Preferred Shares shall be proportionally increased in
the case of a subdivision and decreased in the case of a combination, effective
in either case at the close of business on the date that the subdivision or
combination becomes effective.

If the Company is recapitalized, is consolidated with or merged into any
other corporation, or sells or conveys to any other corporation all or
substantially all of its property as an entity, provision shall be made as part
of the terms of the recapitalization, consolidation, merger, sale, or conveyance
so that the holders of the Preferred Shares may receive, in lieu of the Common
Shares otherwise issuable to them upon conversion of the Preferred Shares, at
the same conversion ratio, the same kind and amount or securities or assets as
may be distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the Common Shares.

If the Company at any time pays to the holders of its Common Shares a
dividend in Common Shares, the number of shares of common stock issuable upon
the conversion of Preferred Shares shall be proportionally increased. If the
Company at any time pays any dividend or makes any distribution on the Common
Shares in property (other than cash or Common Shares), then the number of Common
Shares issuable upon the conversion shall be equitably adjusted.

These adjustments shall be made successively if more than one of these
events occurs. However, no adjustment in the conversion ratio shall be made by
reason of:

- the payment of a cash dividend on the Common Shares or on any other
class of stock of the Company

- the purchase, acquisition, redemption, or retirement of any shares of
common stock or of any other class of stock of the Company, except as
provided above in connection with a subdivision or combination of the
outstanding Common Shares of the Company

- the issuance, other than as provided above, of any Common Shares, or
of any securities of the Company convertible into securities of the
Company, or of any rights, warrants or options to subscribe for or
purchase securities of the Company

COMPARISON OF RIGHTS OF HOLDERS OF PREFERRED SHARES AND UNITS

GENERAL

As a result of the Merger, Unitholders will become preferred shareholders
of the Company, and the rights of former Unitholders will thereafter be governed
by the Company's Certificate of Incorporation, its Bylaws and the Delaware
General Corporation Law. The rights of Unitholders are presently governed by the
Amended and Restated Agreement and Certificate of Limited Partnership of the
Partnership (the "Partnership Agreement") and the Delaware Revised Uniform
Limited Partnership Act. The following summary sets

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forth the material differences between the rights of holders of the Preferred
Shares and the Unitholders under these governing documents and bodies of law.
This summary is qualified in its entirety by reference to the full text of each
such documents and the applicable state statutes.

VOTING RIGHTS

The holders of the Preferred Shares do not have voting rights, but do have
the right to convert the Preferred Shares to the Common Shares, which do have
certain voting rights. Unitholders do not have any authority to bind the
Partnership or participate in the management of the Partnership, powers which
are granted to the General Partner. Though the Unitholders have been assigned
all the economic rights and privileges held by WBO, WBO retains the voting
rights attendant to the limited partnership interests. However, pursuant to the
Partnership Agreement, WBO must vote the limited partnership interests it holds
in accordance with the written instructions it receives from the Unitholders.
Consequently, all references to WBO in a voting context contained in this
Prospectus implicate the Unitholders' right and power to direct WBO's voting
through the submission of written instructions.

WBO cannot participate in the selection of the Partnership's general
partner initially, though a majority vote by WBO and the approval of the
existing general partner is necessary in order to appoint successor and
additional general partners. However, the general partner may not cause the
Partnership to merge or consolidate with another entity, unless the Partnership
is the surviving entity, or sell all or substantially all of the Partnership's
assets under certain circumstances without the affirmative vote by WBO of more
than 50% of the aggregate number of outstanding limited partnership interests.

MANAGEMENT

As discussed above, management of the Partnership is vested in the General
Partner while management of the Company is vested in the board of directors.
Neither the Unitholders nor the holders of the Preferred Shares are entitled to
participate in the management of the respective entities or the selection of
directors or general partners. Holders of the Common Shares, however, are
entitled to vote in the election of directors.

CONVERTIBILITY

The Preferred Shares are convertible into the Common Shares, whereas the
Units are not convertible.

LIQUIDITY

There is no established market for the transfer of the Units. Conditioned
upon the approval of the Preferred Shares for listing on AMEX, subject to
official notice of issuance, the Preferred Shares will be publicly traded on
AMEX. The Common Shares are publicly traded on AMEX.

NATURE OF INTEREST

The Preferred Shares represent a direct ownership interest in the Company
as opposed to the Units, which represent an assignment of the limited
partnership interest held by WBO.

DIVIDENDS AND DISTRIBUTIONS

The Preferred Shares are entitled to quarterly cumulative dividends at a
rate of $1.20 per Preferred Share per annum on such conditions and at such times
as set forth in the board of directors resolutions declaring such dividends. The
Unitholders are entitled to distributions from available cash flow upon the
terms and conditions set forth in the Partnership Agreement.

FEDERAL TAXATION

The Partnership is not subject to federal tax, while the Company is subject
to federal tax as a C corporation.

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<PAGE> 35

REMOVAL OF DIRECTORS AND THE GENERAL PARTNER

The Company's Articles of Incorporation provide that a director may be
removed from office by either the majority vote of the stockholders of the class
that elected such director or by the affirmative vote of 3/4 of the board of
directors. The Partnership Agreement states that a general partner may be
removed with or without cause upon the affirmative vote of the limited partners
of the Partnership and the satisfaction of certain additional requirements, but
the Unitholders themselves have no right to participate in the removal of a
general partner, other than through directing the WBO vote.

ANNUAL MEETINGS

The Company is required to hold an annual meeting in the months of May or
June of each year. The Partnership is not required to hold an annual meeting.

CALLING OF MEETINGS

Shareholders of the Company may call a special meeting of the shareholders
at the request in writing by shareholders owning a majority of the issued and
outstanding capital stock of the Company entitled to vote. Meetings of the
Partnership may be called by solely the General Partner and must be called by
the General Partner upon receipt of written request for a meeting signed by 10%
or more in interest of the Unitholders.

NOTICE OF MEETINGS

Notice of annual or special shareholder meetings must be provided to
shareholders of the Company at least 10 days and no more than 50 days prior to
such meeting in writing. Though notice of meetings is required to be provided to
Unitholders pursuant to the Partnership Agreement, neither the Partnership
Agreement nor Delaware law impose a requirement upon the timing of such notice.

AMENDMENT OF GOVERNING DOCUMENTS

The Company's Bylaws may be amended, altered or repealed and new bylaws
adopted by the board of directors or by the shareholders. Pursuant to Delaware
law, an amendment of the Company's Certificate of Incorporation first requires a
resolution proposing the amendment be adopted by the Company's board of
directors. The amendment must then be adopted by the affirmative vote of a
majority of the shareholders. In the event the amendment would alter the
aggregate number of authorized shares, the par value or the special rights of a
class of shares, such class (even of nonvoting shares) shall be entitled to vote
on the adoption of such amendment.

The General Partner may make certain amendments to the Partnership
Agreement of the Partnership without the consent or approval of the Unitholders
or WBO. These changes include: (i) a change in the name of the Partnership or
location of its principal place of business; (ii) the admission, substitution,
termination or withdrawal of a general or limited partner; (iii) a change
necessary for the Partnership to qualify for limited liability; (iv) a change
necessary or advisable in the opinion of the general partner to avoid being
treated as an association taxable as a corporation for federal income tax
purposes; (v) an inconsequential change that does not adversely affect the
Unitholders or WBO; (vi) a change necessary to cure an ambiguity or correct a
provision of the Partnership Agreement; (vii) a change necessary or desirable to
satisfy the requirements, conditions or guidelines in any opinion, directive,
order, regulation or ruling of any federal or state agency or contained in any
statute or to facilitate the trading of the Units or compliance with a rule or
regulation of a securities exchange on which the Units are listed; (ix) a change
that is required or specifically contemplated by the Partnership Agreement; (x)
a change relating to allocations, provided certain conditions are met; and (xi)
changes necessitated by the repeal, amendment or modification of Delaware law
that requires an amendment of the Partnership Agreement. All other amendments to
the Partnership Agreement require the majority vote of the limited partnership
interests by WBO, but the concurrence of the General Partner is not necessary.

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<PAGE> 36

PREFERENCES UPON LIQUIDATION

Since the Preferred Shares are preferred stock, in the event of the
dissolution of the Company, the holders of the Preferred Shares would occupy a
preferred position upon the liquidation of the Company's assets relative to the
other shareholders of the Company. The Unitholders, however, would occupy the
same liquidation priority as the other equity interest holders of the
Partnership.

INDEMNIFICATION

The Company is required to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding by reason of the fact that he is or was a director, officer,
employee or agent to the Company against expenses (including attorneys' fees),
judgment, fines and amounts paid in settlement actually and reasonably believed
to be in or not opposed to the best interests of the Company. In the case of a
criminal action, indemnification will be provided if the individual had no
reason to believe his conduct was unlawful. Indemnification will also be
provided by the Company to directors, officers, employees and agents of the
Company as a result of a threatened, pending or completed action by or in the
right of the Company to procure a judgment in its favor against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Company. However, no indemnification shall be made with
respect to any claim, issue or matter as to which such person shall have been
adjudged liable for negligence or misconduct in the performance of his duty to
the Company unless the court in which such action or suit was brought determines
otherwise. If successful on the merits, such persons shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the matter.

Whether an individual has met the standards of conduct set forth above is
left to the determination of a majority of the disinterested members of the
board of directors, unless a quorum is not available or an independent legal
opinion dictates otherwise, in which case the determination will be reached by
the shareholders of the Company. The payment of such expenses may be made prior
to the final disposition of the matter, upon the authorization of the board of
directors and the receipt of an undertaking by such individual to repay the
advance amount if indemnification is ultimately determined to be inappropriate.

The Partnership Agreement provides for the indemnification of the General
Partner, its affiliates, and all officers, directors, employees and agents of
the General Partner and its affiliates from and against liabilities incurred as
a result of the business of the Partnership; provided that, such person's
conduct did not constitute actual fraud, negligence, misconduct or breach of
fiduciary duty. Such person must have also acted in good faith and in a manner
it believed to be in, or not opposed to, the interests of the Partnership.

TERM

The Company's existence is of perpetual duration. The Partnership will
continue in existence until the close of business December 31, 2017, unless
earlier terminated pursuant to the Partnership Agreement.

REDEMPTION

The Preferred Shares are subject to redemption by the Company at a price of
$24.00 per Preferred Share. The Units may be redeemed by the Partnership if the
Partnership or General Partner determine that the Unitholder is not eligible to
hold the Units upon those terms and conditions contained in the Partnership
Agreement.

INVESTMENT OBJECTIVES

The principal investment objectives of the Partnership and the Company are
essentially the same: to preserve invested capital, maximize the potential for
capital appreciation and to expand the revenues of each business. The Company's
investment objectives, however, are focused on the more diffuse goal of
enhancing the performance of a couple of different lines of business (such as
several medical diagnostic/radiology centers and a radiation therapy center),
rather than one single business as is the case with the

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<PAGE> 37

Partnership, which limits its activities to the operation of an outpatient
medical imaging center. For further discussion of the Partnership's investment
objectives, see "CERTAIN INFORMATION CONCERNING THE PARTNERSHIP." In essence,
the Company acts as a holding company for several businesses, while the
Partnership is an operating company focused on a single business. The Company is
presently engaged in a strategy of attempting to consolidate its holdings and
gain greater control over its business in order to focus on those markets it
believes are the most promising.

BORROWING POLICIES

Both the Company and the Partnership have broad powers to borrow funds in
furtherance of their investment objectives. While the ability of the Company to
incur indebtedness provides additional sources of funds and additional
investment opportunities, there are also certain risks inherent in incurring
indebtedness. However, the ability to borrow funds is not substantially
different in the Company than in the Partnership, as the board of directors of
the Company and the General Partner both have extensive authority in this
regard.

REVIEW OF INVESTOR LISTS

Under Delaware law, a shareholder of the Company is entitled, upon written
demand, to inspect and copy the record of stockholders, at any time during
normal business hours, for a purpose reasonably related to his or her interest
as a shareholder. Pursuant to the Partnership Agreement, Unitholders may, upon
20 days prior written notice and at such Unitholder's own expense, receive a
list of the name and last known address of each partner and Unitholder of the
Partnership.

EXCHANGE VALUE

The Exchange Value for the Merger shall be one (1) Preferred Share for
every two (2) Units. The Exchange Value is based upon the price the initial
Unitholders paid for their Units, namely, $10 and the stated value of the
Preferred Shares, $20. This approach was used in order to ensure that the
Unitholders would receive securities that matched the initial investment in the
Partnership (exclusive of distributions) and could be traded in an established
market, conditioned upon the acceptance of the Company's application for listing
on the AMEX.

No Preferred Shares will be issued to the General Partner in exchange for
its interest and the General Partner shall remain the general partner of the
Partnership after the consummation of the Merger.

LEGAL MATTERS

There is no pending material litigation to which the Company is a party.

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WENDT-BRISTOL HEALTH SERVICES CORPORATION

MANAGEMENT'S DISCUSSION AND ANALYSIS

NOTE: REFERENCE SHOULD BE MADE TO THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
HEREIN.

Except for historical information contained herein, certain matters
discussed herein are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Any
statements that express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as will likely result, are
expected to, will continue, is anticipated, estimated, projection, outlook) are
not statements of historical facts and may be forward-looking. Forward-looking
statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed in the forward-looking
statements. These forward-looking statements are based largely on the Company's
expectations and are subject to a number of risks and uncertainties, including
but not limited to, economic, competitive, regulatory, growth strategies,
available financing and other factors discussed elsewhere in this report and in
the documents filed by the Company with the SEC. Many of these factors are
beyond the Company's control. Actual results could differ materially from the
forward-looking statements made. In light of these risks and uncertainties,
there can be no assurance that the results anticipated in the forward-looking
information contained in this report will, in fact, occur.

Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events, unless necessary to prevent such statements from becoming
misleading. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.

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FINANCIAL CONDITION

Management has positioned the Company to focus on continuing the aggressive
expansion of its Diagnostic and Radiology business, including radiation therapy.
During 1997 the Company ceased operations of its unprofitable home health care
business and sold two of its three retail pharmacies in order to concentrate on
its core business. In addition, on December 31, 1997, the Company sold its two
Columbus nursing homes and is utilizing the cash from the gain on the sale to
further expand into the diagnostic and radiology services industry. The sale of
these two homes along with the cost savings from the closing of the home health
operations further strengthened the liquidity of the Company and will allow
management to focus on its diagnostic and radiology centers.

In February 1998 the Company, through a subsidiary, opened its third diagnostic
center in Central Ohio. This center, located in Granville, Ohio, provides
enhanced diagnostic imaging techniques including magnetic resonance imaging
(MRI), CT scans, ultrasound, bone densitometry, x-ray and mammography. In
October 1998 the Company, through a subsidiary, opened its fourth diagnostic
center which is located on Jasonway Avenue in Columbus, Ohio. This 31,000 square
foot medical complex includes the Company's second radiation oncology facility
as well as an advanced diagnostic center that includes the first Positron
Emission Tomography (PET) scanning unit in Central Ohio and a full nuclear
medicine department.

The Company, through a subsidiary, broke ground in July 1998 on its Women's
Health Center on Kenny Road. This 7,500 square foot center, scheduled to open in
the first quarter of 1999, will focus on women's health and imaging services and
will include an outpatient surgical suite for breast surgery.

As discussed in Note 9, the Company has approximately $2,300,000 in net
operating loss carryovers available for Federal income tax purposes. Such losses
expire in years commencing with 2004. Recognition of these carryforwards is
included in the deferred tax assets. Management has considered the need for a
valuation allowance (addressing the potential realizeability), related to the
deferred tax assets, including the aforementioned. Management has further
considered the provisions of SFAS No. 109 that allows for utilization of tax
planning strategies. These strategies, if necessary, could consider a possible
sale and/or sale/leaseback of real estate as well as the possible sale of its
remaining nursing home business to preclude the expiration of net operating
losses without realization of a tax benefit. Realization of the deferred tax
asset is dependent on generating sufficient taxable income including use of
management's tax planning strategies prior to the expiration of the loss
carryforwards. Although realization is not assured, management believes it is
more likely than not that a significant amount of the deferred tax asset will be
realized as a result of its tax planning strategies, if necessary, that would
generate estimated tax gains of approximately $2,500,000. The amount of the
deferred tax asset considered realizable, however, could be reduced in the near
term if either the current estimates of future taxable income are reduced or
management would be unable to effect an expected sale and/or sale/leaseback.

Working capital decreased approximately $1,645,000 from $3,284,000 at December
31, 1997 to $1,589,000 at September 30, 1998. Current assets decreased
approximately $3,433,000 due mostly from decreases in notes receivable
($2,885,000), accounts receivable ($652,000) and miscellaneous receivables
($319,000) offset by increases in cash ($173,000), marketable securities
($124,000) and allocation due from limited partnership ($257,000). The increase
in cash and decrease in notes and miscellaneous receivables is mostly due to the
collection of the notes related to the sale of the two nursing homes. The
decrease in accounts receivable is attributable to the collection of year-end
receivables from the two sold nursing homes offset by increases in receivables
at the diagnostic centers. Current liabilities decreased approximately
$1,788,000 due mostly from reductions in accounts payable ($757,000), accrued
wages ($333,000), and other accrued liabilities ($612,000), all primarily
related to the sale of the two nursing homes.

LIQUIDITY AND CAPITAL RESOURCES

The Company's liquidity position for the first nine months remains adequate with
working capital at $1,645,000 at September 30, 1998. During April 1998 the
Company collected the remaining balance of approximately $2.9 million on the
notes receivable due from the sale of the two nursing homes. Also in April 1998,
the Company secured an equipment lease line of credit for $1,000,000 with a
finance company. As of December 31, 1998 approximately $924,000 has been drawn
against this lease line.

The Company and its subsidiaries, limited partnership, and limited liability
companies, have committed to certain equipment upgrades or acquisitions that
will be financed either through the current equipment financing relationship or
through vendor programs. The cost of such equipment currently on order is
approximately $5,400,000.

Cash increased approximately $173,000 during the first nine months of 1998. Cash
flows from investing activities contributed $1,135,000, due mostly from the
collection of notes receivable relating to the year-end sale of two nursing
homes offset by advances to unconsolidated affiliates to assist them in their
start-up phase. A large portion of the proceeds from the note was used to pay
down current liabilities, resulting in a

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net use of funds from operating activities of approximately $822,000. Net cash
used in financing activities was approximately $140,0000 due to net treasury
stock purchases of $53,000 and principal repayments of long-term debt of
$87,000.

During October 1998, the Company, along with a partner, completed construction
of a major 31,000 square feet, two-building center including radiology, nuclear
medicine, cytology, radiation therapy, Positron Emission Tomography (the first
PET scanner in Central Ohio), and a therapy and rehab center. A subsidiary of
the Company has a participating partnership relationship (20%) in the rehab
center, a 22-1/2% interest and management control and responsibility in the
radiation therapy, and 100% ownership in the radiology, PET, nuclear and
cytology operations. In addition, the Company, through a subsidiary, is
expanding one of its facilities by adding approximately 7,500 square feet. The
adjoining addition (which is being financed by a bank) is anticipated to cost
approximately $800,000 and will be used to create one of the first major women's
health centers in central Ohio.

The Company announced plans to acquire all of the limited partner interests in
Wendt-Bristol Diagnostics L.P. and the remaining 15% of the outstanding shares
of the limited partnership's sole general partner: Wendt-Bristol Diagnostics
Company. The proposed acquisitions, pending completion of effective registration
statements and shareholder/partner approval, would be accomplished through an
exchange of shares of Series 1 $20 preferred convertible stock, with cumulative
dividends at 6% per annum. Upon successful completion of the acquisition, total
future annual dividends relating to the preferred shares would amount to
approximately $138,000.

Management further believes the present resources will meet anticipated
requirements for operations of the business. Other than as indicated above,
there are no further material commitments for capital expenditures.

YEAR 2000 ISSUES

A potential problem exists for all companies that rely on computers as the year
2000 approaches. The "Year 2000" problem is the result of the past practice in
the computer industry of using two digits rather than four to identify the
applicable year. This practice could result in incorrect result when the
Company's computers or those of the third parties with which it deals perform
arithmetic operations, comparisons or data field sorting involving years later
than 1999.

The Company has conducted a preliminary assessment of its computer systems to
identify items that could be impacted by the Year 2000 issue and formulated the
following course of action. The Company will begin reviewing its non-information
technology systems in mid-1999. Although the Company does not anticipate that
non-information technology systems will pose a major problem, as its reliance on
such systems is relatively small; non-information technology systems are more
difficult to evaluate and repair than information technology systems and may
require replacement. The Company has already begun its review of its information
technology systems and will make necessary software upgrades in 1999. In
addition, the Company has been separately evaluating its accounting software and
is currently in the process of implementing a new system with implementation
anticipated to be complete during the second quarter of 1999. Total cost of the
conversion is expected to be approximately $40,000.

The Company has already begun assessing the Year 2000 readiness of those third
parties that could have a material impact on the Company's operations. The
Company began sending Year 2000 questionnaires to these third parties in late
1998 with the intent to evaluate the steps these parties have taken to assess
and remedy their Year 2000 problems. The Company is in the process of evaluating
these questionnaires. The area in which the Company is most dependent on third
parties is technical equipment and accounts receivable. Most of the equipment is
from major vendors who have already made assurances of Year 2000 compliance. The
vast majority of the Company's accounts receivables are paid through both
private and public insurance programs. Since these organizations are either
governmental in nature or heavily regulated by the government, the Company is
confident that they either are or will shortly be year 2000 compliant.
Nonetheless, the Company has begun evaluating the readiness of these
organizations as discussed above.

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<PAGE> 41

The most reasonably likely worst case scenario the Company faces in regards to
Year 2000 problems is a lack of compliance on the part of the third parties with
which it deals. Though not highly dependent on any particular vendor, the
failure on the part of its vendors could result in the Company not being able to
get those supplies it needs to administer its business. The Company is prepared
to find alternative vendors should this problem result and is considering
building up an inventory of any necessary supplies to prevent any shortage if
such an eventuality were to occur. The area of noncompliance that would have the
greatest negative impact on the Company's business is that of the private and
public insurance programs that ultimately pay for the Company's services. A lack
of compliance on their part could result in the Company not being promptly or
properly paid for the services provided, impacting the Company's cash flow and
its ability to meet is operational needs. The Company has yet to formulate a
contingency plan in this regard, but is working to develop alternative billing
procedures to deal with any lack of readiness on the part of these third
parties.

The Company will utilize both internal and external resources to reprogram or
replace and test all of its software. The Company preliminarily estimates that
it will cost $5,000 to evaluate, reprogram and replace equipment and software to
ensure Year 2000 compliance, of which all $5,000 will likely be spent on outside
consultants. In addition, as discussed above, the Company is going to spend
$40,000 to replace its existing accounting system. Such costs are being financed
through an existing line of credit and will not have a material adverse effect
on the Company's financial condition or results of operations.

RESULTS OF OPERATIONS - SEPTEMBER 1998 VS. SEPTEMBER 1997

Consolidated revenues from operations for the nine and three months ended
September 30, 1998 decreased approximately $7,454,000 or 57.9% and $2,357,000 or
55.2%, respectively, from the same periods in 1997. Net sales decreased
$1,105,000 or 57.4% for the nine months and $233,000 or 46.2% for the three
months ended September 30, 1998 while service revenues declined $6,349,000 or
58.0% for the nine months and $2,124,000 or 56.4% for the quarter over the same
periods last year. The decline in net sales is due to the reduction in the
number of pharmacies from three in 1997 to one in 1998 while the decrease in
service revenues is attributable to the sale of two nursing homes at December
31, 1997. Excluding the two sold nursing homes, service revenues for the first
nine months of 1998 are up 12.9% as compared to 1997 due mostly to the opening
of the new diagnostic center in February 1998.

Cost of sales decreased approximately $858,000 or 58.0% for the nine months and
$211,000 or 50.6% for the three months ended September 30, 1998 as compared to
the corresponding periods in 1997. Gross margin for the first nine months
increased to 24.2% in 1998 from 23.1% in 1997. The decreases are primarily due
to the 1997 sale of two retail pharmacies whose sales are not included in the
1998 results.

Selling, general and administrative expenses decreased approximately $5,887,000
or 56.2% for the nine months and $1,802,000 or 50.5% for the three months ended
September 30, 1998 as compared to the corresponding periods in 1997. The
decrease is mostly due to the reduction in expenses caused by the sale of the
two nursing homes and two pharmacies offset by increases in expenses of the new
Granville Diagnostic Center and the expansion of mobile mammography. Selling,
general and administrative expenses at the new centers contribute heavily to the
costs during their initial period of market development. Such costs have had a
significant impact to the consolidated results for 1998. However, management
anticipates each of the centers, upon reaching its operating goals, to
contribute profits to the Company's results of operations.

Interest expense for the nine and three months ended September 30, 1998
decreased approximately $517,000 or 76.4% and $134,000 or 61.8%, respectively,
as compared to the same periods in 1997. The reduction is mostly due to the
reduced debt from the mortgages on the two sold nursing homes and the interest
income earned on the notes receivable from the sale of the homes offset by
interest expense on additional equipment at the new diagnostic center.

RESULTS OF OPERATIONS - 1997 VS. 1996

38
<PAGE> 42

Consolidated revenues from operations for the year ended December 31, 1997
decreased approximately $404,000 or 2.3% from the previous year. Net sales
declined $381,000 or 13.5% while service revenues decreased $23,000 or .2% from
the comparable period in 1996. The decline in sales was due to the Company
selling two of its retail pharmacies during 1997 while the decrease in service
revenue was due to the decline in visits in the home health care subsidiary
(which ceased operations in April, 1997) offset by increased revenues at the
nursing homes.

Cost of sales decreased approximately $251,000 or 12.1% for the year as compared
to 1996. Gross margin for the year ended December 31, 1997 was 25.3% as compared
to 26.4% for the comparable period in 1996. The decline is attributable to
pricing pressures in the competitive retail pharmacy markets and price
reductions at the locations that closed during the year.

Selling, general and administrative expenses decreased approximately $726,000 or
4.9% for the year ended December 31, 1997 as compared to 1996. The decrease is
mostly due from decreased visits in the home health care agency.

Interest expense increased approximately $32,000 or 3.7% for the year ended
December 31, 1997 as compared to 1996. In 1996 the Company did not have a
working capital line of credit in place until late May and therefore, incurred
interest expense relating only to equipment and mortgage for the first five
months of 1996. The 1997 amount includes the accounts receivable securitization
program interest costs through the middle of March and the interest attributable
to the convertible subordinated and Series 1 bonds.

RESULTS OF OPERATIONS - 1996 VS. 1995

Consolidated revenue from operations for the year ended December 31, 996
increased approximately $342,000 or 2.0% over 1995. Net sales increased
approximately $107,000 or 4.0% as compared to the previous year. Service
revenues increased approximately $234,000 or 1.6%, due mostly from revenue
increases at the Alzheimer's Center partially offset by a decline in revenues in
Home Health Care.

Cost of sales increased approximately $151,000 or 7.9% for the year as compared
to 1995. Gross margin for the year ended December 31, 1996 was 26.4% as compared
to 29.1% for the comparable period in 1995. The decline is attributable to
pricing pressures in the competitive retail pharmacy market.

Selling, general and administrative expenses increased approximately $649,000 or
4.6% for the year ended December 31, 1996 as compared to 1995. The increase is
primarily attributable to certain patient care costs, i.e. labor, remaining
level during periods of diminished census at the nursing homes. A further
increase resulted from the $376,000 reduction to 1995 expenses as a result of
the reversal of a reserve on the life insurance premium receivable.

Interest expense decreased approximately $36,000 or 4.0% as compared to 1995,
primarily from lower borrowings through most of the year.

39
<PAGE> 43

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.

MANAGEMENT'S DISCUSSION AND ANALYSIS

FINANCIAL CONDITION

Working capital decreased approximately $193,000 from a deficit of $405,000 at
December 31, 1997 to a deficit of $597,000 at September 30, 1998, due mostly
from the net loss of $131,000 after depreciation of $377,000 for the nine months
ended September 30, 1998. Current assets increased approximately $362,000, due
mostly from an increase in receivables ($388,000) while current liabilities
increased $555,000, due mostly from an increase in advances from affiliates
($511,000).

LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity weakened during the first nine months due to the net
loss during the period. The Company's affiliates advanced funds to help finance
the growth in modalities and receivables due to increased billings and a slowing
of collections.

Cash increased approximately $2,000 during the first nine months of 1998.
Operations utilized cash of $62,000 for the nine months ended September 30,
1998. This was due mostly to the income before depreciation of $247,000 being
more than offset by the increase of trade receivables of $400,000. Net cash
provided by financing activities helped fund the operating deficit and the
principal payments of long-term debt of $420,000 with approximately $526,000
being provided by advances from affiliates. Cash flows from investing activities
used $41,000, due mostly from capital expenditures of $55,000.

Management believes the present resources will meet anticipated requirements for
operations of the business and there are no further material commitments for
capital expenditures.

YEAR 2000 ISSUES

A potential problem exists for all companies that rely on computers as the year
2000 approaches. The "Year 2000" problem is the result of the past practice in
the computer industry of using two digits rather than four to identify the
applicable year. This practice could result in incorrect results when the
Company's computers or those of the third parties with which it deals perform
arithmetic operations, comparisons or data field sorting involving years later
than 1999.

The Company and its parent have conducted a preliminary assessment of its
computer systems to identify items that could be impacted by the Year 2000 issue
and formulated the following course of action. The Company will begin reviewing
its non-information technology systems in mid-1999. Although the Company does
not anticipate that non-information technology systems will pose a major
problem, as its reliance on such systems is relatively small; non-information
technology systems are more difficult to evaluate and repair than information
technology systems and may require replacement. The Company has already begun it
review of its information technology systems and will make necessary software
and upgrades in 1999. In addition, the Company's parent, which provides all
accounting support, has been separately evaluating its accounting software and
is currently in the process of implementing a new system with implementation
anticipated to be complete during the second quarter of 1999. Total cost of the
conversion is expected to be approximately $40,000.

40
<PAGE> 44

regulated by the government, the Company is confident that they either are or
will shortly be year 2000 compliant. Nonetheless, the Company has begun
evaluating the readiness of these organizations as discussed above.

The Company and its parent will utilize both internal and external resources to
reprogram or replace and test all of its software. The Company's preliminarily
estimates that it will cost $5,000 to evaluate, reprogram and replace equipment
and software to ensure Year 2000 compliance, of which all $5,000 will likely be
spent on outside consultants and be borne by the Company's parent. In addition,
as discussed above, the Company's parent is going to spend $40,000 to replace
its existing accounting system. Such costs are being financed through an
existing line of credit and will not have a material adverse effect on the
Company's financial condition or results of operations.

RESULTS OF OPERATIONS 1998-1997
Revenues for the nine and three months ended September 30, 1998 increased
approximately $355,000 or 11.4% and $279,000 or 26.7%, respectively, over the
same periods in 1997 due to an increased number of procedures in 1998.

Selling, general and administrative expenses increased approximately $490,000 or
20.1% for the nine months and $224,000 or 25.7% for the three months ended
September 30, 1998 as compared to the same periods in 1997. The increases are
primarily attributable to costs associated with additional modalities, which
began in 1997 and have not yet reached their anticipated volumes.

Interest expense for the nine and three months ended September 30, 1998
increased $56,000 or 22.4% and $21,000 or 22.3% respectively, over the same
periods in 1997. The increase is due to the financing cost of new angiography
equipment and other equipment upgrades placed in service during the second half
of 1997.

RESULTS OF OPERATIONS 1997-1996
Revenues for the year ended December 31, 1997 decreased approximately $75,000 or
1.8% over the same period in 1996. A higher volume of procedures was offset by
pricing pressures from large insurance companies, which resulted in a net
decline compared to the prior year.

Selling, general and administrative expenses increased approximately $366,000 or
11.7% for the year ended December 31, 1997 as compared to 1996. The increase is
primarily attributable to costs associated with additional modalities
(angiography) which began in 1997 and have not yet met their anticipated
volumes.

Interest expense for the year ended December 31, 1997 increased $129,000 or
53.0% over the same period in 1996. This was due to additional equipment and
upgrades that were acquired and placed in service during 1997 along with a full
year of interest expense in 1997 on a major equipment re-financing as compared
to only nine months of expense in the prior year.

41
<PAGE> 45

RESULTS OF OPERATIONS 1996-1995

Revenues for the year ended December 31, 1996 increased approximately $131,000
or 3.2% over the same period in 1995 due to a higher volume of procedures
slightly offset by declining prices due to the impact of competition in the
market.

Selling, general and administrative expenses increased approximately $189,000 or
6.5% for the year ended December 31, 1996 as compared to 1995. The increase is
primarily attributable to costs associated with the increase in the volume of
diagnostic procedures performed.

Interest expense for the year ended December 31, 1996 increased $90,000 or 58.5%
over the same period in 1995. This was due to the equipment refinancing in March
1996, the building refinancing April 1996, and the accounts receivable
securitization program put into place during May of the current year.

42
<PAGE> 46
GLOSSARY

Certain capitalized terms used in this Prospectus shall have the
following meanings unless the context otherwise requires:

"AMEX" means the American Stock Exchange.

"401(k) PLAN" means the Plan and Trust established by the Company to
comply with the provisions of Section 401(k) of the Code.

"AHCC" means American Health Care Centers, Inc.

"ADVANCES" means the advances of premium payments made on certain life
insurance policies on behalf of certain key officers and employees.

"CON" means Certificates of Need, as provided under sections 3702.51-
3702.68 of the Ohio Revised Code.

"CODE" means the provisions of the Internal Revenue Code of 1986, as
amended.

"COMMISSION" means the securities in Exchange Commission.

"COMMON SHARES" means the Common Stock of the Company.

"COMPANY" means The Wendt-Bristol Health Services Corporation, a
Delaware corporation.

"CORPORATE MERGER" means the merger of Wendt-Bristol Acquisition, Inc.,
an Ohio corporation and subsidiary of W-B, within and into WBDC.

"DEPARTMENT" means the New Jersey Department of Environmental
Protection and Energy.

"EACC" means Ethan Allen Care Center, Inc.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"EXCHANGE AGENT" means the Exchange Agent designated by the Company in
trust for the benefit of the holders of Units pending surrender and
exchange.

"EXCHANGE VALUE" means the rate at which Units will be converted to the
right to receive Preferred Shares, namely, every two Units will be
converted to the right to receive one Preferred Share.

43
<PAGE> 47
"GENERAL PARTNER" means WBDC in its capacity as the General Partner of
the Partnership.

"LLC" means Wendt-Bristol Acquisition LLC, a Delaware limited liability
company.

"MANAGEMENT GROUP" means Marvin D. Kantor, Sheldon A. Gold, and Reed A.
Martin.

"MERGER AGREEMENT" means the Merger Agreement by and among the Company,
the Partnership, and LLC.

"MERGER" means the merger of the LLC with and into the Partnership,
under the terms and conditions expressed in the Prospectus.

"NON-EMPLOYEE DIRECTORS" means those Directors of the Company who are
not also employees of the Company.

"PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement and
Certificate of Limited Partnership of the Partnership.

"PARTNERSHIP" means Wendt-Bristol Diagnostics Company L.P., a Delaware
limited partnership.

"PLAN" means the Incentive Stock Option Plan adopted by the Company in
1983, as subsequently amended.

"PORTION" means an eligible employee who elects to defer a portion of
his or her compensation under the 401(k) Plan.

"PREFERRED SALES" means the preferred shares of the Company designated
Series 1, the par value of One Dollar ($1.00) per share in the stated
value of Twenty Dollars ($20.00) per share, proposed to be issued in
connection with the Merger.

"PROSPECTUS" means this joint proxy statement/prospectus, together with
the supplements and the appendices thereto, filed with the Commission
as it may be further self-amended or amended from time to time.

"REGISTRATION STATEMENT" means the Registration Statement on Form S-4,
together with all amendments and exhibits that the Company has filed
with the Commission under the Securities Act with respect to the
issuance of Preferred Shares in connection with the Merger.

44
<PAGE> 48
"REGULATIONS" means all applicable existing or proposed Treasury
Department Regulations promulgated under the Code.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SERVICE" means the Internal Revenue Service (IRS).

"SPECIAL MEETING" means the Special Meeting of the Partnership that
will be held to consider and vote upon a proposal to approve and adopt
the Merger Agreement.

"UNIT HOLDER'S SECTION 751 ASSET BASIS" means portion of each
Unitholder's basis in his or her Units attributable to the
Partnership's Section 751 assets.

"UNITHOLDER'S SECTION 751 ASSET PRICE" means the amount realized for
the Unitholder's Units allocated among the Partnership's Section 751
Assets.

"UNITHOLDERS" means those holders of Units.

"UNITS" means the Depository Units representing assigned limited
partnership interests in the Partnership.

"WBDC" means Wendt-Bristol Diagnostics Company, an Ohio corporation.

"WBO" means W-B Organizational L.P., Inc., an Ohio corporation.

"W-B" means The Wendt-Bristol Company, a Delaware corporation.

45
<PAGE> 49

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PRO FORMA FINANCIAL STATEMENTS OF WENDT-BRISTOL HEALTH
SERVICES CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet as at September 30, 1998
(Unaudited)....................................................... F-2
Pro Forma Consolidated Statement of Operations for the
Nine Months Ended September 30, 1998 (Unaudited).................. F-3
Pro Forma Consolidated Statement of Operations for the
Year Ended December 31, 1997 (Unaudited).......................... F-4
Computation of Pro Forma Earnings Per Share (Basic and Diluted)
Nine Months Ended September 30, 1998 and Year Ended
December 31, 1997................................................. F-5
Notes to Pro Forma Financial Statements (Unaudited).................. F-6

FINANCIAL STATEMENTS OF WENDT-BRISTOL HEALTH SERVICES
CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets as at September 30, 1998 (Unaudited)
and December 31, 1997............................................. F-7
Consolidated Statements of Operations (Unaudited) for the
Nine and Three Months Ended September 30, 1998 and 1997........... F-8
Consolidated Statements of Comprehensive Income (Unaudited) for the
Three and Nine Months Ended September 30, 1998 and 1997........... F-9
Consolidated Statements of Cash Flows (Unaudited) for the
Nine Months Ended September 30, 1998 and 1997..................... F-10
Notes to Consolidated Financial Statements........................... F-11
Report of Independent Auditors....................................... F-15
Consolidated Balance Sheets as at December 31, 1997 and
1996.............................................................. F-16
Consolidated Statements of Operations for the Years Ended
December 31, 1997, 1996 and 1995.................................. F-17
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1997, 1996 and 1995...................... F-18
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1997, 1996 and 1995.................................. F-19
Notes to Consolidated Financial Statements for the Years
Ended December 31, 1997, 1996 and 1995............................ F-20

FINANCIAL STATEMENTS OF WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)
Balance Sheets as at September 30, 1998 and December 31, 1997........ F-41
Statements of Operations (Unaudited) for the Nine and Three Months
Ended September 30, 1998 and 1997................................. F-42
Statements of Cash Flows (Unaudited) for the Nine Months Ended
September 30, 1998 and 1997....................................... F-43
Notes to Consolidated Financial Statements........................... F-44
Independent Auditors' Report......................................... F-45
Balance Sheets as at December 31, 1997 and 1996...................... F-46
Statements of Operations for the Years Ended December 31, 1997,
1996 and 1995..................................................... F-47
Statements of Changes in Partners' Capital for the Years Ended
December 31, 1997, 1996 and 1995.................................. F-48
Statements of Cash Flows for the Years Ended December 31, 1997,
1996 and 1995..................................................... F-49
Notes to Financial Statements........................................ F-50
</TABLE>

F-1
<PAGE> 50
PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma combined financial statements give effect to the
Mergers using the purchase method of accounting, after giving effect to the pro
forma adjustments and assumptions described in the accompanying notes. These
unaudited pro forma financial statements of The Wendt-Bristol Health Services
Corporation have been prepared as if the Mergers of Wendt-Bristol Diagnostics
Company and Wendt-Bristol Diagnostics Co. L.P. had occurred on January 1, 1997.

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

PRO FORMA CONSOLIDATED BALANCE SHEET

AS AT SEPTEMBER 30, 1998

ASSETS

(UNAUDITED)

<TABLE>
<CAPTION>
DIAGNOSTICS DIAGNOSTICS
COMPANY COMPANY PRO FORMA
PRO FORMA PRO FORMA INCLUDING
ADJUSTMENTS ADJUSTMENTS DIAGNOSTICS
HISTORICAL DEBITS CREDITS COMPANY
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
$ 51,428 c
Cash $ 797,980 38,571 f $ 707,981
Restricted Cash 202,018 202,018
Receivables:
Trade, net of allowance for doubtful
accounts of $69,000 1,248,226 1,248,226
Notes receivable 332,003 332,003
Allocation due from limited partnership 697,000 697,000
Miscellaneous 866,412 866,412
----------- ---------- ---------- -----------
3,143,641 -- -- 3,143,641
----------- ---------- ---------- -----------

Inventories 168,765 168,765
Prepaid expenses and other 112,058 112,058
----------- ---------- ---------- -----------
Total current assets 4,424,462 -- 89,999 4,334,463
----------- ---------- ---------- -----------

PROPERTY, PLANT AND EQUIPMENT, AT COST 7,040,986 7,040,986
Less: Accumulated depreciation and
amortization (1,772,069) (1,772,069)
----------- ---------- ---------- -----------
5,268,917 -- -- 5,268,917
----------- ---------- ---------- -----------
INVESTMENTS AND OTHER ASSETS:
Securities available for sale 123,750 123,750
Notes and other receivables, net of current portion 87,640 87,640
Notes receivable from officers, employees and
related parties, net of amounts payable 998,022 998,022
Life insurance premiums receivable 1,060,581 1,060,581
Investment in and related advances, net 3,342,636 3,342,636
Excess of cost over assets of businesses 29,497 b
and subsidiaries acquired, less amortization 344,531 442,460 a 22,123 e 735,371
Deferred charges 544,780 544,780
Other assets 334,909 334,909
----------- ---------- ---------- -----------
Total investments and other assets 6,836,849 442,460 51,620 7,227,689
----------- ---------- ---------- -----------
$16,530,228 $ 442,460 $ 141,619 $16,831,069
=========== ========== ========== ===========

LIABILITIES

CURRENT LIABILITIES:
Accounts payable $ 2,032,299 2,032,299
Accrued expenses and other liabilities
Salaries and wages 166,638 166,638
Taxes, other than federal income taxes 123,841 123,841
Interest 92,758 92,758
Other 66,426 66,426
Long-term obligations classified as current 353,132 353,132
----------- ---------- ---------- -----------
Total current liabilities 2,835,094 -- -- 2,835,094
----------- ---------- ---------- -----------
LONG-TERM OBLIGATIONS, LESS AMOUNTS CLASSIFIED
AS CURRENT 6,808,314 6,808,314
----------- ---------- ---------- -----------

Total liabilities 9,643,408 -- -- 9,643,408
----------- ---------- ---------- -----------

542,718 a
MINORITY INTERESTS 578,483 35,865 d (100)
----------- ---------- ---------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock -- 857,140 a 857,140
Common stock 82,485 82,485
Capital in excess of par 10,260,927 10,260,927
Net unrealized losses on securities
available for sale, net of tax (36,659) (36,659)
22,123 g 35,865 g
29,497 h 128,038 h
51,428 c
Retained earnings (deficit) (1,396,312) 38,571 f (1,374,028)
----------- ---------- ---------- -----------
8,910,441 141,619 1,021,043 9,789,865
Treasury stock, at cost (2,602,104) (2,602,104)
----------- ---------- ---------- -----------
Total stockholders' equity 6,308,337 141,619 1,021,043 7,187,761
----------- ---------- ---------- -----------

16,530,228 $ 720,202 $1,021,043 $16,831,069
=========== ========== ========== ===========
</TABLE>

<TABLE>
<CAPTION>
DIAGNOSTICS DIAGNOSTICS PROFORMA
CO. L.P. CO. L.P. INCLUDING
PRO FORMA PRO FORMA DIAG COMPANY
ADJUSTMENTS ADJUSTMENTS AND
DEBITS CREDITS DIAG CO. L.P.
------------ ------------ -------------
<S> <C> <C> <C>
CURRENT ASSETS: $ 2,793 A
6,500 F $ 86,305 H
Cash 1,000 I 64,729 L $ 567,240
Restricted Cash 202,018
Receivables:
Trade, net of allowance for doubtful
accounts of $184,000 1,378,346 A 2,626,572
Notes receivable 21,488 A 353,491
257,000 I
Allocation due from limited partnership 440,000 F --
Miscellaneous 13,349 A 879,761
------------ ----------- -----------
1,413,183 697,000 3,859,824
------------ ----------- -----------

Inventories 168,765
Prepaid expenses and other 53,252 A 165,310
------------ ----------- -----------
Total current assets 1,476,728 848,034 4,963,157
------------ ----------- -----------

7,478,763 A
PROPERTY, PLANT AND EQUIPMENT, AT COST 783,873 D 15,303,622
3,437,521 A
Less: Accumulated depreciation and 52,156 J
amortization 69,541 E (5,331,287)
------------ ----------- -----------
8,262,636 3,559,218 9,972,335
------------ ----------- -----------
INVESTMENTS AND OTHER ASSETS:
Securities available for sale 123,750
Notes and other receivables, net of current portion 147,361 A 235,001
Notes receivable from officers, employees and
related parties, net of amounts payable 998,022
Life insurance premiums receivable 1,060,581
1,131,963 A
Investment in and advances, net 567,870 A 1,642,803
Excess of cost over assets of businesses 860,829 D 57,389 E
and subsidiaries acquired, less amortization 43,041 J 1,495,770
Deferred charges 152,765 A 697,545
117,106 K
Other assets 146,282 G 598,297
------------ ----------- -----------
Total investments and other assets 1,424,343 1,800,263 6,851,769
------------ ----------- -----------

$ 11,163,707 $ 6,207,515 $21,787,261
============ =========== ===========

LIABILITIES
CURRENT LIABILITIES:
Accounts payable $ $ 591,731 A $ 2,624,030
Accrued expenses and other liabilities
Salaries and wages 32,852 A 199,490
Taxes, other than federal income taxes 10,073 A 133,914
Interest 38,081 A 130,839
Other 162,653 A 229,079
Long-term obligations classified as current 663,261 A 1,016,393
Federal income taxes payable --
------------ ----------- -----------
Total current liabilities -- 1,498,651 4,333,745
------------ ----------- -----------
LONG-TERM OBLIGATIONS, LESS AMOUNTS CLASSIFIED
AS CURRENT 2,828,003 A 9,636,317
------------ ----------- -----------

Total liabilities -- 4,326,654 13,970,062
------------ ----------- -----------

215,891 A 251,441 I
440,000 F 455,268 F
MINORITY INTERESTS 257,000 F 206,282 D --
------------ ----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock 1,438,420 D 2,295,560
Common stock 82,485
Capital in excess of par 10,260,927
Net unrealized losses on securities
available for sale, net of tax (36,659)
3,772,831 M 3,544,299 M
4,497,865 N 4,212,291 N
64,729 L
143,842 F
Retained earnings (deficit) 86,305 H (2,183,010)
------------ ----------- -----------
8,565,572 9,195,010 10,419,303
Treasury stock, at cost (2,602,104)
------------ ----------- -----------
Total stockholders' equity 8,565,572 9,195,010 7,817,199
------------ ----------- -----------

$ 9,478,463 $14,434,655 $21,787,261
============ =========== ===========
</TABLE>

F-2
<PAGE> 51

PRO FORMA FINANCIAL INFORMATION

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998

(UNAUDITED)

<TABLE>
<CAPTION>
DIAGNOSTICS DIAGNOSTICS
COMPANY COMPANY PRO FORMA
PRO FORMA PRO FORMA INCLUDING
ADJUSTMENTS ADJUSTMENTS DIAGNOSTICS
HISTORICAL DEBITS CREDITS COMPANY
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 819,978 $ -- $ 819,978
Service income 4,595,723 4,595,723
----------- -----------
5,415,701 5,415,701
----------- -----------
Cost and expenses:
Cost of sales 621,243 621,243
Selling, general and administrative
expenses, net 4,593,502 22,123 e 4,615,625
Depreciation 187,232 187,232
----------- -----------
5,401,977 5,424,100
Operating income (loss) 13,724 (8,399)
Other income (expense):
Minority interests in loss (earnings), net of tax (35,865) 35,865 d --
Interest expense, net (160,210) (160,210)
Equity in earnings of affiliates 86,190 86,190
Other, net 20,232 20,232
----------- -----------
(89,653) (53,788)
----------- -----------
Income (loss) before income taxes (75,929) (62,187)
Income tax benefit (expense) 17,100 17,100
----------- -------- -------- -----------
Net income (loss) $ (58,829) $ 22,123 g $ 35,865 g $ (45,087)
=========== ======== ======== ===========
Income (loss) per common share:
Basic $ (0.01) $ (0.01)
=========== ===========
Diluted $ (0.01) $ (0.01)
=========== ===========
Weighted average shares outstanding:
Basic 6,108,144 6,108,144
=========== ===========
Diluted 6,108,144 6,108,144
=========== ===========
Ratio of earnings to fixed charges 0.814
===========
</TABLE>

<TABLE>
<CAPTION>
DIAGNOSTICS DIAGNOSTICS PROFORMA
PRO FORMA CO. L.P. CO. L.P. INCLUDING
INCLUDING PRO FORMA PRO FORMA DIAG COMPANY
DIAGNOSTICS ADJUSTMENTS ADJUSTMENTS AND
COMPANY DEBITS CREDITS DIAG CO. L.P.
----------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 819,978 $ -- $ 819,978
Service income 4,595,723 3,176,752 B 7,772,475
----------- -----------
5,415,701 8,592,453
----------- -----------
Cost and expenses:
Cost of sales 621,243 621,243
Selling, general and administrative 43,041 J
expenses, net 4,615,625 2,624,235 B 7,282,901
52,156 J
Depreciation 187,232 377,491 B 616,879
----------- -----------
5,424,100 8,521,023
Operating income (loss) (8,399A) 71,430
Other income (expense):
Minority interests in loss (earnings), net of tax -- 250,441 I 250,441 B --
Interest expense, net (160,210) 304,483 B (464,693)
Equity in earnings of affiliates 86,190 119,500 B (33,310)
Other, net 20,232 1,484 B 18,748
---------- -----------
(53,708) (479,255)
---------- -----------
Income (loss) before income taxes (62,187) (407,825)
Income tax benefit (expense) 17,100 117,106 K 134,206
---------- ---------- ----------- -----------
Net income (loss) $ (45,087) $3,772,831 M $ 3,544,299 M $ (273,619)
========== ========== =========== ===========
Income (loss) per common share:
Basic $ (0.01) $ (0.06)
========== ============
Diluted $ (0.01) $ (0.06)
========== ============
Weighted average shares outstanding:
Basic 6,108,144 6,108,144
========== ============
Diluted 6,108,144 6,108,144
========== ============
Ratio of earnings to fixed charges 0.349
============
</TABLE>

F-3
<PAGE> 52
PRO FORMA FINANCIAL INFORMATION

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)

<TABLE>
<CAPTION>
DIAGNOSTICS DIAGNOSTICS
COMPANY COMPANY PRO FORMA
PRO FORMA PRO FORMA INCLUDING
ADJUSTMENTS ADJUSTMENTS DIAGNOSTICS
HISTORICAL DEBITS CREDITS COMPANY
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 2,435,334 $ -- $ -- $ 2,435,334
Service income 14,694,917 14,694,917
----------- -----------
17,130,251 17,130,251
----------- -----------
Cost and expenses:
Cost of sales 1,820,352 1,820,352
Selling, general and administrative
expenses, net 14,088,614 29,497 b 14,118,111
Depreciation 359,636 359,636
----------- -----------
16,268,602 16,298,099
Operating income 861,649 832,152
Other income (expense):
Minority interests in loss (earnings), net of tax (128,038) 128,038 a --
Interest expense, net (893,101) (893,101)
Equity in earnings of affiliates 348,206 348,206
Gain on sale of nursing homes assets 1,778,007 1,778,007
Other, net 12,190 12,190
----------- -----------
1,117,264 1,245,302
----------- -----------
Income before income taxes 1,978,913 2,077,454
Income tax benefit (expense) (197,300) (197,300)
----------- ------- ---------- -----------
Net income $ 1,781,613 $29,497 h $ 128,038 h $ 1,880,154
=========== ======= ========= ===========
Income per common share:
Basic $ 0.29 $ 0.29
=========== ===========
Diluted $ 0.26 $ 0.27
=========== ===========
Weighted average shares outstanding:
Basic 6,224,241 6,224,241
=========== ===========
Diluted 6,916,241 7,201,954
=========== ===========
Ratio of earnings to fixed charges 2.864
===========
</TABLE>

<TABLE>
<CAPTION>
DIAGNOSTICS DIAGNOSTICS PROFORMA
PRO FORMA CO. L.P. CO. L.P. INCLUDING
INCLUDING PRO FORMA PRO FORMA DIAG COMPANY
DIAGNOSTICS ADJUSTMENTS ADJUSTMENTS AND
COMPANY DEBITS CREDITS DIAG CO. L.P.
---------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 2,435,334 $ -- $ -- $ 2,435,334
Service income 14,694,917 3,741,180 C 18,436,097
----------- -----------
17,130,251 20,871,431
----------- -----------
Cost and expenses:
Cost of sales 1,820,352 1,820,352
Selling, general and administrative 57,389 E
expenses, net 14,118,111 3,078,779 C 17,254,279
69,541 E
Depreciation 359,636 463,727 C 892,904
----------- -----------
16,298,099 19,967,535
Operating income 832,152 903,896
Other income (expense):
Minority interests in loss (earnings), net of tax -- 304,926 F 304,926 C --
Interest expense, net (893,101) 371,777 C (1,264,878)
Equity in earnings of affiliates 348,206 149,526 C 198,680
Gain on sale of nursing homes assets 1,778,007 1,778,007
Other, net 12,190 19,903 C 32,093
----------- -----------
1,245,302 743,902
----------- -----------
Income before income taxes 2,077,454 1,647,798
Income tax benefit (expense) (197,300) 2,200 C 146,282 G (53,218)
----------- ---------- ----------- -----------
Net income $ 1,880,154 $4,497,865 N $ 4,212,291 N $ 1,594,580
=========== ========== =========== ===========
Income per common share:
Basic $ 0.29 $ 0.23
=========== ===========
Diluted $ 0.27 $ 0.21
========= ===========
Weighted average shares outstanding:
Basic 6,224,241 6,224,241
========= ===========
Diluted 7,201,954 7,681,427
========= ===========
Ratio of earnings to fixed charges 1.859
===========
</TABLE>

F-4
<PAGE> 53
COMPUTATION OF PRO FORMA EARNINGS PER SHARE
BASIC AND DILUTED

NINE MONTHS ENDED SEPTEMBER 30, 1998

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DIAGNOSTICS WITH DIAGNOSTICS DIAGNOSTICS WITH ALL
BASIC EARNINGS HISTORICAL COMPANY COMPANY ONLY CO. L.P. TRANSACTIONS
- -------------- ---------- ----------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net income (loss) $ (58,829) $ 13,742 $ (45,087) $ (228,532) $ (273,619)
Less: Preferred stock dividends -- (38,571) (38,571) (64,729) (103,300)
---------- ----------- ---------- ----------- -----------
Net income (loss) available to
common s/h (58,829) (24,829) (83,658) (293,261) (376,919)
---------- ----------- ---------- ----------- -----------
DILUTED EARNINGS (loss)
- ----------------
Add: Effect of convertible bonds -- --
Effect of options -- --
Preferred stock dividends* -- --
========== =========== ========== =========== ===========
Income (loss) assuming conversions $ (58,829) $ (24,829) $ (83,658) $ (293,261) $ (376,919)
========== =========== ========== =========== ===========
Weighted average shares outstanding:
Basic 6,108,144 6,108,144 6,108,144
---------- ----------- ---------- ----------- -----------
Effect of convertible bonds -- --
Effect of options -- --
Effect of preferred shares* -- --
---------- ----------- ---------- ----------- -----------
Diluted shares 6,108,144 -- 6,108,144 -- 6,108,144
---------- ----------- ---------- ----------- -----------
Income (loss) per common share:
Basic $ (.01) $ (.01) $ (.06)
========== ========== ===========
Diluted $ (.01) $ (.01) $ (.06)
========== ========== ===========
</TABLE>

COMPUTATION OF PRO FORMA EARNINGS PER SHARE
BASIC AND DILUTED
YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
DIAGNOSTICS WITH DIAGNOSTICS DIAGNOSTICS WITH ALL
BASIC EARNINGS HISTORICAL COMPANY COMPANY ONLY CO. L.P. TRANSACTIONS
- -------------- ---------- ----------- ---------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net income $1,781,613 $ 98,541 $1,880,154 $ (285,574) $ 1,594,580
Less: Preferred stock dividends -- (51,428) (51,428) (86,305) (137,733)
---------- ----------- ---------- ----------- -----------
Net income available to common s/h 1,781,613 47,113 1,828,726 (371,879) 1,456,847
---------- ----------- ---------- ----------- -----------
DILUTED EARNINGS
- ----------------
Add: Effect of convertible bonds 35,200 35,200 35,200
Effect of options 15,017 15,017 15,017
Preferred stock dividends -- 51,428 51,428 86,305 137,733
---------- ----------- ---------- ----------- -----------
Income assuming conversions $1,831,830 $ 98,541 $1,930,371 $ (285,574) $ 1,644,797
========== =========== ========== =========== ===========
Weighted average shares outstanding:
Basic 6,224,241 6,224,241 6,224,241
---------- ----------- ---------- ----------- -----------
Effect of convertible bonds 500,000 500,000 500,000
Effect of options 192,000 192,000 192,000
Effect of preferred shares 285,713 285,713 479,473 765,186
---------- ----------- ---------- ----------- -----------
Diluted shares 6,916,241 285,713 7,201,954 479,473 7,681,427
---------- ----------- ---------- ----------- -----------
Income per common share:
Basic $ .29 $ .29 $ .23
========== ========== ===========
Diluted $ .26 $ .27 $ .21
========== ========== ===========
</TABLE>

* The preferred shares were not included in the computation because they
would be anti-dilutive.

F-5
<PAGE> 54

NOTES TO PRO FORMA FINANCIAL STATEMENTS
- ---------------------------------------

The unaudited pro forma combined financial statements give effect to the Mergers
using the purchase method of accounting, after giving effect to the pro forma
adjustments and assumptions described in the accompanying notes. These unaudited
pro forma financial statements of The Wendt-Bristol Health Services Corporation
have been prepared as if the Mergers of Wendt-Bristol Diagnostics Company and
Wendt-Bristol Diagnostics Co. L.P. had occurred on January 1, 1997.

NOTE 1 - PRO FORMA ADJUSTMENTS RELATING TO THE MERGER OF WENDT-BRISTOL
DIAGNOSTICS COMPANY

The public offering of WBDC had an initial price to the public of $5.00 per
share. Despite significant efforts by the Company and its representatives, the
"Best Efforts" offering had disappointing sales, far less than expectations. As
a result of the limited number of shares in the marketplace, trading has become
especially difficult with an inability to trade at the initial price.

After consideration of the circumstances, management concluded that it would be
appropriate to offer remaining shareholders (less than 15% of outstanding
shares) an exchange value equivalent to the initial offering price.

The value of the Wendt-Bristol Diagnostics Company 171,429 minority common
shares (approximately 14.5% of the total outstanding) was determined by
converting the 171,429 shares into 42,857 shares (4:1 ratio) of Wendt-Bristol
Health Services Preferred Stock with a stated value of $20 per share. The
difference between the purchase price of $857,140 and the amount due to the
minority shareholders of $414,680 results in an excess of cost over assets
acquired (goodwill) of $442,460 being recorded on the balance sheet of
Wendt-Bristol Health Services. Such amount is being amortized over fifteen years
in this Pro Forma presentation.

The pro forma balance sheet includes adjustments for the issuance of preferred
stock and payment of preferred dividends at the annual rate of $1.20 per share.
The pro forma statements of operations include adjustments for depreciation,
amortization of goodwill, and the inclusion of the minority share of earnings,
historically included in the consolidated statements of Wendt-Bristol Health
Services Corporation.

The following is a description of the adjustments presented in the Pro Forma
financial statements:

a. To record the issuance of 42,857 shares of $20 stated value Preferred Stock
of Wendt-Bristol Health Services for the 171,429 minority shares outstanding
of Wendt-Bristol Diagnostics Company. Utilizing the purchase method of
accounting for the purchase of these shares results in goodwill of $442,460.

b. To record the amortization of goodwill resulting from the exchange
transaction for the year ended December 31, 1997.

c. To record the payment of cash dividends on the 42,857 preferred shares issued
for the year ended December 31, 1997.

d. To eliminate the minority earnings of WBDC for the nine months ended
September 30, 1998 due to the consolidation of its financial statements.

e. To record the amortization of goodwill resulting from the exchange
transaction for the nine months ended September 30, 1998.

f. To record the payment of cash dividends on the 42,857 preferred shares issued
for the nine months ended September 30, 1998.

g. To record income statement adjustments to retained earnings for the nine
months ended September 30, 1998.

h. To record income statement adjustments to retained earnings for the years
ended December 31, 1997.

NOTE 2 - PRO FORMA ADJUSTMENTS RELATING TO THE MERGER OF WENDT-BRISTOL
DIAGNOSTICS COMPANY L.P.

The Company determined the fair value of the Partnership Units by considering
their initial price, limited marketability and the Unitholder's recovery of
their initial investment. The price the initial Unitholders (limited partners)
paid for their units was $10.00 per unit. As a result of the diminished
marketability of the units resulting primarily from the effects of a lack of
cash flow available for distribution, $10.00 per unit has been established as
the fair value to ensure that the Unitholders would receive securities that
matched the initial investment in the Partnership (exclusive of distributions)
and that such services could be traded in an established market, conditioned
upon the acceptance of the Company's application for listing on the American
Stock Exchange.

The value of the Wendt-Bristol Diagnostics Company L.P. 143,842 minority
units was determined by converting the 143,842 units into 71,921 shares (2:1
ratio) of Wendt-Bristol Health Services Preferred Stock with a stated value of
$20 per share. The difference between the purchase price of $1,438,420 and the
amount due from the minority unitholders of $206,282 results in a fair market
revaluation of fixed assets of $783,873 and an excess cost over assets acquired
(goodwill) of $860,829 being recorded on the balance sheet of Wendt-Bristol
Health Services. The fixed assets are depreciated over 10-40 years and the
goodwill is amortized over fifteen years.

The pro forma balance sheet includes adjustments for the issuance of preferred
stock and payment of preferred dividends at the annual rate of $1.20 per share
and for partnership distributions made in 1997. The pro forma statements of
operations include adjustments for depreciation, amortization of goodwill, and
the inclusion of the minority shares of losses, net of tax, historically
included in the consolidated statements of Wendt-Bristol Health Services
Corporation.

The following is a description of the adjustments presented in the Pro Forma
financial statements:

A. To combine the balance sheet of Wendt-Bristol Diagnostics Company L.P. at
September 30, 1998.

B. To combine the income statement of Wendt-Bristol Diagnostics Company L.P. for
the nine months ended September 30, 1998.

C. To combine the income statement of Wendt-Bristol Diagnostics Company L.P. for
the year ended December 31, 1997.

D. To record the issuance of 71,921 shares of $20 stated value Preferred Stock
of The Wendt-Bristol Health Services Corporation for the 143,842 outstanding
limited partnership units of Wendt-Bristol Diagnostics Company L.P.

E. To record additional depreciation and amortization relating to the merger for
the year ended December 31, 1997.

F. To eliminate the minority earnings of Wendt-Bristol Diagnostics Company L.P.
for the year ended December 31, 1997 due to the consolidation of its
financial statements.

G. To record the income tax effect (at 34%) of the partnership units acquired
for the year ended December 31, 1997.

H. To record the payment of cash dividends on the 71,921 preferred shares issued
for the year ended December 31, 1997.

I. To eliminate the minority earnings of Wendt-Bristol Diagnostics Company L.P.
for the nine months ended September 30, 1998 due to the consolidation of its
financial statements.

J. To record depreciation and amortization relating to the merger for the nine
months ended September 30, 1998.

K. To record the income tax effect (at 34%) of the partnership units acquired
for the nine months ended September 30, 1998.

L. To record the payment of cash dividends on the 71,921 preferred shares issued
for the nine months ended September 30, 1998.

M. To record income statement adjustments to retained earnings for the nine
months ended September 30, 1998.

N. To record income statement adjustments to retained earnings for the year
ended December 31, 1997.

NOTE 3 - RATIO OF EARNINGS TO FIXED CHARGES

F-6
<PAGE> 55
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS AT SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
-------------- ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash ...................................................................... $ 797,980 $ 625,109
Restricted Cash ........................................................... 202,018 221,120
Receivables:
Trade, net of allowance for doubtful
accounts of $69,000 and $101,000 (1998 and 1997) ................... 1,248,226 1,899,967
Notes receivable, current portion ..................................... 332,003 3,216,654
Allocation due from limited partnership (Notes 2 and 8) ............... 697,000 440,000
Miscellaneous ......................................................... 866,412 1,184,921
----------- -----------
3,143,641 6,741,542
----------- -----------

Inventories ............................................................... 168,765 202,951
Prepaid expenses and other current assets ................................. 112,058 66,655
----------- -----------
Total current assets ............................................... 4,424,462 7,857,377
----------- -----------

PROPERTY, PLANT AND EQUIPMENT AT COST .......................................... 7,040,986 5,768,148
Less: Accumulated depreciation and
amortization .......................................................... (1,772,069) (1,656,764)
----------- -----------
5,268,917 4,111,384
----------- -----------
INVESTMENTS AND OTHER ASSETS:
Securities available for sale, at market .................................. 123,750 --
Notes and other receivables, net of current portion ....................... 87,640 257,949
Notes receivable from officers, employees and
related parties, net of amounts payable ............................... 998,022 902,271
Life insurance premiums receivable ........................................ 1,060,581 972,451
Investments and related advances, net ..................................... 3,342,636 2,416,998
Excess of cost over assets of subsidiary acquired, net .................... 344,531 355,439
Deferred charges .......................................................... 544,780 535,138
Other assets .............................................................. 334,909 235,854
----------- -----------
Total investments and other assets ................................. 6,836,849 5,676,100
----------- -----------
$16,530,228 $17,644,861
=========== ===========

LIABILITIES
CURRENT LIABILITIES:
Accounts payable .......................................................... $ 2,032,299 $ 2,789,660
Accrued expenses and other liabilities
Salaries and wages .................................................... 166,638 499,571
Taxes, other than federal income taxes ................................ 123,841 192,974
Interest .............................................................. 92,758 77,565
Other ................................................................. 66,426 678,517
Long-term obligations classified as current ............................... 353,132 344,807
Federal income taxes payable .............................................. -- 40,000
----------- -----------
Total current liabilities .......................................... 2,835,094 4,623,094
----------- -----------
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
LESS CURRENT PORTION ...................................................... 6,808,314 6,034,023
----------- -----------

Total liabilities .................................................. 9,643,408 10,657,117
----------- -----------

MINORITY INTERESTS ............................................................. 578,483 542,618

STOCKHOLDERS' EQUITY
Preferred stock, $20 stated value, authorized 500,000
shares, issued, none (note 17) ........................................ -- --
Common stock, $.01 par, authorized 12,000,000 shares,
issued, 8,248,480 shares .............................................. 82,485 82,485
Capital in excess of par .................................................. 10,260,927 10,244,805
Net unrealized gains (losses) on securities
available for sale, net of tax ........................................ (36,659) --
Retained earnings (deficit) ............................................... (1,396,312) (1,337,483)
----------- -----------
8,910,441 8,989,807
----------- -----------
Treasury stock, at cost, 2,079,901 shares (September)
and 2,067,254 shares (December) ....................................... (2,602,104) (2,544,681)
----------- -----------
Total stockholders' equity ......................................... 6,308,337 6,445,126
----------- -----------
$16,530,228 $17,644,861
=========== ===========
</TABLE>

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

F-7

<PAGE> 56

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- --------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Net sales ............................................ $ 819,978 $ 1,924,713 $ 271,546 $ 504,305
Service income ....................................... 4,595,723 10,945,140 1,641,009 3,764,955
---------- ----------- ---------- ----------
5,415,701 12,869,853 1,912,555 4,269,260

Cost and expenses:
Cost of sales ........................................ 621,243 1,479,636 205,575 416,363
Selling, general and administrative .................. 4,593,502 10,480,568 1,765,667 3,567,894
Depreciation ......................................... 187,232 385,080 66,232 128,922
---------- ----------- ---------- ----------
5,401,977 12,345,284 2,037,474 4,113,179

Operating income (loss) ................................... 13,724 524,569 (124,919) 156,081

Other income (expense):
Equity in earnings of affiliates, net of minority
interests in affiliates (Note 6).................... 50,325 330,295 15,817 105,451
Interest expense, net ................................ (160,210) (677,649) (83,199) (217,662)
Other, net ........................................... 20,232 56,690 5,483 24,111
---------- ----------- ---------- ----------
(89,653) (290,664) (61,899) (88,100)

Income (loss) before income taxes ......................... (75,929) 233,905 (186,818) 67,981

Income tax benefit (expense) .............................. 17,100 (14,300) 20,600 (5,100)
---------- ----------- ---------- ----------

Net income (loss) ......................................... $ (58,829) $ 219,605 $ (166,218) $ 62,881
========== =========== ========== ==========
Income (loss) per common share:
Basic ................................................ $ (0.01) $ 0.04 $ (0.03) $ 0.01
========== =========== ========== ==========
Diluted .............................................. $ (0.01) $ 0.03 $ (0.03) $ 0.01
========== =========== ========== ==========
Weighted average shares outstanding:
Basic ................................................ 6,108,144 6,237,303 6,139,889 6,228,326
========== =========== ========== ==========
Diluted .............................................. 6,108,144 6,290,097 6,139,889 6,263,526
========== =========== ========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-8
<PAGE> 57

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------------- ----------------------
1998 1997 1998 1997
----- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) $(58,829) $219,605 $(166,218) $62,881

Unrealized loss on securities available
for sale, net of tax benefit of $18,900 (36,659) -- (36,659) --
-------- -------- --------- -------
Comprehensive income (loss) $(95,488) $219,605 $(202,877) $62,881
======== ======== ========= =======
</TABLE>

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

F-9
<PAGE> 58

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1998 1997
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $ (58,829) $ 219,605
----------- -----------
Adjustments required to reconcile net income (loss) to net
cash provided by operating activities:
Amortization, depreciation and other, net............... 198,140 431,341
Provision for losses on notes and accounts receivable... 25,124 31,116
Loss on disposition of assets........................... 3,391 --
Minority interest in earnings (losses) of
affiliates............................................. 35,865 148,496
Equity in net earnings of affiliates.................... (86,190) (478,791)
Changes in assets and liabilities:
Receivables
Purchase of receivables............................ -- (250,358)
Other changes...................................... 945,815 (366,512)
Merchandise inventories............................... 34,186 140,350
Prepaid expenses and other current assets............. (33,587) 24,151
Accounts payable...................................... (757,361) 378,609
Accrued expenses and other liabilities................ (998,964) (1,426,417)
Federal income taxes payable.......................... (40,000) --
Deferred charges and other............................ (89,780) (35,035)
----------- -----------
Total adjustments......................................... (763,361) (1,403,050)
----------- -----------
Net cash used in operating activities....................... (822,190) (1,183,445)
----------- -----------
Cash flows from investing activities:
(Increase) decrease in notes receivable................... 3,054,960 (178,549)
Investment and related advances........................... (1,400,100) (1,433,804)
Purchase of marketable securities......................... (179,309)
Disbursements to related parties and former affiliates,
net..................................................... (183,881) (33,298)
Utilization of or (deposit to) restricted cash............ 19,102 (143,804)
Capital expenditures...................................... (176,012) (231,092)
----------- -----------
Net cash provided by (used in) investing activities......... 1,134,760 (2,020,547)
----------- -----------
Cash flows from financing activities:
Distributions from limited partnership.................... -- 143,842
Treasury stock purchased.................................. (318,108) (69,414)
Proceeds from the sale of Treasury stock.................. 264,991
Purchase of common stock/partnership units of affiliates.. -- (3,600)
Proceeds from officer obligation.......................... 50,000 90,000
Principal payments of officer obligation.................. (50,000) (145,000)
Proceeds from stock options............................... -- 4,375
Principal payments of long-term obligations............... (86,582) (553,106)
Proceeds from long-term obligations....................... -- 3,554,934
Net payments to securitization program.................... -- (392,287)
----------- -----------
Net cash provided by (used in) financing activities......... (139,699) 2,629,744
----------- -----------
Net increase (decrease) in cash............................. 172,871 (574,248)
Cash at beginning of period................................. 625,109 890,128
----------- -----------
Cash at end of period....................................... $ 797,980 $ 315,880
=========== ===========
Cash paid during the nine months for:
Interest, net of interest income.......................... $ 145,017 $ 635,461
Income taxes.............................................. $ 95,037 $ 10,550
Supplemental disclosures of noncash investing and financing
activity:
A subsidiary purchased equipment which was financed
by entering into installment finance agreements.
Increase in equipment cost, net......................... $ 869,198 $ --
Increase in long-term obligations....................... (869,198) --
The company purchased marketable securities and in
accordance with the provisions of SFAS No. 115, has
recognized an unrealized loss on the balance sheet as
a component of stockholders' equity.
Increase in unrealized (gains) losses on securities
available for sale, net of tax...................... $ 36,659
Increase in other assets.............................. 18,900
Decrease in securities available for sale............. (55,559)
A subsidiary of the Company is a general partner in a
limited partnership. Capital was reallocated from
the general partner to the limited partners resulting
in a receivable from the limited partners.
Increase in miscellaneous receivables................. $ 257,000
Decrease in investment and related advances........... (257,000)
</TABLE>

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

F-10
<PAGE> 59

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. MANAGEMENT'S REPRESENTATION

In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting only of normal
adjustments and recurring accruals) necessary to present fairly The
Wendt-Bristol Health Services Corporation ("Wendt-Bristol" or "Company") and
subsidiaries consolidated financial position as at September 30, 1998 and
December 31, 1997 and the consolidated results of its operations for the three
and nine months ended September 30, 1998 and 1997 as well as the cash flows for
the respective nine months. The results of operations for any interim period are
not necessarily indicative of results for the full year.

2. RECLASSIFICATIONS

Certain amounts on the balance sheet at December 31, 1997 have been
reclassified to conform with the presentation at September 30, 1998.

3. INCOME TAXES

Federal, state and local taxes are summarized as follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
1998 1997 1998 1997
-------- ------- -------- ------
<S> <C> <C> <C> <C>
Federal taxes:
Current expense (benefit)................... $ 16,000 $ -- $ 19,000 $ --
Deferred expense (benefit).................. (41,300) -- (41,300) --
State and local taxes:
Current expense............................. 8,200 14,300 1,700 5,100
-------- ------- -------- ------
Total expense (benefit)............. $(17,100) $14,300 $(20,600) $5,100
======== ======= ======== ======
</TABLE>

4. STOCKHOLDERS' EQUITY

At September 30, 1998 there were 414,538 Common Stock purchase warrants
outstanding, exercisable at $3.75 per warrant. Each warrant, upon exercise,
provides two and three quarters (2-3/4) shares of the Company's common stock and
a Series II warrant (issuable upon completion of appropriate Securities and
Exchange Commission filings) exercisable for two shares at $3.00/share. The
Warrants' expiration dates, as amended by the Board of Directors in April 1998,
are May 1, 1999 for the initial Warrant and May 1, 2000 for the Series II
Warrants. There were no warrants exercised during the nine or three months ended
September 30, 1998.

5. EARNINGS PER SHARE

In February 1997, the Financial Accounting Standard Board issued statement
of Financial Accounting Standards No. 128, "Earnings per Share," which changed
the method used to calculate earnings per share. Basic earnings per share has
been calculated as income available to common stockholders divided by the
weighted average number of common shares outstanding. Diluted earnings per share
has been calculated as diluted income available to common stockholders divided
by the diluted weighted average number of common shares. Diluted weighted
average number of common shares has been calculated using the treasury stock

F-11
<PAGE> 60
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

method for Common Stock equivalents, which includes Common Stock issuable
pursuant to stock options and Common Stock warrants. The following is provided
to reconcile the earnings per share calculations:

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------ ------------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Income (loss) available to common
stockholders............................ $ (58,829) $ 219,605 $ (166,218) $ 62,881
Effect of dilutive 5.5% convertible bond
(net of tax)......................... -- -- -- --
---------- ---------- ---------- ----------
Income (loss) available to common
stockholders and assumed conversions.... $ (58,829) $ 219,605 $ (166,218) $ 62,881
========== ========== ========== ==========
Shares:
Weighted average shares (basic)........... 6,108,144 6,237,303 6,139,889 6,228,326
Effect of dilutive securities
Options.............................. --(A) 52,794 --(A) 35,200
Warrants............................. --(B) --(B) --(B) --(B)
Convertible Debt..................... --(C) --(C) --(C) --(C)
---------- ---------- ---------- ----------
Diluted weighted average shares........... 6,108,144 6,290,097 6,139,889 6,263,526
========== ========== ========== ==========
Income (loss) per common share:
Basic................................... $ (0.01) $ 0.04 $ (0.03) $ 0.01
========== ========== ========== ==========
Diluted................................. $ (0.01) $ 0.03 $ (0.03) $ 0.01
========== ========== ========== ==========
</TABLE>

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

(A) Excluded from the computation because their exercise would be anti-dilutive.

(B) 414,538 warrants were excluded from the computation of diluted EPS because
the exercise price was greater than the average market price of the common
shares.

(C) 500,000 shares of common stock associated with the possible conversion of
convertible debt were excluded because the conversion would be
anti-dilutive.

6. AFFILIATES/MINORITY INTEREST

The following table reflects the Company's proportionate share of the
earnings of affiliates accounted for under the equity method of accounting,
less the proportionate share of Minority interest attributable to the minority
investors in the (earnings) losses of consolidated affiliates.

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------- -------------------
1998 1997 1998 1997
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Equity in earnings (losses) of
affiliates............................. $ 86,190 $ 478,791 $ 39,937 $157,708
Minority interest in earnings of
affiliates, net of tax................. (35,865) (148,496) (24,120) (52,257)
-------- --------- -------- --------
$ 50,325 $ 330,295 $ 15,817 $105,451
======== ========= ======== ========
</TABLE>

F-12
<PAGE> 61
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited financial information of the affiliates which are accounted for
by the equity method is summarized below:

Combined Balance Sheets

<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
<S> <C> <C>
Current assets............................................. $ 2,550,974 $1,632,879
Property, plant and equipment net of accumulated
depreciation............................................. 12,672,505 5,212,519
Other non-current assets................................... 751,777 815,063
----------- ----------
Total assets..................................... $15,975,256 $7,660,461
=========== ==========
Liabilities................................................ $14,256,137 $5,027,500
Equity..................................................... 1,719,119 2,632,961
----------- ----------
Total liabilities and equity..................... $15,975,256 $7,660,461
=========== ==========
</TABLE>

Combined Statements of Operations

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- -----------------------
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Service revenues..................... $5,283,712 $4,144,769 $1,900,834 $1,386,228
Operating income (loss).............. $ 45,057 $ 674,876 $ (38,949) $ 161,565
Net income (loss).................... $ (535,877) $ 560,947 $ (290,827) $ 170,538
</TABLE>

As a result of the limited liability companies and limited partnership
being taxed as partnerships for Federal income tax purposes, there is no tax
provided for earnings. See Note 2. Income Taxes.

7. MARKETABLE SECURITIES

The Company determines the appropriate classification of marketable
securities at the time of purchase and reevaluates such designation at each
balance sheet date. Marketable securities have been classified as
available-for-sale and are carried at fair value, with unrealized holding gains
and losses reported as a separate component of stockholders' equity.

8. ALLOCATION DUE FROM LIMITED PARTNERSHIP

A subsidiary of the Company is the general partner in a limited
partnership. Based on the allocation of income in accordance with the
partnership agreement, the balance is due from the limited partners for excess
income allocated to the limited partners' from the general partner. It is
management's estimate that all income reallocated will be restored as a result
of the priorities established in the partnership agreement.

9. NEW ACCOUNTING PRONOUNCEMENTS

On April 3, 1998 the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-up Activities"
which states that the costs of start-up activities, including organization
costs, should be expensed as incurred. Implementation of SOP 98-5 is required
for financial statements issued for fiscal years beginning after December 15,
1998 with the initial application of this SOP being reported as a cumulative
effect of a change in accounting principle. Currently, the Company has an asset
of approximately $171,000 included in the caption "Deferred charges" on the
balance sheet at September 30, 1998, of which $123,000 was capitalized during
the first nine months of 1998. If the SOP was adopted early, there would be a
cumulative charge to earnings at this time of approximately $147,000 for the
consolidated entities.

In addition, entities accounted for by the equity method have deferred
start-up charges on their balance sheets totaling $429,000 at September 30, 1998
of which $114,000 was capitalized during the first nine months of 1998. If SOP
98-5 was adopted early, there would be a cumulative charge to earnings of the
Company relating to affiliates at this time of approximately $102,000.

Other than the above indicated effects of the asset write-off and
respective charge to earnings, there would be no further impact to the Company
as a result of the adoption of this standard.

F-13
<PAGE> 62
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

10. PLANS TO ACQUIRE MINORITY INTERESTS/ISSUANCE OF PREFERRED STOCK

On June 23, 1998 the Company announced its plans to acquire all of the
limited partner interests in Wendt-Bristol Diagnostics Co. L.P., its ten year
old, initial Diagnostic and Radiology Center located in Columbus, Ohio.
Additionally, the Company intends to acquire the approximate 15% of the
outstanding shares that it doesn't already own in the partnership's sole general
partner: Wendt-Bristol Diagnostics Company.

The Board of Directors has approved the issuance of the Company's
authorized, but unissued convertible Series 1 $20.00 Preferred Stock, with
cumulative dividends at 6% per annum (payable quarterly) with the express intent
to accomplish the acquisition of all of the minority interests in each of the
two aforementioned affiliates.

The Company has filed registration statements of Preferred Shares with the
Securities and Exchange Commission (SEC) and a listing application with the
American Stock Exchange. Such filings have had an initial review by the SEC and
the Company is preparing amended registration statements responding to the
comments and utilizing the updated financial information contained herein along
with the Annual Report for the twelve months ended December 31, 1997. It is
anticipated that the issuance of the Preferred Shares and acquisition of the
minority interests will be completed subject to the approval of the limited
partners, the shareholders of Wendt-Bristol Diagnostics Company, the
effectiveness of the amended registration statements to be filed by the Company
with the Securities and Exchange Commission regarding the Preferred Shares, and
any necessary third party consents.

In conjunction with the above and in response to foreign investor interest,
the Company had also filed a registration statement for the possible issuance of
up to 325,000 shares of Preferred Stock for a cash price of $20.00 per share. An
amended registration statement will be filed similarly and concurrently with the
above.

F-14
<PAGE> 63

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
The Wendt-Bristol Health Services Corporation
Columbus, Ohio

We have audited the accompanying consolidated balance sheets of The
Wendt-Bristol Health Services Corporation and Subsidiaries for the years ended
December 31, 1997 and 1996, and the related consolidated statements of income,
cash flows and changes in stockholders' equity for each of the three years in
the period ended December 31, 1997. These financial statements and schedules
referred to below are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedules based on our audits.

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

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The
Wendt-Bristol Health Services Corporation and Subsidiaries at December 31, 1997
and 1996 and the consolidated results of their operations, cash flows and
changes in stockholders' equity for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

/s/ HAUSSER + TAYLOR LLP

Columbus, Ohio

April 20, 1998, except for Note 17 as to which the date is June 23, 1998 and
Note 18 as to which the date is January 27, 1999.

F-15
<PAGE> 64

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS AT DECEMBER 31, 1997 AND 1996

ASSETS

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1997 1996
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash .................................................. $ 625,109 $ 890,128
Restricted Cash ....................................... 221,120 381,025
Receivables:
Trade, net of allowance for doubtful
accounts of $101,000 and $90,000
(1997 and 1996)................................. 1,899,967 1,641,103
Notes receivable, current portion ................. 3,216,654 97,707
Miscellaneous ..................................... 1,624,921 722,937
----------- -----------
6,741,542 2,461,747
----------- -----------

Inventories ........................................... 202,951 482,930
Prepaid expenses and other current assets ............. 66,655 172,404
----------- -----------
Total current assets ........................... 7,857,377 4,388,234
----------- -----------

PROPERTY, PLANT AND EQUIPMENT AT COST ...................... 5,768,148 14,168,601
Less: Accumulated depreciation and
amortization ...................................... (1,656,764) (3,216,920)
----------- -----------
4,111,384 10,951,681
----------- -----------
INVESTMENTS AND OTHER ASSETS:
Notes and other receivables, net of current portion ... 257,949 177,191
Notes receivable from officers, employees and
related parties, net of amounts payable ........... 902,271 993,580
Life insurance premiums receivable .................... 972,451 865,299
Investments and related advances, net ................. 2,416,998 759,852
Excess of cost over assets of subsidiary
acquired, net...................................... 355,439 621,629
Deferred charges ...................................... 535,138 823,867
Other assets .......................................... 235,854 328,631
----------- -----------
Total investments and other assets ............. 5,676,100 4,570,049
----------- -----------

$17,644,861 $19,909,964
=========== ===========
CURRENT LIABILITIES:
Notes payable - officer ............................... $ -- $ 55,000
Securitization program advances ....................... -- 392,287
Accounts payable ...................................... 2,789,660 2,297,666
Accrued expenses and other liabilities
Salaries and wages ................................ 499,571 458,709
Workers' compensation ............................. 50,197 380,502
Taxes, other than federal income taxes ............ 192,974 674,985
Interest .......................................... 77,565 77,250
Stock purchase agreement payable .................. -- 325,000
Other ............................................. 628,320 630,192
Long-term obligations classified as current ........... 344,807 291,300
Federal income taxes payable .......................... 40,000 --
----------- -----------
Total current liabilities ...................... 4,623,094 5,582,891
----------- -----------

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS,
LESS CURRENT PORTION .................................. 6,034,023 9,084,733
----------- -----------

Total liabilities .............................. 10,657,117 14,667,624
----------- -----------

MINORITY INTERESTS ......................................... 542,618 500,310

STOCKHOLDERS' EQUITY
Preferred stock, $20 stated value, authorized 500,000
shares, issued, none (note 17) .................... -- --
Common stock, $.01 par, authorized 12,000,000 shares,
issued, 8,248,480 shares (1997) and 8,243,480
shares (1996) ..................................... 82,485 82,435
Capital in excess of par .............................. 10,244,805 10,238,750
Retained earnings (deficit) ........................... (1,337,483) (3,119,096)
----------- -----------
8,989,807 7,202,089
----------- -----------
Treasury stock, at cost, 2,067,254 shares (1997)
and 2,007,460 shares (1996) ....................... (2,544,681) (2,460,059)
----------- -----------
Total stockholders' equity ..................... 6,445,126 4,742,030
----------- -----------
$17,644,861 $19,909,964
=========== ===========
</TABLE>

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

F-16
<PAGE> 65

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Net sales ....................................... $ 2,435,334 $ 2,816,386 $ 2,708,955
Service income .................................. 14,694,917 14,717,744 14,483,606
----------- ----------- -----------
17,130,251 17,534,130 17,192,561

Cost and expenses:
Cost of sales ................................... 1,820,352 2,071,596 1,920,118
Selling, general and administrative ............. 14,088,614 14,814,307 14,165,023
Depreciation .................................... 359,636 509,996 513,019
----------- ----------- -----------
16,268,602 17,395,899 16,598,160

Operating income ..................................... 861,649 138,231 594,401

Other income (expense):
Equity in earnings of affiliates, net of
minority interests in affiliates (Note 6)...... 220,168 327,868 450,131
Interest expense, net ........................... (893,101) (861,211) (896,867)
Gain on sale of nursing home assets ............. 1,778,007 --
Other, net ...................................... 12,190 102,425 5,726
----------- ----------- -----------
1,117,264 (430,918) (441,010)

Income (loss) before income taxes .................... 1,978,913 (292,687) 153,391

Income tax benefit (expense) ......................... (197,300) 46,409 63,334
----------- ----------- -----------

Net income (loss) .................................... $ 1,781,613 $ (246,278) $ 216,725
=========== =========== ===========
Income (loss) per common share:
Basic ........................................... $ 0.29 $ (0.04) $ 0.04
=========== =========== ===========
Diluted ......................................... $ 0.26 $ (0.04) $ 0.04
=========== =========== ===========
Weighted average shares outstanding:
Basic ........................................... 6,224,241 5,825,686 6,131,770
=========== =========== ===========
Diluted ......................................... 6,916,241 5,825,686 6,131,770
=========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-17
<PAGE> 66

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
COMMON CAPITAL IN RETAINED TREASURY
STOCK EXCESS OF PAR EARNINGS STOCK TOTAL
------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994..................... $82,407 $10,311,509 $(3,089,543) $ (104,826) $ 7,199,547
Shares contributed to
Retirement Plan
(21,764 shares)....... (40,257) 50,157 9,900
Warrants exercised for
common stock.......... 28 3,722 3,750
Treasury stock acquired
(2,500,000 shares)
(Note 2 )............. (2,887,347) (2,887,347)
Net income............... 216,725 216,725
------- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31,
1995..................... 82,435 10,274,974 (2,872,818) (2,942,016) 4,542,575
Shares contributed to
Retirement Plan
(16,262 shares)....... (10,224) 18,957 8,733
Sale of treasury shares
(500,000 shares) (Note
10)................... (26,000) 463,000 437,000
Net loss................. (246,278) (246,278)
------- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31,
1996..................... 82,435 10,238,750 (3,119,096) (2,460,059) 4,742,030
Shares contributed to
Retirement Plan (6,306
shares)............... 1,730 7,728 9,458
Treasury stock acquired
(66,100 shares)....... (92,350) (92,350)
Stock options exercised
(5,000 shares)........ 50 4,325 4,375
Net income............... 1,781,613 1,781,613
------- ----------- ----------- ----------- -----------
BALANCE AT DECEMBER 31,
1997..................... $82,485 $10,244,805 $(1,337,483) $(2,544,681) $ 6,445,126
======= =========== =========== =========== ===========
</TABLE>

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

F-18
<PAGE> 67

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)......................................... $ 1,781,613 $ (246,278) $ 216,725
----------- ----------- -----------
Adjustments required to reconcile net income (loss) to net
cash provided by operating activities:
Amortization, depreciation and other, net............... 350,093 530,481 530,933
Provision for losses on notes and accounts receivable... 59,958 65,480 105,528
Gain on sale of nursing home assets..................... (1,778,007) -- --
Gain on sale of other assets............................ (98,548) -- --
Life insurance premium reserve.......................... -- -- (376,000)
Costs associated with acquisition of minority interest
in limited partnership................................. -- -- 151,950
Minority interest in earnings (losses) of consolidated
subsidiaries........................................... 128,038 97,308 51,725
Equity in earnings of unconsolidated affiliates......... (348,206) (425,176) (501,856)
Changes in assets and liabilities:
Receivables:
Sale (purchase) of receivables...................... (269,176) 494,188 (1,354,048)
Other changes....................................... (68,328) (69,178) 225,534
Inventories........................................... 279,979 6,112 (29,350)
Prepaid expenses and other current assets............. 103,672 324,052 110,705
Accounts payable...................................... 491,994 282,693 (297,946)
Accrued expenses and other liabilities................ (1,550,552) (1,520,547) 508,462
Federal income taxes payable.......................... 40,000 (100,000) (220,000)
Deferred charges and other............................ (32,310) (180,083) 9,468
----------- ----------- -----------
Total adjustments................................... (2,691,393) (494,670) (1,084,895)
----------- ----------- -----------
Net cash provided by (used in) operations........... (914,902) (740,948) (868,170)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of minority interest from limited partners....... -- -- (250,000)
Collection of miscellaneous receivable.................... -- -- 1,700,000
Investments and advances to affiliates, net............... (1,443,982) 311,802 553,018
Collection on sale of nursing homes assets................ 750,000 -- --
Proceeds from sale of other property, plant and equipment
and investments......................................... 115,500 -- --
Investment in unconsolidated affiliates................... (170,911) -- --
Decrease (increase) in notes receivable................... (448,800) (57,701) 243,986
Disbursements to related parties and former affiliates,
net..................................................... (62,669) (236,575) (184,390)
Utilization of (deposit to) restricted cash............... (104,882) (217,063) 243,654
Capital expenditures...................................... (446,027) (219,040) (331,726)
----------- ----------- -----------
Net cash provided by (used in) investing
activities.......................................... (1,811,771) (418,577) 1,974,542
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Distributions to limited partners, net.................... 143,842 -- 143,842
Purchase of common stock of subsidiary.................... (85,730) (8,000) (2,000)
Proceeds from sale of treasury stock...................... -- 500,000 --
Treasury stock purchased.................................. (92,350) -- --
Proceeds from officer obligation.......................... 90,000 (305,000) --
Principal payments of officer obligation.................. (145,000) 360,000 --
Proceeds from warrants and options exercised.............. 4,375 -- 3,750
Principal payments on long-term obligations............... (666,130) (508,349) (807,049)
Proceeds from borrowing on long-term obligations.......... 3,604,934 1,583,390 4,520
Net advances from (payments to) securitization program.... (392,287) 392,287 (478,500)
----------- ----------- -----------
Net cash provided by (used in) financing
activities.......................................... 2,461,654 2,014,328 (1,135,437)
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH............................. (265,019) 854,803 (29,065)
CASH -- BEGINNING OF PERIOD................................. 890,128 35,325 64,390
----------- ----------- -----------
CASH -- END OF PERIOD....................................... $ 625,109 $ 890,128 $ 35,325
=========== =========== ===========
</TABLE>

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

F-19
<PAGE> 68

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND GENERAL

A. PRINCIPLES OF CONSOLIDATION

The primary business of The Wendt-Bristol Health Services Corporation and
its Subsidiaries (the "Company") is to provide health care services. Through
subsidiaries, The Wendt-Bristol Company ("W-B"), itself a subsidiary, operates
three nursing homes (two disposed of at December 31, 1997) and a home health
care delivery service (ceased operations during 1997). Additionally, the Company
operates a retail pharmacy in Ohio and is the landlord of a non-related
manufacturing building (see Note 12A).

A subsidiary of W-B is a member in three limited liability companies (LLC)
and general partner of a limited partnership. One LLC operates a diagnostic
center that features an open-field magnetic resonance imaging device. The second
LLC operates a radiation therapy practice. The third LLC has acquired land for
which it has commenced construction (in 1998) of a medical complex, a
significant portion of which Company affiliates will rent and operate. The
limited partnership operates a diagnostic center featuring fixed site magnetic
resonance imaging ("MRI"), CT Scan, Sonography and other modalities. Investments
in affiliated companies and limited partnership, owned 22 1/2% to 50% inclusive
are stated at cost of investment plus the Company's equity in undistributed net
income since acquisition. The change in the equity in net income of these
companies is included in equity in earnings of affiliates in the Consolidated
Statements of Operations.

The consolidated financial statements include the accounts of all companies
of which The Wendt-Bristol Health Services Corporation or a wholly-owned
subsidiary has majority ownership. All material intercompany transactions have
been eliminated in consolidation.

B. ACQUISITIONS AND DISPOSITIONS OF SUBSIDIARIES, SIGNIFICANT ASSETS,
PARTNERSHIP INTERESTS OR OWNERSHIP INTERESTS

Effective at the close of business on December 31, 1997, the Company sold
all of the operating assets of two of its three nursing homes for a total
purchase price of approximately $9.9 million. This was financed with cash of
$750,000; assumption of mortgage debt of approximately $6.2 million and a note
receivable of approximately $2.9 million. The entire note is expected to be paid
in full on April 21, 1998. The following summarizes the operations of the two
nursing homes for the years ended December 31, 1997, 1996 and 1995:

<TABLE>
<CAPTION>
1997 (A) 1996 1995
-------- ------ ------
(IN 000'S)
<S> <C> <C> <C>
Revenues................................................ $9,123 $9,254 $8,508
Operating income........................................ 1,091 1,049 479
Net income.............................................. 495 110 (110)
</TABLE>

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

(A) Excludes gain on sale of nursing home assets. During December 1996, the
Wendt-Bristol Diagnostics Company ("Diagnostics") formed Wendt-Bristol
Crosswoods, Ltd. During January 1997, Diagnostics invested $325,000 for a
50% interest in this new entity. Such funds were used to acquire operating
assets, including an open field magnetic resonance imaging device.
Operations of this new diagnostics center began in January 1997 and has
expanded to include helical CT and additional modalities during 1997.

During 1997, Diagnostics acquired a 22.5% interest in Wendt-Bristol at Park
Oncology Center, Ltd., a venture that was formed to own and operate a radiation
therapy center. Operations began during the fourth quarter 1997.

F-20
<PAGE> 69
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

During 1997, Diagnostics acquired a 50% interest in Jasonway, Ltd., a
venture that was formed to construct and rent a medical and office complex.
Construction is anticipated to be completed by third quarter 1998.

During 1997, the Company ceased to operate its home health care delivery
services. Loss from operations approximated $91,000, $124,000, and $47,000 for
the years ended December 31, 1997, 1996, 1995, respectively, which is included
in the Consolidated Statements of Operations.

During March 1995, the Company acquired 345,000 common shares in a
subsidiary of the Company, Diagnostics, for approximately $744,000 (see Note 2).
The purchase of these common shares in addition to nominal subsequent activity
has increased the Company's ownership to approximately 86%. The acquisition cost
exceeded the underlying equity in net assets ("goodwill") by $146,700. See Note
1H for further discussion with respect to amortization.

In 1995, the Company purchased the limited partnership interests for cash
of $250,000. The purchase price in excess of the limited partnership's book
basis approximating $151,000 has been expensed in the Consolidated Statement of
Operations and included in the caption "Other, net".

C. STATEMENT OF CASH FLOWS

For purposes of the statement of cash flows, the Company considers all
highly liquid debt investments purchased with a maturity of three months or less
to be cash. No such investments were purchased during 1997, 1996 or 1995.

D. CONCENTRATIONS OF CREDIT RISK

Credit risk associated with cash balances in excess of federally-insured
amounts is minimized by using several accounts at major financial institutions.

E. ACCOUNTS RECEIVABLE

In May, 1996 the Company and certain of its subsidiaries entered into a
financing arrangement involving the sale of their trade accounts receivable.
This financing arrangement terminated through payment in March, 1997 (see Note
4).

The agreement provided for the Company's sale of its health care trade
accounts receivable, subject to various terms and conditions, with limited
recourse, with the Company continuing to service the accounts. A sale was
recorded when the health care accounts receivable were transferred to the
purchaser, net of contractual allowances. Such sales are not included in the
Consolidated Statement of Operations and no gain or loss arises in the
transaction.

Certain receivables from the Company's medical services segment are due
from third party payors, including Medicare, Medicaid and commercial insurance
carriers, under contractual arrangements by which payment may be at a discount
from billed charges, as is customary within the health care industry. The
Company estimates and records allowances for such discounts to billed charges to
recognize revenues when the service income is earned based on amounts expected
to be recovered.

A significant portion of the income earned by the nursing homes is related
to services provided to Medicaid patients. The income reported for the nursing
homes is based on cost reports filed with the State of Ohio and such reports are
subject to audit and adjustment by Medicaid auditors. Management monitors and
evaluates changes in regulations which would impact income earned on cost report
filings and records adjustments to these estimates accordingly.

F-21

<PAGE> 70
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

F. INVENTORIES

Inventories are stated at the lower of cost or market, determined on the
first-in, first-out basis. Inventories at December 31, 1997 and 1996 were
$202,951 and $482,930, respectively. These inventories consist of retail
pharmaceuticals, durable medical equipment and supplies.

G. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation for
financial reporting purposes is computed using principally the straight-line
method over the estimated useful lives of the related assets. Leasehold
improvements are amortized over the primary lease term or the life of the
related improvement, whichever period is shorter. Expenditures for major
renewals and betterments that extend the useful lives of property, plant and
equipment are capitalized. Expenditures for maintenance and repairs are charged
to operations as incurred.

Long-lived assets held and used by the Company are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an assets may not be recoverable. For purposes of evaluating the recoverability
of long-lived assets, the recoverability test is performed using undiscounted
net cash flows. There were no such impairment adjustments at December 31, 1997,
1996 or 1995.

H. EXCESS OF COST OVER ASSETS OF BUSINESSES AND SUBSIDIARIES ACQUIRED

Costs of acquired businesses in excess of the value of net assets (i.e.,
goodwill) are amortized over periods ranging from 20 to 40 years, except for
goodwill associated with the manufacturing real estate, which is being amortized
over the estimated remaining life of the building. During the fourth quarter of
1997, the Company deducted the remaining goodwill of approximately $189,000
associated to its interest in Health America against the gain on the sale of the
nursing homes. Amortization expense excluding this one-time adjustment for the
years ended December 31, 1997, 1996, and 1995, approximated $28,400, $20,500 and
$17,900, respectively. Accumulated amortization at December 31, 1997, 1996 and
1995, was $141,900, $163,000, and $141,200, respectively. Goodwill consists of
an amount applicable to the manufacturing real estate and the purchase of common
shares of Diagnostics Company (see Note 1B).

The Company periodically evaluates the recoverability of intangibles
resulting from business acquisitions and measures the amount of impairment, if
any, by assessing current and future levels of income and cash flows as well as
other factors, such as business trends and prospects and market and economic
conditions. There were no such impairment adjustments at December 31, 1997, 1996
and 1995.

I. DEFERRED CHARGES

The Company has included in deferred charges costs that are being amortized
over future periods ranging from 5 to 11 years. Deferred charges are
predominantly costs associated with financing, costs incurred for staff
training, opening new facilities and a rent adjustment to properly recognize
rental income on the leased manufacturing facility. (See Note 1O)

J. ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.

K. INCOME (LOSS) PER SHARE

Per share amounts were computed using the weighted average number of shares
outstanding during each period for basic which was adjusted for the effect
of dilutive potential common shares in the computation of diluted EPS. (See
Note 10)

F-22
<PAGE> 71
THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

L. INCOME TAXES

The Company utilizes the liability method of accounting for income taxes.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income taxes, and are measured using the
enacted tax rates and laws that will be in effect or expected to continue in
effect when the differences are expected to reverse. (See Note 9).

M. FINANCIAL INSTRUMENTS AND FAIR VALUE

The estimated fair value of amounts reported in the financial statements
have been determined using available market information and valuation
methodologies, as applicable (see Note 16).

The Company enters into foreign currency contracts in order to reduce the
impact of certain foreign currency fluctuations. The Company does not enter into
financial instruments for trading or speculative purposes. Gains and losses
related to qualifying hedges, measured by quoted market prices, termination
values or other methods of firm commitments are deferred and are recognized as
income or as adjustments of carrying amounts when the hedged transaction occurs,
except that losses not expected to be recovered upon the completion of the
hedged transactions are expensed. On the balance sheet, deferred gains and
losses are included in long-term assets and liabilities. (See Note 16)

N. STOCK BASED COMPENSATION

The Company utilizes the provisions of Accounting Principles Board ("APB")
No. 25, "Accounting for Stock Issued to Employees" which utilizes the intrinsic
value based method. The Financial Accounting Standards Board ("FASB") Statement
No. 123, "Accounting for Stock-Based Compensation", which utilizes a fair value
based method is effective for the Company's year beginning January 1, 1996. The
FASB requires disclosure for new employee stock options of the impact to the
financial statements of utilizing the intrinsic value versus the fair value
based method (see Note 10).

O. ACCOUNTING PRONOUNCEMENTS FOR 1998

The FASB has issued three pronouncements for fiscal years beginning after
December 15, 1997 -- SFAS No. 130 -- "Reporting of Comprehensive Income"; SFAS
No. 131 -- "Disclosures about Segments of an Enterprise and Related
Information", and SFAS No. 132 -- "Employers' Disclosures about Pensions and
Other Postretirement Benefits". The Company believes that the effect of the
adoption of the above will not be material to its financial position or results
of operations.

On April 3, 1998 the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5 "Reporting on the Costs of Start-up Activities"
which states that the costs of start-up activities, including organization
costs, should be expensed as incurred. Implementation of SOP 98-5 is required
for financial statements issued for fiscal years beginning after December 15,
1998 with the initial application of this SOP being reported as a cumulative
effect of a change in accounting principle. Currently, the Company has an asset
of approximately $48,000 included in the caption "Deferred charges" on the
balance sheet at December 31, 1997 and has incurred additional startup of
$123,000 during the first nine months of 1998. If the SOP was adopted early,
there would be a cumulative charge to earnings at this time of approximately
$147,000 for the consolidated entities.

In addition, entities accounted for by the equity method have deferred
start-up charges on their balance sheets totaling $314,000 at December 31, 1997.
If SOP 98-5 was adopted early, there would be a cumulative charge to earnings of
the Company relating to these affiliates at this time of approximately $102,000.

NOTE 2. PRIVATE COMMON STOCK TRANSACTIONS

On February 27, 1995, the Company, pursuant to a certain Stock Exchange
Agreement (the "Agreement") by and between the Company and the Insurance
Commissioner of the Commonwealth of Pennsylvania, as Statutory Liquidator (the
"Statutory Liquidator") for Corporate Life Insurance Company ("CLIC") and
successor to CLIC, agreed to sell to the Statutory Liquidator thirty thousand
(30,000) preferred shares (par value $100 per share or a total of $3,000,000)
owned by the Company in Life Holdings, Inc., in exchange for two million
(2,000,000) shares of the Company's common stock and three hundred thousand
(300,000) shares of common stock of Wendt-Bristol Diagnostics Company
("Diagnostics"), a majority-owned consolidated subsidiary of the Company, owned
by CLIC. The closing of the transaction contemplated by the Agreement occurred
on March 2, 1995. The value assigned to (i) the Company's 2,000,000 common
shares of $2,481,091 ($1.24 per share) and (ii) the Diagnostics 300,000 common
shares of $518,909 ($1.73 per share) equal $3,000,000. The Company's common
shares have been included in Treasury Stock on the accompanying balance sheet
for 1997, 1996 and 1995; while Diagnostic's common shares are recorded as an
additional investment in a consolidated subsidiary, which is eliminated in
consolidation except for goodwill.

F-23
<PAGE> 72

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In addition, as part of the transaction contemplated by the Agreement, the
Company or its designee agreed to purchase from the Statutory Liquidator, within
ninety (90) days, subject to extension, five hundred thousand (500,000)
additional shares of common stock of the Company for a price of $.80 per share,
and forty-five thousand (45,000) additional shares of common stock of
Diagnostics for a price of $5.00 per share. This resulted in increases in
Treasury Stock of the Company of $400,000 (see Note 10 for sale of treasury
stock) and $225,000 recorded as a further increase in the investment in a
consolidated subsidiary which is eliminated in consolidation except for
goodwill. The remaining amount payable at December 31, 1996 of $325,000 along
with additional costs was subsequently paid in its entirety during the first
quarter of 1997.

Upon the March 2, 1995 closing and acquisition of the additional 500,000
common shares of Company and 45,000 common shares of Diagnostics, the Company
has reacquired all shares previously issued and/or sold in transactions with
CLIC.

At December 31, 1997, 1996 and 1995, the Company owns, through its wholly
owned subsidiary, approximately 86%, 83%, and 83%, respectively, in Diagnostics.
See above and Note 1B concerning Wendt-Bristol Company's acquisition of
approximately 29% additional shares of Diagnostics in 1995 and other subsequent
activity.

NOTE 3. RESTRICTED CASH

The Company has restricted cash of $221,120 and $381,025 at December 31,
1997 and 1996, respectively. The amounts in a bank trust account were $179,934
and $171,654 at December 31, 1997 and 1996, respectively. These restricted
assets were set aside to satisfy the New Jersey Department of Environmental
Protection and Energy in connection with the reimbursement of clean-up expenses
at the leased manufacturing facility located in Passaic, New Jersey. (See Item
1. Business and Note 12A.) The remainder of the cash in 1997 represents amounts
in a brokerage margin account that is maintained in conjunction with foreign
exchange futures contracts. The remainder of the restricted cash in 1996
represents amounts placed in escrow for "replacement" reserves at the mortgage
agent for the Department of Housing and Urban Development ("HUD") for HUD
insured financed skilled nursing facilities. See Note 1B concerning the sale of
the two HUD facilities.

F-24
<PAGE> 73

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 4. RECEIVABLES

The following schedule states current receivables by specific groups as
indicated at December 31:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Receivables:
Trade (net of allowance for doubtful accounts) -- (a)..... $1,899,967 $1,641,103
---------- ----------
Notes receivable -- current:
Nursing homes sales(b).................................... 2,923,794
Related parties(c)........................................ 60,760 67,822
Unconsolidated affiliates(d).............................. 180,000
Others.................................................... 52,100 29,885
---------- ----------
Total............................................. 3,216,654 97,707
---------- ----------
Allocation due from limited partnership(f)................ 440,000

Miscellaneous receivables:
Nursing homes sale(b)..................................... 326,990
Securitization program reserves(e)........................ 65,763
Medicare settlements...................................... 259,202 215,561
Others -- (g)............................................. 598,729 441,613
---------- ----------
Total............................................. 1,184,921 722,937
---------- ----------
Total current receivables......................... $6,741,542 $2,461,747
========== ==========
</TABLE>

- ---------------
(a) During May, 1996, the Company and certain of its subsidiaries entered into
an agreement with a finance company to secure additional working capital
funds. This agreement was terminated amicably through a pay-off in March,
1997. Trade receivables at December 31, 1996 are shown net of receivables
purchased by the finance company. Total cash proceeds from the sale of these
receivables amounted to approximately $2,938,000 in 1996. Uncollected sold
receivable balances approximated $252,000 at December 31, 1996. Program fees
and costs are included in "interest expense, net" and "selling, general and
administrative" approximating 16% for the years ended December 31, 1997 and
1996, respectively, in the Consolidated Statement of Operations. Such sales
are not included in the Consolidated Statement of Operations and no gain or
loss arise from these transactions.

Additionally, the purchaser advanced funds that were in excess of purchased
receivables of which $392,287 was outstanding at December 31, 1996 and was
subsequently paid in 1997.

(b) At December 31, 1997, the Company sold two of its nursing homes assets. The
current note receivable was expected to be received in full on April 21,
1998. (See Note 1B) The miscellaneous receivables represent escrow balances
related to HUD financing for which the Company is anticipating reimbursement
in 1998.

(c) The balance consists of the current portion of notes receivable for the sale
of assets to a related party (See Notes 11B and 11C).

(d) The balance consists of notes receivable from unconsolidated affiliates.
(See Notes 1A and 6).

(e) In connection with the securitization program above, the third party
purchasing the receivables held reserves as additional collateral for the
receivables purchased from the Company. These cash reserves were released in
full upon termination of the securitization program.

(f) A subsidiary of the Company is the general partner in a limited partnership.
Based on the allocation of income in accordance with the partnership
agreement, the balance is due from the limited partners for excess income
allocated to the limited partners' from the general partner. It is
management's estimate

F-25
<PAGE> 74

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

that all income reallocated during the current year totaling $440,000 will
be restored in 1998 as a result of the priorities established in the
partnership agreement.

(g) The balance consists mostly (approximately $400,000 and $367,000 in 1997 and
1996, respectively) of a receivable due from the former owner of two of the
nursing homes regarding final collection of the purchase price of the
transaction. (See Note 12B).

Total interest income for the years ended December 31, 1997, 1996 and 1995,
amounted to approximately $175,000, $104,000, and $88,000, respectively, and is
netted against interest expense in the accompanying Consolidated Statements of
Operations.

NOTE 5. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 1997 and 1996 and the
estimated useful lives used in computing depreciation are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, ESTIMATED
-------------------------- USEFUL LIVES
1997 1996 (IN YEARS)
----------- ----------- ------------
<S> <C> <C> <C>
Land and improvements........................ $ 1,209,773 $ 1,490,349 30
Buildings and improvements................... 3,748,139 10,804,958 3-40
Machinery and equipment...................... 810,236 1,873,294 3-14
----------- -----------
5,768,148 14,168,601
Accumulated depreciation and
amortization............................ (1,656,764) (3,216,920)
----------- -----------
$ 4,111,384 $10,951,681
=========== ===========
</TABLE>

Included in property, plant and equipment at December 31, 1997 and 1996 are
land, buildings and improvements of $4,517,834 and $4,453,608 with accumulated
depreciation and amortization of $1,176,265 and $1,061,488, respectively, leased
to the purchaser of its former manufacturing division (see Note 12A).

Depreciation and amortization expense for the years ended December 31,
1997, 1996 and 1995 was $359,636, $509,996, $513,019.

F-26
<PAGE> 75

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6. EQUITY IN AFFILIATES

Audited financial information of the affiliates which are accounted for by
the equity method (See Note 1A) is summarized below:

<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996 DECEMBER 31, 1995
----------------- ----------------- -----------------
<S> <C>
COMBINED BALANCE SHEETS
Current assets.............................................. $ 2,153,000 $ 643,000 $ 798,000
Property, plant and equipment, net of accumulated
depreciation.............................................. 9,568,000 3,793,000 3,013,000
Other non-current assets.................................... 722,000 1,268,000 874,000
----------- ---------- ----------
Total assets...................................... $12,443,000 $5,704,000 $4,685,000
=========== ========== ==========
Liabilities................................................. $10,213,000 $4,214,000 $3,599,000
Equity...................................................... 2,230,000 1,490,000 1,086,000
----------- ---------- ----------
Total liabilities and equity...................... $12,443,000 $5,704,000 $4,685,000
=========== ========== ==========

COMBINED STATEMENTS OF OPERATIONS
Service revenues............................................ $ 5,667,000 $4,218,000 $4,087,000
Operating income............................................ 580,000 648,000 771,000
Net income.................................................. 208,000 405,000 622,000
</TABLE>

A limited liability company in which the Company has a 50% interest with
assets of $875,000, liabilities of $840,000 and equity of $35,000 is unaudited
as of December 31, 1997. The limited liability company has acquired land for
which a medical facility is under construction, therefore, it has no operations.

As a result of the limited liability companies and limited partnership
being taxed as partnerships for Federal income tax purposes, there is no tax
provided for earnings.

F-27
<PAGE> 76

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7. LONG-TERM OBLIGATIONS

At December 31, 1997 and 1996, long-term obligations are as follows:

<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
5.5% subordinated convertible bond, interest only payable
in quarterly installments, principal due December,
2001.................................................... $ 1,000,000 $ 1,000,000
5.0% bonds, denominated in Swiss francs, interest only
payable in quarterly installments, principal due
February, 2002.......................................... 3,416,934 --
8.875% mortgage, payable in monthly installments including
interest through December, 2034. Paid off as real estate
was sold on December 31, 1997........................... -- 3,166,432
9% mortgage, payable in monthly installments including
interest through June, 2027. Paid off as real estate was
sold on December 31, 1997............................... -- 2,931,243
Variable rate mortgage -- interest at 11.50% and 11.25% at
December 31, 1997 and 1996, respectively, payable in
monthly installments including interest through April,
2001, with any remaining balance due May 1, 2001........ 1,546,509 1,646,649
Variable rate mortgage -- interest at 10.5% at December
31, 1996, payable in monthly installments through
December, 1997.......................................... -- 34,992
7.7% to 13% notes payable in monthly installments
including interest, through October, 2002,
collateralized by equipment............................. 415,387 444,188
12% notes payable in monthly installments including
interest................................................ -- 128,578
Capitalized lease obligations............................. -- 23,951
----------- -----------
6,378,830 9,376,033
Less: current installments................................ 344,807 291,300
----------- -----------
Long-term portion......................................... $ 6,034,023 $ 9,084,733
=========== ===========
</TABLE>

Subordinated Convertible Bond

Beginning February 2, 1997 through December 30, 2001, the subordinated
convertible bond may be converted in units of not less than $100,000 into fully
paid shares of the Company's common stock at a conversion ratio of $2.00 of
principle for one share of common stock for the beneficial ownership of a non
United States person, pursuant to Regulation S of the Securities Act of 1933.

Other

Aggregate future principal maturities of long-term debt and capital lease
obligations are as follows: 1998 -- $344,807, 1999 -- $177,526,
2000 -- $208,228, 2001 -- $1,198,486, and thereafter -- $4,449,784.

All land and real estate is collateralized by the mortgages payable.

The Company incurred interest expense in the amount of $1,063,017,
$965,525, and $984,112 in 1997, 1996 and 1995, respectively.

Commitments

The Company and its subsidiaries have committed to certain equipment
acquisitions that will be financed through a combination of current equipment
financing relationships, vendor

F-28
<PAGE> 77

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

programs or newly available resources. The cost of such equipment currently on
order is approximately $2,400,000.

In April 1998, the Company secured with a finance company an equipment
lease line of credit for $1,000,000. The entire lease line is available.

See Commitments and Contingencies Note 12D for debt guarantees made by the
Company for entities which the Company has equity ownership interests.

NOTE 8. LEASE COMMITMENTS

The Company leases all of the locations used in its
businesses under leases expiring on dates ranging through July 2015.

As of December 31, 1997, minimum annual rental commitments under
noncancelable leases amount to:

<TABLE>
<S> <C>
OPERATING LEASES
1998..................................................... $ 536,189
1999..................................................... 499,344
2000..................................................... 438,984
2001..................................................... 349,695
2002..................................................... 343,006
Thereafter............................................... 4,120,816
----------
$6,288,034
==========
</TABLE>

In addition, the Company remains contingently liable for certain leases on
locations that have been sold. These contingent leases include payments
aggregating $104,000 over the next three years.

Rental expense included in the Consolidated Statements of Operations for
the years ended December 31, 1997, 1996 and 1995, was approximately $543,000,
$541,000, and $548,000, respectively, net of annual sublease income of $870,
$1,740, and $20,180, respectively. Amortization of assets recorded under capital
leases is included in depreciation expense.

F-29
<PAGE> 78

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9. INCOME TAXES

The Company has recognized a deferred tax liability, a deferred tax asset
and a valuation allowance against the deferred tax assets. The components of
these consolidated deferred tax items at December 31, 1997 and 1996 are as
follows:

<TABLE>
<CAPTION>
1997 1996
-------- ----------
<S> <C> <C>
Assets:
Net operating loss carryforwards.......................... $781,700 $1,874,000
Investment tax credit carryforwards....................... 25,900 28,400
Bad debt allowance........................................ 51,300 47,600
Other..................................................... 3,000 3,000
-------- ----------
861,900 1,953,000
Less: valuation allowance................................. 200,000
-------- ----------
861,900 1,753,000
-------- ----------
Liabilities:
Depreciation and amortization............................. 109,300 604,500
Costs capitalized in connection with acquisitions......... 605,000 884,600
Other..................................................... 10,200 10,200
-------- ----------
724,500 1,499,300
-------- ----------
Net deferred tax asset...................................... $137,400 $ 253,700
======== ==========
</TABLE>

These deferred tax assets and liabilities have been offset for balance
sheet presentation except for the "net deferred tax asset" which is included in
the balance sheet caption "Other Assets". Management has utilized approximately
$3.2 million of net operating loss carryforwards through the sale of two nursing
home assets in 1997. Additionally, the valuation allowance was reduced by
$200,000. These two factors combined to result in a deferred tax expense of
$116,300 in 1997. Management has recognized a deferred tax benefit of $84,300 in
1996 by a reduction in the valuation allowance for the expected utilization of
net operating losses during the carryforward period. Management has considered
the provisions of SFAS No. 109 that allows for utilization of tax planning
strategies associated with real estate. These strategies, if necessary, could
consider a possible sale and/or sale/leaseback of such real estate to preclude
the expiration of net operating losses without realization of a tax benefit.
Realization of the deferred tax asset is dependent on generating sufficient
taxable income including use of management's tax planning strategies prior to
the expiration of the loss carryforwards. Although realization is not assured,
management believes it is more likely than not that a significant amount of the
deferred tax asset will be realized. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near term if either the
current estimates of future taxable income are reduced or management would be
unable to effect an expected sale and/or sale/leaseback of real estate. Both of
these conditions are currently necessary for consideration in the evaluation of
the realizability of the deferred tax assets and estimated valuation allowance.

Consolidated net operating losses available for tax purposes at December
31, 1997 are approximately $2,300,000, expiring $645,000 in 2004, $935,000 in
2006, $335,000 in 2008 and $383,000 in 2009. Investment tax credits available
for tax purposes at December 31, 1997 are approximately $25,900 expiring at
various dates from 1998 to 2000. In 1997 and 1996 as a result of consolidated
taxable income the Company was able to utilize net operating losses of
$3,160,000 and $27,000, respectively, of which $730,000 and $27,000,
respectively, was pre-operating losses of an acquired subsidiary which was only
to be used to offset taxable income by that subsidiary.

F-30
<PAGE> 79

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As discussed in Note 2, the Company had previously sold a portion of its
interest in Diagnostics and, as a result, Diagnostics began to file its income
tax returns on a separate company basis. Diagnostics has no significant
temporary differences that give rise to deferred tax assets or liabilities at
December 31, 1997, 1996 and 1995.

During 1995, see Note 2, the Company acquired additional common shares in
Diagnostics, thereby allowing for its inclusion in the consolidated tax return
of the Company.

For the years ended December 31, 1997, 1996 and 1995 a reconciliation of
the statutory rate and effective rate for the provision for income taxes
consists of the following based on amounts that do not include minority
interests:

<TABLE>
<CAPTION>
NOT INCLUDING
DIAGNOSTICS
(PERCENTAGE)
-------------
<S> <C>
DECEMBER 31, 1997
Federal statutory rate...................................... 34.0
Minority interests.......................................... (3.7)
Equity in unconsolidated affiliates......................... (4.2)
State and local income taxes, net of federal tax benefit.... 1.1
Alternative minimum tax..................................... 2.5
Tax effect of permanent differences......................... (5.0)
Valuation allowance......................................... (12.4)
-----
Effective rate.............................................. 12.3
=====
DECEMBER 31, 1996
Federal statutory rate...................................... (34.0)
Minority interests.......................................... 13.6
State and local income taxes, net of federal tax benefit.... 6.3
Tax effect of permanent differences......................... 44.0
Valuation allowance......................................... (49.1)
-----
Effective rate.............................................. (19.2)
=====
</TABLE>

<TABLE>
<CAPTION>
DIAGNOSTICS
(PERCENTAGE)
-------------
<S> <C> <C>
DECEMBER 31, 1995
Federal statutory rate...................................... 34.0 34.0
Minority interests.......................................... (8.1) (8.2)
State and local income taxes, net of federal tax benefit.... 1.3 1.1
Tax effect of permanent differences......................... (26.0) 2.0
Valuation allowance......................................... (43.6) --
----- ----
Effective rate.............................................. (42.4) 28.9
===== ====
</TABLE>

F-31
<PAGE> 80

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The expense (benefit) for income taxes consists of the following:

<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Federal:
Consolidated
Current expense............................... $ 40,000 $ $
Deferred expense (benefit).................... 116,300 (84,300)
Without Diagnostics
Current expense...............................
Deferred benefit.............................. (74,540)
State:
Consolidated
Current expense............................... 43,200 45,191
Without Diagnostics
Current expense............................... 7,006
Diagnostics
Current expense............................... 15,555
-------- -------- --------
Total tax expense (benefit)........................ $199,500 $(39,109) $(51,979)
======== ======== ========
</TABLE>

The principal differences between the income or loss reported for financial
reporting purposes and the income or loss reported for federal income tax
purposes results from (i) accelerated depreciation methods being utilized for
tax purposes, (ii) inventory capitalization methods required for tax purposes,
(iii) reserving for doubtful accounts receivable and certain other reserves, and
(iv) costs capitalized in connection with certain acquisitions for financial
reporting purposes and not for tax purposes.

NOTE 10. STOCKHOLDERS' EQUITY

COMMON STOCK

See Note 2 for reacquisition of 2,500,000 shares of Common Stock into
treasury in 1995.

In October 1996, the Company sold at $1.00 per share 500,000 shares of
common stock held in treasury, pursuant to Regulation S of the Securities Act of
1933. The total cost of such shares sold totaled $463,000.

WARRANTS

A. At December 31, 1997, there were 414,538 warrants outstanding. Each
warrant, as a result of a November 1990 amendment, is exercisable for
two and three quarters (2 3/4) shares of The Wendt-Bristol Health
Services Corporation common stock. The Company has reserved 1,139,980
shares for such issue. The exercise price of $3.75 per warrant is the
equivalent of $1.36 per share. Other terms of the warrants remain the
same as when originally issued in 1986, including the anti-dilution
provisions, except that the expiration date has been extended to May 1,
1999, and the redemption feature has been removed.

Also, as a result of the November 1990 amendment, upon exercise of
existing warrants, in addition to the common shares to be received upon
such exercise, each warrant holder will receive, upon registration under
the Securities Act of 1933, a newly-created Series II warrant which has
been extended to May 2000, which enables the warrant holder upon
exercise of the Series II warrant to purchase 2 shares of common stock
at $3.00 per share.

F-32
<PAGE> 81

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. In conjunction with the issuance, pursuant to Regulation S of the
Securities Act of 1933, of Series No. 1 bonds issued on February 14,
1997, the Company issued thirty-three (33) Series No. 1 warrants
exercisable into a total of 300,000 shares of the common stock of the
Company for $2.00 per share for the beneficial ownership of non U.S.
persons.

STOCK OPTIONS

The Company has previously adopted a qualified employee incentive stock
option plan (the "Plan"). The Plan provides for 250,000 common shares to be made
available for options granted to eligible officers, directors and employees. The
options may be granted for a term not to exceed ten years (five years with
respect to a 10% shareholder) and are not transferable or assignable. The
exercise price of all options must be at least equal to the fair market value of
the common stock at the date of grant, or 110% of such fair market value with
respect to any optionee who is a 10% shareholder of the Company.

The Board of Directors granted options for 10,000 shares to each outside
Director upon their election. All such options have expired except for one block
of options to purchase 10,000 shares at a price of $.375 with an expiration date
of February 1, 2000. Beginning in 1992, 1,000 options were granted annually to
each outside Director upon his anniversary month as an outside Director. As of
December 31, 1997, 17,000 options were issued to outside directors. The annual
expense for these outside directors using the fair value based method (SFAS No.
123) approximated $300.

In June, 1993 the Board of Directors granted 80,000 options to purchase
shares at a price of $1.25 to certain officers and key employees of which 65,000
are outstanding at December 31, 1997. These options will expire on June 3, 1998.

In May, 1996 the Board granted options totaling 130,000 shares to certain
officers and key employees of which 110,000 are outstanding at December 31,
1997. Such options are exercisable at a price of $.875 per share and expire on
May 23, 2001.

In 1997, 5,000 options were exercised at $.875 per share for total proceeds
of $4,375. Additionally, 30,000 options with exercise prices of $.875 to $1.25
were terminated as the employees are no longer employed by the Company.

No options were exercised in 1996 or 1995. There were 192,000 stock options
outstanding at December 31, 1997 at prices ranging from $.375 to $1.4375 per
share. At December 31, 1997 and 1996, options available for grant were 53,000
and 19,000, respectively.

The Company utilizes the intrinsic value method under APB No. 25 to account
for employee stock options. The Company has utilized the Black Scholes option
pricing model for proforma footnote purposes with the following assumptions used
for grants in all years. Dividend yield of 0%, risk-free interest rate of 6%,
and expected option life of 5 years. Expected volatility was 74.6%. If the
Company had utilized the fair value based method under FASB No. 123, the impact
would not be significant to the financial statements.

F-33
<PAGE> 82

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

EARNINGS PER SHARE

The following is a reconciliation of the basic and diluted EPS for December
31, 1997. As noted below, basic and diluted EPS are the same for the years ended
December 31, 1996 and 1995.

<TABLE>
<CAPTION>
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
BASIC EPS
Income available to common stockholders...... $1,781,613 6,224,241 $.29
====
Effect of dilutive securities (net of tax)
5.5% convertible bond..................... 35,200 500,000
Options...................................... 15,017 192,000
---------- ---------
DILUTED EPS
Income available to common stockholders and
assumed conversions....................... $1,831,830 6,916,241 $.26
========== ========= ====
</TABLE>

At December 31, 1997 and 1995, 1,440,980 and 1,248,980 stock options and
warrants not associated with convertible debt were excluded from the computation
of diluted EPS because the exercise price was greater than the average market
price of the common shares. At December 31, 1996, all potential common stock
would be anti-dilutive due to the net loss. At December 31, 1995, all
outstanding stock options and warrants were excluded from diluted EPS because
the exercise price was greater than the average market price of the common
shares.

NOTE 11. RELATED PARTY TRANSACTIONS

A. PARTNERSHIP OWNERSHIP

Certain officers and directors own, in the aggregate, less than 6% of the
outstanding limited partnership interests of a limited partnership of which a
subsidiary of the Company is the managing general partner.

B. SALE OF ASSETS TO A RELATED PARTY

Effective January 1, 1995, the Company sold the operating assets of a
subsidiary's retail liquor store and two lounges in Florida to MHK Corp., a
company owned by certain of the Company's officers and directors. The purchase
price was equivalent to the net book value of the net assets, with no gain or
loss recognized, totaling $574,949, as adjusted for certain 1995 transactions.

The purchase price is evidenced by a promissory note bearing interest at
9%. The note accrued interest from the effective date of the sale through June
30, 1996 at which time the total accrued interest of $77,618 was added to the
original sale price for a total amended principal sum of $652,567. The note is
payable in monthly installments of $8,266 including interest, from July 1, 1996
through June 1, 2006 with the balance fully amortized.

At April 15, 1996, the Company combined all advances to MHK Corp. into a
promissory note totaling $156,868 earning interest of 9% which accrues from July
1, 1996 until paid. The note will be payable in monthly installments, including
interest, of $1,987 from July 1, 1996 through June 1, 2006 with the balance
fully amortized.

The notes receivable due from MHK Corp. are collateralized by the assets of
a lounge and a retail liquor store. The Company has received additional
collateral in the form of a security interest on real estate in Ohio, an
assignment of the lease and rents associated to that property as well as the
leasehold interest in a Florida property leased by MHK Corp. and subleased to a
third party, and a pledge of the common stock of MHK Corp.

F-34
<PAGE> 83

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Management's current estimate of the business activities of these Florida
operations combined with the rental operations is that they will earn sufficient
cash flow to amortize the notes. No further advances or support is expected
by the Company. If the notes are not being amortized, an allowance for
non-collectibility will be considered absent other remedies not considered at
this time.

C. NOTES RECEIVABLE FROM OFFICERS AND RELATED PARTIES

At December 31, 1997 and 1996, the notes receivable amounts due from MHK
Corp. approximate $730,000 and $800,000, respectively. Interest income totaling
$68,328 and $76,668 for the year ended December 31, 1997 and 1996, respectively
is included in "interest expense, net". Refer to Note 11B for the related party
transactions and applicable collateral for 1995 activity.

At December 31, 1997 and 1996, the President and CEO of the Company had
outstanding advances totaling approximately $213,000 and $243,000, respectively.
The President/CEO has granted a security interest in certain collateral to
enhance the realization of the indebtedness, which is evidenced by a non-
interest bearing promissory note. A representation has been made that the amount
will not further increase and the existing balance will be reduced by $15,000
annually in 1998 and subsequent years.

In addition, pursuant to a ten year lease entered into in 1985, the Company
leased a warehouse facility from two of the officers and directors of MHK Corp.
Effective May 1, 1992, a renewal option was exercised on the lease, extending
its term to 2005. In January 1996, the officers sold a portion of the property
and terminated the lease with the Company. The remaining parcel is pledged as
additional collateral toward a note due the Company from the sale of the liquor
operations (see Note 11B).

D. LIFE INSURANCE PREMIUMS RECEIVABLE

The balance sheet includes $972,471 and $865,299 at December 31, 1997 and
1996, respectively, for policies with death benefits totaling $2,750,000 under
the caption "Life insurance premiums receivable". The Company, pursuant to
agreements, has purchased life insurance on the lives of certain officers and
key employees on a "split-dollar" basis. The program is designed so that
payments the Company makes on behalf of each officer are collateralized by
assignments of the related life insurance policies (i.e., the accumulated policy
cash value, the policy death benefit, or a combination thereof). The life
insurance premiums receivables are noninterest-bearing. The insured parties own
the policies and, with the consent of the Company, are permitted to borrow from
the cash surrender values of the policies. Under the "split-dollar" agreements,
the Company advances the premium payments and upon the death of the insured
would receive the return of such advances from the death benefits or from cash
value (without termination of the policy) at such other times (i.e. termination
of employment) prior to the death of the insured.

Annual premiums for these policies total $107,000, $107,000, and $87,000
for the years ended December 31, 1997, 1996 and 1995, respectively. Net cash
surrender value on these policies approximated $375,000 and $282,000 at December
31, 1997 and 1996 respectively.

By Amendment No. 1 to the "split-dollar" agreement, the applicable officers
of the Company recognize the premiums receivable not collateralized by the
policy cash surrender values of $375,500 at December 31, 1997, are their
personal responsibility if not collected through the respective policies as long
as the Company continues to maintain the policies. The Company has represented
its intention and obligation to maintain the policies. The individuals have
agreed to provide additional collateral, to the Company, by pledging common
shares they own in the Company to enhance the realization of these receivables.

During 1995, the Company restored a $376,000 reserve that had been recorded
in 1991 to reduce life insurance premiums receivable. Management believed the
reserve was no longer necessary due to the improvement in operations and
increased cash values over the last four years.

F-35
<PAGE> 84

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

E. NOTES PAYABLE TO OFFICER

In January 1996, the Company borrowed the sum of $300,000 from Marvin D.
Kantor, a director and the Chairman of the Board of the Company. In September
1996, the Company borrowed an additional $60,000 (the "Loans"). The Loans were
obtained to meet certain short-term working capital needs of the Company. The
Loans bear interest at 8.5% per annum. The Loans are payable in monthly
installments and are collateralized by a pledge of the Company's common stock
held in Wendt-Bristol Diagnostics Company. The balance outstanding at December
31, 1996 was $55,000 and was repaid in full in 1997.

F. MANAGEMENT FEES FROM AFFILIATES

A subsidiary of the Company, Diagnostics, which owns equity interests in a
limited partnership and limited liability companies (See Note 1B), is the
management agent for two of the companies. Management fees totaling $491,000,
$360,000 and $402,000 were included in the Consolidated Statements of Operations
for the year ended December 31, 1997, 1996 and 1995, respectively.

NOTE 12. COMMITMENTS AND CONTINGENCIES

A. REAL ESTATE RELATED TO PREVIOUSLY SOLD DIVISION

In October 1991, the Company sold substantially all of the assets (other
than real estate) of its manufacturing division located in New Jersey.

As part of that transaction, the buyer entered into a lease on the physical
facilities which initially included a purchase option. The buyer is responsible
for taxes, maintenance, and insurance costs. Rental income has been recorded on
a straight-line basis over the term of the lease.

During September 1994, the buyer/tenant instituted arbitration proceedings
against the Company. The Company and the tenant settled in June 1995. The
settlement agreement provides (a) a revised term of ten years for the lease
commencing January 1, 1995, (b) monthly rental of $28,000 for the first five
years and $30,000 for the remaining five years, (c) identification of
approximately $200,000 in repairs, of which the tenant has paid $40,000; such
repairs were subsequently completed, (d) tenant's option to renew for an
additional two years at $10,000 per month; if option not exercised, the tenant
is obligated to pay $10,000 per month in the eleventh year despite the fact that
premises are vacated and (e) tenant abandoned its option to purchase the
premises as well as any role in the Company's compliance with the environmental
laws of the State of New Jersey.

As a result of compliance with the State of New Jersey environmental laws
and in connection with the sale of the division, the Company is in the process
of a clean-up of contamination caused by prior ownership whereby the property
had been contaminated by leaking underground storage tanks and the discharge of
certain industrial fluids into the sewage system. The Company spent
approximately $56,000, $50,000, and $61,000 related to the clean-up during the
years ended December 31, 1997, 1996 and 1995, respectively. Costs attributable
to the project, incurred or accrued, have been capitalized. The Company's
consulting engineers have completed a study of the contamination and have
submitted a clean-up plan to the appropriate State of New Jersey department. In
December 1995, the State of New Jersey granted a conditional approval of the
plan with a two year monitoring period. The remaining estimated costs to
complete the plan are approximately $100,000. Refer to Note 3 regarding
restricted cash set aside to satisfy the New Jersey Department of Environmental
Protection and Energy.

B. RENTAL AGREEMENT ON A NURSING HOME

The landlord of a nursing home facility filed a complaint for Declaratory
Judgment against a subsidiary of the Company seeking a judgment that the
subsidiary is in default of the lease agreement and seeks the right to

F-36

<PAGE> 85

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

purchase the license of the nursing home. The landlord had filed a Motion for
Summary Judgment and was denied by the court. The subsidiary is presently
current on its rent obligation but is disputing the calculation of the late rent
charges imposed under the lease. Although not directly subject to this
complaint, the Company is seeking payment of a receivable related to a Share
Transfer Agreement with the subsidiary of the Company. Such amounts became due
in February 1996, one year after final settlement of certain State of Ohio
Medicaid receivables, as provided in the Agreement. See Item 3. Legal
Proceedings for additional discussion.

In the opinion of management, the ultimate costs and liability to the
Company and its subsidiaries as a result of this legal proceeding will not be
material. It is further believed that the receivable at December 31, 1997
totaling $400,000 (see Note 4(e)) will be realized through the ultimate
settlement of the entire dispute in the near term.

C. INSURANCE COMMISSIONER OF THE COMMONWEALTH OF PENNSYLVANIA, AS THE STATUTORY
LIQUIDATOR FOR CORPORATE LIFE INSURANCE COMPANY (UNAFFILIATED THIRD PARTY)

On February 20, 1995, the Company entered into a Stock-Exchange Agreement
with the Insurance Commissioner of the Commonwealth of Pennsylvania, as the
Statutory Liquidator of Corporate Life Insurance Company (CLIC) (see Note 2).
The Statutory Liquidator caused a Writ of Summons in the Commonwealth Court of
Pennsylvania (Case No. 509-MD-1995) to be served on the Company indicating in
its entirety that Statutory Liquidator has commenced an unspecified action
against the Company which counsel for the Statutory Liquidator advised the
Company that the Statutory Liquidator intends to seek performance in the action
for the amounts due it from the Company. During 1996, the Company paid $300,000
toward the purchase of the shares, leaving a balance of $325,000 at December 31,
1996. The Company subsequently paid the balance during the first quarter of
1997.

On March 19, 1997, the Insurance Commissioner of the Commonwealth of
Pennsylvania, as the Statutory Liquidator of CLIC dismissed with prejudice the
action it had commenced against the Company in the Commonwealth Court of
Pennsylvania.

Additionally, as a result of a Federal investigation of the activities of
CLIC, the Company had been requested to furnish documents and information in its
files related to transactions with CLIC and Life Holdings, Inc. The Company
complied with this request and is cooperating fully with this on-going
investigation.

D. DEBT GUARANTEES

The Company or its subsidiaries is contingently liable as a guarantor of
long-term debt and capital lease obligations totaling $1,850,000 for medical
equipment that is currently in or will be placed in service by entities that a
subsidiary, Wendt-Bristol Diagnostics Company ("Diagnostics"), has ownership
interests varying from 22.5% to 50%. In addition, the Company is contingently
liable for $3,500,000 as guarantor of debt on the construction of a medical and
office complex that Diagnostics has a 50% ownership interest in.

Additionally, the Company and Diagnostics are contingently liable for a two
year lease agreement and the purchase price ($1,400,000) of a building used by
an entity in which Diagnostics has a 22.5% ownership interest. The Company and
Diagnostic are currently 100% contingently liable for the two year lease and
purchase price.

NOTE 13. INDUSTRY SEGMENT DATA

Industry segment data for years ended December 31, 1997, 1996 and 1995
included in Item 1 ("Industry Segments") of this report is an integral part of
these financial statements.

F-37
<PAGE> 86

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14. RETIREMENT PLAN

The Company adopted, effective July 1, 1989, a retirement plan, under
Section 401(k) of the Internal Revenue Code, covering substantially all
employees with more than one year of service. The plan provides for the Company
and its affiliates accounted for on the equity method to contribute, on an
annual basis, 10% of the employees' eligible deferred compensation; such
employer contribution is in the form of Company common stock. The Company values
the actual shares transferred to the Plan from the treasury at the respective
December 31 market value. During 1997, 1996 and 1995, the Company contributed
6,306, 16,262, and 21,764 shares, and recorded an expense of $9,458, $8,733, and
$9,900, respectively.

NOTE 15. SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITY

<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITY Note receivable from officers
and related parties was reduced by assigning a
non-related party note receivable
Increase in notes receivable....................... $ 105,000
Decrease in notes receivable from officers and
related parties................................. (46,826)
Decrease in accrued interest payable............... (58,174)
A subsidiary of the Company is a general partner in a
limited partnership. Capital was reallocated from
the general partner to the limited partners
resulting in a receivable from the limited partners
Increase in miscellaneous receivables.............. $ 440,000
Increase in minority interests..................... (440,000)
Two subsidiaries of the Company sold nursing home
assets. Additionally, HUD replacement reserves are
to be returned as part of the sale
Increase in notes receivable, current.............. $ 2,923,794
Increase in miscellaneous receivables.............. 261,327
Decrease in restricted cash........................ (264,287)
Decrease in prepaid expenses....................... (11,535)
Decrease in property, plant and equipment, net..... (7,064,636)
Decrease in excess of cost over assets of
businesses and subsidiaries acquired............ (189,096)
Decrease in deferred charges and other assets...... (317,120)
Increase in accrued expenses....................... (394,367)
Decrease in debt................................... 6,083,927
Gain on sale of nursing home assets, net of cash
proceeds ($750,000)............................. (1,028,007)
</TABLE>

F-38
<PAGE> 87

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
A subsidiary and a partnership, of which the company
is the managing general partner, purchased
equipment which was financed by entering into an
installment finance agreement
Increase in equipment cost, net.................... $ 147,921
Increase in long-term obligations.................. (147,921)
Subsidiaries of the Company sold trade accounts
receivable, a portion of which was used for certain
related fees
Increase in deferred costs......................... $ 27,500
Increase in miscellaneous accounts receivable
reserves........................................ 185,507
Decrease in notes payable.......................... 53,155
Decrease in accounts receivable -- sold............ (266,162)
Common stock of the Company (2,000,000 shares) and
common stock of a subsidiary (300,000 shares) were
exchanged for 30,000 shares of preferred stock, par
value $100 per share, owned by the Company in Life
Holdings, Inc.
Decrease in investment in preferred stock, at
cost............................................ $(3,000,000)
Decrease in minority interest...................... 512,653
Increase in treasury stock......................... 2,487,347
The Company purchased common stock (500,000 shares)
of the Company for a price of $.80 per share and
common stock of a subsidiary (45,000 shares) for a
price of $5.00 per share
Increase in accrued expenses and other
liabilities..................................... $ (625,000)
Increase in treasury stock......................... 400,000
Increase in excess of cost of assets of businesses
and subsidiaries acquired, less amortization.... $ 148,103
Decrease in minority interest...................... 76,897
A subsidiary of the Company sold the operating
assets, net of associated liabilities to a related
party in exchange for an interest bearing note
(Note 11B)
Increase in notes receivable from officers,
employees and related parties, net of amounts
payable:
Note arising in transaction..................... $ 574,949
Other........................................... (55,936)
Decrease in accounts payable....................... 48,624
Decrease in accrued expenses and other
liabilities..................................... 83,006
Decrease in trade and miscellaneous receivables.... (4,668)
Decrease in inventories............................ (126,703)
Decrease in prepaid expenses and other current
assets.......................................... (38,409)
Decrease in property, plant and equipment, net..... (240,079)
Decrease in deferred charges....................... (500)
Decrease in other assets........................... (240,284)
</TABLE>

F-39
<PAGE> 88

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<CAPTION>
1997 1996 1995
----------- ---------- -----------
<S> <C> <C> <C>
A subsidiary of the Company incurred costs for the
construction of an Alzheimer's and related
syndromes facility with draws against a HUD-insured
financing agreement
Increase in property, plant and equipment.......... $
Increase in long-term obligations.................. (166,826)
Increase in prepaid expenses and other current
assets.......................................... 45,116
Decrease in accounts payable....................... 121,710
</TABLE>

NOTE 16. FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial Accounting Standard Board ("FASB") Statement No. 107, "Disclosure
about Fair Value of Financial Instruments", is effective for the Company's year
ended December 31, 1995 and thereafter. The statement requires disclosure of
fair value information about financial instruments. For certain of the Company's
financial instruments including cash, receivables, accounts and notes payable,
and other accrued liabilities the carrying amounts approximate fair value due to
their short maturities. For long-term notes receivable and notes payable, the
Company believes the carrying value will approximate their fair value. For the
subordinated note, the Company believes the carrying amount approximates fair
value with the conversion feature to the Company's common stock available.

At December 31, 1997 and 1996, management believes the carrying amount of
these long-term receivables are not impaired and will be realized in the normal
course of business in accordance with their contract terms. The fair value of
debt is believed to be approximately equal to their current carrying value based
on current market prices.

At December 31, 1997, the Company had outstanding multiples of three month
foreign exchange futures contracts that were to expire March, 1998. Management's
intent is to continue to repurchase these contracts (currently holding June 1998
expirations) as a hedge against the Swiss Franc on 5,000,000 Swiss Franc 5%
bonds payable in February, 2002. The contract amount of foreign currency
forwards at December 31, 1997 is $3,449,000. As these futures contracts are not
for trading or speculative purposes, the Company has deferred the current loss
of approximately $104,000 at December 31, 1997 until 2002 when the bond becomes
due and a determination of the cumulative gain or loss is known. The net cash
outlay at December 31, 1997 totaled $144,000. Future cash requirements will be
determined by future foreign currency exchange rates.

NOTE 17. PROPOSED PURCHASE OF MINORITY INTEREST STOCKHOLDER'S COMMON STOCK
AND LIMITED PARTNERSHIP INTEREST

The Wendt-Bristol Health Services Corporation ("WBHSC") announced on June
23, 1998 that it is proceeding with plans to acquire the approximate 15% of the
outstanding shares of Wendt-Bristol Diagnostics Company that it does not already
own through a subsidiary (Wendt-Bristol Company).

Additionally, the Company announced plans to acquire all of the limited
partnership interests in Wendt-Bristol Diagnostics Company L.P. Wendt-Bristol
Diagnostics Company, a subsidiary of the Company, is the general partner.

WBHSC has approved (subject to the satisfactory completion of the
appropriate filings with the Securities and Exchange Commission and any other
required approvals) the issuance of authorized but unissued convertible
Preferred Stock with a stated value of $20 per share with cumulative dividends
at $1.20 per share, payable quarterly to accomplish the acquisition of the
common stock that is not held by Wendt-Bristol Company. A special meeting of the
common stockholders is expected in the first quarter of 1999 for purposes of
approving the transaction.

NOTE 18. FINANCIAL STATEMENTS RESTATEMENT

Pursuant to a review of its previously filed Registration Statement (Form
S-4) the Company has changed its use of the "Consolidation Method" of accounting
related to its interest as sole General Partner of Wendt-Bristol Diagnostics Co.
L.P. and will now reflect the investment utilizing the "equity method" of
accounting. Such method does not effect the Company's previously determined net
earnings or stockholders' equity. The "equity method", however, does change the
individual components of the Consolidated Balance Sheets, Statements of
Operations and related financial information. All financial statements included
herein have been restated to conform to this change.

The audited financial information of Wendt-Bristol Diagnostics Co. L.P.
that is subject to this restatement is as follows at December 31:

<TABLE>
<CAPTION>
Balance Sheet 1997 1996 1995
- ------------- ---- ---- ----
<S> <C> <C> <C>
Current assets $1,107,418 $ 643,009 $ 797,823
Property plant and
equipment net of
accumulated depreciation 4,227,612 3,792,908 3,012,923
Other non-current assets 341,536 1,268,503 873,823
---------- ---------- ----------
Total assets $5,676,566 $5,704,420 $4,684,569
========== ========== ==========

Liabilities $4,629,552 $4,214,322 $3,599,199
Equity 1,047,014 1,490,098 1,085,370
---------- ---------- ----------
Total liabilities
and equity $5,676,566 $5,704,420 $4,684,569
========== ========== ==========

Statement of Operations
- -----------------------
Service revenues $4,142,908 $4,217,924 $4,086,993
Operating income $ 198,674 $ 648,266 $ 771,264
Net income $ (155,400) $ 404,728 $ 621,832
</TABLE>

F-40
<PAGE> 89

THE WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.

BALANCE SHEETS

AS AT SEPTEMBER 30, 1998 AND DECEMBER 31, 1997

ASSETS

<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------------- ------------------
(Unaudited)
Current assets:
<S> <C> <C>
Cash ........................................................................ $ 2,793 $ 500

Receivables:
Trade, net of allowance for doubtful accounts of
$115,000 and $100,000 (1998 and 1997) ............................... 1,378,346 978,759
Notes receivable, current portion ....................................... 21,488 20,246
Miscellaneous receivables ............................................... 13,349 25,743
----------- -----------
1,413,183 1,024,748
----------- -----------

Prepaid expenses and other .................................................. 53,252 82,170
----------- -----------
Total current assets ................................................ 1,469,228 1,107,418
----------- -----------

Property, plant and equipment, at cost ........................................... 7,478,763 7,313,435
Less: Accumulated depreciation and
amortization ............................................................ (3,437,521) (3,085,823)
----------- -----------
4,041,242 4,227,612
----------- -----------

Investments and other assets:
Notes and other receivables, net of current portion ......................... 147,361 162,702
Deferred charges and other costs ............................................ 152,765 178,834
----------- -----------
Total investments and other assets .................................. 300,126 341,536
----------- -----------

$ 5,810,596 $ 5,676,566
=========== ===========

Current liabilities:
Current portion of long-term debt and capital lease obligations.............. $ 663,261 $ 641,341
Accounts payable ............................................................ 591,731 517,421
Advances from affiliates, net ............................................... 567,810 56,445
Accrued expenses and other liabilities ...................................... 243,659 296,731
----------- -----------
Total current liabilities ........................................... 2,066,521 1,511,938
----------- -----------

Long-term debt and capital lease obligations,
less current portion ........................................................ 2,828,003 3,117,614
----------- -----------

Total liabilities ................................................... 4,894,524 4,629,552
----------- -----------

Partners' Capital
General Partner (1 share issued and outstanding) ............................ 1,130,335 1,261,277
Limited partners' deficit (150,000 units authorized;
143,842 issued and outstanding) ......................................... (214,263) (214,263)
----------- -----------
Total partners' capital ............................................. 916,072 1,047,014
----------- -----------

$ 5,810,596 $ 5,676,566
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.

F-41
<PAGE> 90

THE WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.

STATEMENT OF OPERATIONS

FOR THE NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------------------ -------------------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenues:
Service income .................................... $ 3,480,738 $ 3,125,597 $ 1,321,256 $ 1,042,603

Cost and expenses:
Selling, general and administrative ............... 2,928,221 2,437,811 1,093,660 870,092
Depreciation ...................................... 377,491 404,729 126,072 147,834
----------- ----------- ----------- -----------
3,305,712 2,842,540 1,219,732 1,017,926

----------- ----------- ----------- -----------
Operating income ....................................... 175,026 283,057 101,524 24,677
----------- ----------- ----------- -----------

Other income (expense):
Interest expense, net ............................. (304,483) (248,831) (116,777) (95,477)
Other, net ........................................ (1,484) 120,047 323 100,370
----------- ----------- ----------- -----------
(305,967) (128,784) (116,454) 4,893
----------- ----------- ----------- -----------

Income before income taxes ............................. (130,941) 154,273 (14,930) 29,570

Income tax expense ..................................... -- 3,100 -- 600
----------- ----------- ----------- -----------

Net income (loss) ...................................... $ (130,941) $ 151,173 $ (14,930) $ 28,970
=========== =========== =========== ===========

Income (loss) per limited partners' unit ............... $ (1.74) $ (0.48) $ (0.85) $ (0.40)
=========== =========== =========== ===========

Income per general partners' share ..................... $119,500.00 $ 54,310.00 $273,904.00 $ 86,294.00
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.

F-42
<PAGE> 91

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
STATEMENT OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997

(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)......................................... $(130,941) $ 151,173
--------- ---------
Adjustments required to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization.......................... 377,491 404,729
Loss on disposal of property and equipment............. 1,483 11,465
Changes in operating assets and liabilities:
(Increase) decrease in assets:
Trade receivables:
Sale (purchase) of accounts receivable.......... -- (356,871)
Other changes................................... (399,587) (240,798)
Miscellaneous receivables......................... 12,394 122,830
Prepaid expenses and other current assets......... 28,918 21,312
Deferred charges and other costs.................. 26,756 (51,260)
Increase (decrease) in liabilities:
Accounts payable.................................. 74,310 (155,053)
Accrued expenses and other liabilities............ (53,072) (177,327)
--------- ---------
Total adjustments............................... 68,693 (420,973)
--------- ---------
Net cash (used in) provided by
operating activities.......................... (62,248) (269,800)
--------- ---------
Cash flows from investing activities:
Proceeds from sale of assets.............................. -- 40,000
Purchases of property and equipment....................... (55,046) (43,489)
Collections on notes receivable........................... 14,099 17,206
--------- ---------
Net cash (used in) provided by investing
activities.................................... (40,947) 13,717
--------- ---------
Cash flows from financing activities:
Principal payments of long-term obligations............... (420,404) (352,404)
Capital distributions to general partner.................. -- (143,842)
Capital distributions to limited partners................. -- (143,842)
Advances from (to) affiliates and equity
affiliates, net........................................ 525,892 896,129
--------- ---------
Net cash provided by financing activities....... 105,488 256,041
--------- ---------
Net increase (decrease) in cash............................. 2,293 (42)
Cash at beginning of period................................. 500 542
--------- ---------
Cash at end of period....................................... $ 2,793 $ 500
========= =========
Cash paid during the nine months for:
Interest, net of interest income.......................... $ 306,150 $ 248,967
Income taxes.............................................. $ -- $ 6,225
Supplemental disclosures of noncash investing and financing
activity:
Purchase of equipment with notes payable
Increase in property, plant and equipment.............. $ 441,209 $ 761,568
Increase in long-term debt............................. (441,209) 761,568
Transfer of fixed assets to affiliated company through
advances from affiliates:
Decrease in property, plant and equipment.............. $(302,963) $ --
Decrease in advances from affiliates................... 302,963 --
</TABLE>

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

F-43
<PAGE> 92

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. MANAGEMENT'S REPRESENTATION

In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal adjustments and
recurring accruals) necessary to present fairly the Wendt-Bristol Diagnostics
Company L.P. financial position as at September 30, 1998 and December 31, 1997
and the results of its operations for the three and nine months ended September
30, 1998 and 1997 as well as the cash flows for the respective nine months. The
results of operations for any interim period are not necessarily indicative of
results for the full year. These financial statements should be read in
conjunction with the financial statements and notes thereto contained in the
Wendt-Bristol Diagnostics Company L.P. 1997 audit report.

F-44
<PAGE> 93

To the General and Limited partners
Wendt-Bristol Diagnostics Company L.P.
(A Limited Partnership)
Columbus, Ohio

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying balance sheets of the Wendt-Bristol
Diagnostics Company L.P. (A Limited Partnership) as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital and
cash flows for each of the three years in the period ended December 31, 1997.
These financial statements are the responsibility of the Partnership's
management. Our responsibility is to express an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are freed of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Wendt-Bristol
Diagnostics Company L.P. (A Limited Partnership) at December 31, 1997 and 1996
and the results of its operations and its cash flows for each of the three years
in the period ended December 31, 1997 in conformity with generally accepted
accounting principles.

/s/ HAUSSER + TAYLOR LLP

Columbus, Ohio
April 20, 1998, except for Note 8, as to
which the date is June 23, 1998

F-45
<PAGE> 94

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

BALANCE SHEETS
DECEMBER 31, 1997 AND 1996

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash...................................................... $ 500 $ 542
Receivables: (Note 2)
Trade (net of allowances for contractual adjustments
and doubtful accounts)................................ 978,759 373,300
Notes receivable, current portion...................... 20,246 22,906
Miscellaneous receivables.............................. 25,743 167,718
Prepaid expenses and other current assets................. 82,170 78,543
---------- ----------
Total current assets.............................. 1,107,418 643,009
---------- ----------
PROPERTY, PLANT AND EQUIPMENT (Note 3)...................... 7,313,435 6,711,692
Less accumulated depreciation............................. 3,085,823 2,918,784
---------- ----------
4,227,612 3,792,908
---------- ----------
OTHER ASSETS
Notes receivable, net of current portion (Note 2)......... 162,702 181,816
Deferred charges and other costs.......................... 178,834 150,260
Advances to affiliates (Note 6)........................... -- 936,427
---------- ----------
Total other assets................................ 341,536 1,268,503
---------- ----------
$5,676,566 $5,704,420
========== ==========

LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Current portion of long-term debt and capital lease
obligations (Note 4)................................... $ 641,341 $ 459,458
Accounts payable.......................................... 517,421 431,354
Advances from affiliates, net............................. 56,445 --
Accrued expenses and other liabilities.................... 296,731 327,387
---------- ----------
Total current liabilities......................... 1,511,938 1,218,199
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, LESS CURRENT
PORTION (Note 4).......................................... 3,117,614 2,996,123
---------- ----------
Total liabilities................................. 4,629,552 4,214,322
---------- ----------
COMMITMENTS (Notes 2, 3 and 5)
PARTNERS' CAPITAL (Note 6)
General partner (1 share issued and outstanding).......... 1,261,277 1,696,281
Limited partners' deficit (150,000 units authorized;
143,842 issued and outstanding......................... (214,263) (206,183)
---------- ----------
Total partners' capital........................... 1,047,014 1,490,098
---------- ----------
$5,676,566.. $5,704,420
========== ==========
</TABLE>

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

F-46

<PAGE> 95

THE WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.

STATEMENT OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1997 1996 1995
<S> <C> <C> <C>
Revenues:
Service income ........................................... 4,142,908 $ 4,217,924 $ 4,086,993

Cost and expenses:
Selling, general and administrative ...................... 3,480,507 3,114,939 2,926,056
Depreciation ............................................. 463,727 454,719 389,673
----------- ----------- -----------
3,944,234 3,569,658 3,315,729

----------- ----------- -----------
Operating income .............................................. 198,674 648,266 771,264
----------- ----------- -----------

Other income (expense):
Interest expense, net .................................... (371,777) (243,067) (153,359)
Other, net ............................................... 19,903 6,829 15,282
----------- ----------- -----------
(351,874) (236,238) (138,077)
----------- ----------- -----------

Income before income taxes .................................... (153,200) 412,028 633,187

Income tax expense ............................................ 2,200 7,300 11,355
----------- ----------- -----------

Net income (loss) ............................................. $ (155,400) $ 404,728 $ 621,832
=========== =========== ===========

Income (loss) per limited partners' unit ...................... $ (2.12) $ (0.14) $ 0.83
=========== =========== ===========

Income per general partners' share ............................ $149,527.00 $425,177.00 $501,856.00
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.

F-47
<PAGE> 96

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

STATEMENT OF CHANGES IN PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
GENERAL LIMITED
PARTNER'S PARTNERS'
CAPITAL CAPITAL TOTAL
----------- --------- -----------
<S> <C> <C> <C>
BALANCES -- DECEMBER 31, 1994 ............................. $ 913,090 $(161,868) $ 751,222
ADDITIONS (DEDUCTIONS)
Net income ........................................... 501,856 119,976 621,832
Capital distributions ................................ (143,842) (143,842) (287,684)
----------- --------- -----------

BALANCES -- DECEMBER 31, 1995 ............................. 1,271,104 (185,734) 1,085,370
ADDITIONS (DEDUCTIONS)
Net income (loss) .................................... 425,177 (20,449) 404,728
----------- --------- -----------

BALANCES -- DECEMBER 31, 1996 ............................. 1,696,281 (206,183) 1,490,098
ADDITIONS (DEDUCTIONS)
Net income (loss) .................................... 149,527 (304,927) (155,400)
Reallocated income (note 1B) ......................... (440,689) 440,689 --
Distributions ........................................ (143,842) (143,842) (287,684)
----------- --------- -----------

BALANCES -- DECEMBER 31, 1997 ............................. $ 1,261,277 $(214,263) $ 1,047,014
=========== ========= ===========
</TABLE>

The accompanying notes are an integral part of these financial statements

F-48
<PAGE> 97

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)......................................... $ (155,400) $ 404,728 $ 621,832
---------- --------- -----------
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................... 500,718 486,181 389,673
Gain on disposal of property and equipment............. (18,621) -- --
Change in operating assets and liabilities:
(Increase) decrease in assets:
Trade receivables:
Sale (purchase) of receivables.................. (338,053) 476,372 --
Other changes................................... (267,406) (258,036) 87,008
Miscellaneous receivables......................... 141,975 (78,801) --
Prepaid expenses and other current assets......... (3,627) (14,991) 13,185
Deferred charges and other costs.................. (65,565) (115,334) 14,139
Increase (decrease) in liabilities:
Accounts payable.................................. 86,067 (390,146) 301,639
Distribution payable.............................. -- (143,842) 143,842
Accrued expenses and other liabilities............ (30,656) 8,034 72,042
---------- --------- -----------
Total adjustments............................... 4,832 (30,563) 1,021,528
---------- --------- -----------
Net cash provided by (used in) operating
activities................................... (150,568) 374,165 1,643,360
---------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment........................ (125,316) (325,826) (172,595)
Collections on notes receivable........................... 21,774 23,913 34,976
---------- --------- -----------
Net cash used in investing activities........... (103,542) (301,913) (137,619)
---------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt.............................. -- 591,910 --
Principal payments on long-term debt and capital lease
obligations............................................ (491,120) (352,318) (782,191)
Capital distributions to general partner.................. (143,842) -- (143,842)
Capital distributions to limited partners................. (143,842) -- (143,842)
Advances from (to) affiliates and non-consolidated
affiliates, net........................................ 1,032,872 (311,802) (553,018)
---------- --------- -----------
Net cash provided by (used in) financing
activities................................... 254,068 (72,210) (1,622,893)
---------- --------- -----------
NET INCREASE (DECREASE) IN CASH............................. (42) 42 (117,152)
Cash -- Beginning of year................................... 542 500 117,652
---------- --------- -----------
Cash -- End of year......................................... $ 500 $ 542 $ 500
========== ========= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the years for:
Interest............................................... $ 349,100 $ 220,696 $ 159,468
Income taxes........................................... $ -- $ 12,650 7,005
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING AND INVESTING
ACTIVITIES
Purchase of equipment with notes payable:
Increase in property, plant and equipment.............. $ 794,494 $ 875,626 $ 642,692
Increase in long-term debt............................. (794,494) (875,626) (642,692)
Sale of trade accounts receivable, a portion of which was
used for certain related fees:
Increase in deferred costs............................. $ -- $ 11,825 $ --
Increase in advances to affiliates..................... -- 15,675 --
Increase in miscellaneous accounts receivable.......... -- 88,917 --
Decrease in accounts receivable -- sold................ -- (116,417) --
Transfer of fixed asset and related debt from an
affiliated company through advances to affiliates:
Increase in property, plant and equipment.............. $ -- $ 33,252 --
Increase in notes payable.............................. -- (25,859) --
Decrease in advances to affiliates..................... -- (7,393) --
</TABLE>

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

F-49
<PAGE> 98

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS

NOTE 1. BUSINESS ORGANIZATION AND ACCOUNTING POLICIES

The Wendt-Bristol Diagnostics Company L.P. (Diagnostics L.P.) is a limited
partnership which owns and operates an outpatient medical diagnostics and
imaging center in Columbus, Ohio (the Center). The partnership was formed May
28, 1987 and shall continue in existence until the close of business on December
31, 2017, or until the earlier termination of the partnership in accordance with
the partnership agreement. The general partner, who has a 50% ownership
interest, is Wendt-Bristol Diagnostics Company, an Ohio corporation, which is a
majority-owned subsidiary of The Wendt-Bristol Company, a Delaware corporation,
which is wholly-owned by The Wendt-Bristol Health Services Corporation, a
Delaware corporation.

Ownership of Diagnostics L.P. consists of depository unitholders
representing limited partner interests. Each depository unit represents an
original capital contribution of $10. The limited partners own 50% of
Diagnostics L.P. A depository unitholder's capital account is subsequently
adjusted for earnings, losses, distributions and any reallocation required under
the Limited Partnership Agreement ("Agreement") as discussed in "Allocation of
Profits and Losses". (See Note 1B.)

Diagnostics L.P. has contracted under a management agreement with the
general partner for general management services. The agreement, which is renewed
annually, provides for a basic management fee payable at 10% of collections as
well as reimbursement of out-of-pocket expenses incurred in providing certain
services.

The accounting policies that affect significant elements of the financial
statements are summarized below:

A. Distributions and Allocations -- Diagnostics L.P. makes cash
distributions after payment of all expenses and partnership
obligations, including the general partner's management fee and
appropriate reserves established by the general partner. Effective
January 1992, the general partner's distributive share of cash flow
available for distribution (as defined) is 50%, with the remaining 50%
allocated to the depository unitholders. At all times, distributions to
the general partner will be subject to the depository unitholders'
receipt of an amount equal to an eight percent annual preferred return
on their original capital contributions.

B. Allocation of Profits and Losses -- Items of revenue and expenses
(excluding depreciation) were allocated 25% to the general partner and
75% to the depository unitholders through December 1991. As a result of
the cumulative return of 100% of the unitholders' original investment,
beginning January 1, 1992, items of revenues and expenses (excluding
depreciation) are allocated 50% to the general partner and 50% to the
depository unitholders. Depreciation expense is allocated 99% to the
depository unitholders.

If the limited partners' tax basis capital accounts become negative,
the income and loss allocation methodology changes in accordance with
the agreement to allow for additional income to be allocated to the
limited partners to eliminate the negative tax basis capital accounts.
To the extent there is an allocation of additional income by the
general partner to the limited partners, this allocation can be
restored to the general partner's capital account from operations or
upon dissolution of the partnership. All other allocation methods are
ceased until the general partner has restored its capital account to
its original balance before the required income allocation. The most
significant difference between the financial statement and tax basis
limited partners' capital accounts is the reduction of the limited
partners' capital accounts for financial statements for the cost of the
public offering. (See Note 1G.)

C. Third-Party Reimbursement -- Diagnostics L.P. is a provider of services
under contractual arrangements with Medicare, Medicaid and various
commercial insurance carriers. Service income includes

F-50
<PAGE> 99
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

amounts estimated by management to be reimbursable by these programs
under the provisions of various payment formulas. Amounts collected by
Diagnostics L.P. for services related to patients covered by such
programs are generally less than the established billing rates. The
differences between established billing rates and amounts received is
recorded as a reduction in service income when the service income is
earned. See Note 2 related to allowance for contractual adjustments.

D. Property and Equipment -- Property, equipment and capital leases are
recorded at cost and depreciated on a straight-line basis over the
expected useful lives of the assets. The carrying amounts of assets
sold, retired or otherwise disposed of and the related accumulated
depreciation are eliminated from the accounts. Any resulting gain or
loss is included in other income.

Depreciation and amortization are computed on a straight-line basis
using estimated useful lives of 31.5 to 40 years on the building and
improvements, 7 to 17 years on furniture, fixtures and equipment and 5
years on computer equipment.

Long-lived assets held and used by the Company are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. For purposes of
evaluating the recoverability of long-lived assets, the recoverability
test is performed using undiscounted net cash flows. There were no
such impairment adjustments at December 31, 1997, 1996, or 1995.

E. Deferred Charges and Other Costs -- Deferred charges consist of costs
(a) incurred to secure mortgage and other financing, (b) fees paid to
the general partner for reimbursement of expenses incurred for the
development of the Center, and (c) preopening costs associated with a
remodeled suite to accommodate an angiography/flouroscopy unit at
Diagnostics L.P. These costs are being amortized on a straight-line
basis over lives ranging from five to ten years. (See Note 1L.)

F. Income Taxes -- Diagnostics L.P. is organized as a partnership and
therefore is not subject to federal income taxes. Each partner reports
on their federal income tax return their distributive share of the
income, gains, losses, deductions and credits of the partnership,
whether or not any actual distribution is made to him during the
taxable year. Taxable income or loss of the partnership will be
allocated to the depository unitholders for inclusion in their
respective federal income tax returns for all applicable years.

As a result of the passage of the Revenue Act of 1987 on December 22,
1987, the partnership could be treated as a corporation for federal tax
purposes upon the earlier of (a) the addition of a substantial new line
of business, or (b) for years beginning after December 31, 1997 once
the partnership meets the criteria to qualify as a publicly traded
partnership as defined under the Internal Revenue Code. Diagnostics
L.P. would not have met the applicable criteria to be treated as a
publicly traded partnership which would cause it to be taxed as a
corporation for the year ended December 31, 1997. However, the
regulations require that the criteria be tested monthly. Therefore, at
the end of any month, Diagnostics L.P. could become taxable as a
corporation instead of a partnership.

If the partnership qualifies as a publicly traded partnership,
Diagnostics L.P. will then be required to pay taxes on its taxable
income, partnership distributions will be taxable as dividends to the
depository unitholders, and the taxable income or loss of the
partnership will not be allocated to the depository unitholders for
inclusion in their respective tax returns.

The Partnership is, however, subject to city income taxes. The current
income tax expense of $2,200 for 1997, $7,300 for 1996, and $11,355
for 1995 is based on local income taxes for the reported amounts of
pre-tax income for the periods.

G. Cost of Public Offering -- The cost of the original public offering of
$214,263 is reflected as a reduction in the limited partners' capital
on the balance sheet.

H. Statement of Cash Flows -- For purposes of the statement of cash flows,
the Partnership considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash. No such investments
were purchased during 1997, 1996 and 1995.

F-51
<PAGE> 100
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

I. Concentrations of Credit Risk -- Concentrations of credit risk
associated with cash balances in excess of federally-insured amounts is
minimized by continuous monitoring of available balances.

J. Estimates -- The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could
differ from these estimates.

K. Fair Value of Financial Instruments -- On January 1, 1995, the Company
adopted Statement of Financial Accounting Standards ("SFAS") No. 107,
"Disclosure about Fair Value of Financial Instruments", which requires
the disclosure of the fair market of all financial instruments for
which it deems practicable to estimate fair value. For certain of the
Company's financial instruments including cash, receivables, accounts
and notes payable, and other accrued liabilities, the carrying amounts
approximate fair value due to their short maturities. For long-term
notes payable, the Company believes the carrying value will approximate
their fair value, based on the Company's incremental borrowing rates
for similar types of borrowings. At December 31, 1997, management
believes the carrying amount of long-term receivables are not impaired
and will be realized in the normal course of business in accordance
with their contract terms.

L. Accounting Pronouncements for 1998 and 1999 -- The Financial Accounting
Standards Board ("FASB") has issued pronouncements for fiscal years
beginning after December 15, 1997 -- SFAS No. 130 -- "Reporting of
Comprehensive Income", and SFAS No. 132 -- "Employers' Disclosures
About Pensions and Other Postretirement Benefits". The Company believes
that the effect of the adoption of the above will not be material to
its financial position or results of operations.

The American Institute of Certified Public Accountants has issued a
pronouncement for fiscal years beginning after December 15, 1998, with
early application permitted, entitled "Reporting on the Costs of
Start-Up Activities". Effective January 1, 1999, Diagnostics L.P. will
record a change in accounting principle for all start-up costs recorded
on the balance sheet at December 31, 1998. At December 31, 1997,
start-up costs totaling approximately $97,000 have been capitalized net
of accumulated amortization of approximately $11,000. Effective January
1, 1999, the unamortized balance of approximately $86,000 will be
recorded as an expense in the Statements of Operations entitled "Change
in Accounting Principle".

F-52
<PAGE> 101
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2. RECEIVABLES

The following schedule summarizes current and noncurrent receivables at
December 31, 1997 and 1996:

<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
Current receivables:
Trade(a).................................................. $1,478,759 $ 763,300
Less allowance for doubtful accounts...................... (100,000) (100,000)
Less allowance for contractual adjustments................ (400,000) (290,000)
---------- ---------
$ 978,759 $ 373,300
========== =========
Miscellaneous receivables:
Securitization program reserves(b)........................ $ -- $ 166,368
Others.................................................... 25,743 1,350
---------- ---------
$ 25,743 $ 167,718
========== =========
Notes receivable (all due in monthly installments):
Notes receivable(c)....................................... $ 182,948 $ 204,722
Less current installments................................. (20,246) (22,906)
---------- ---------
Long-term portion...................................... $ 162,702 $ 181,816
========== =========
</TABLE>

- ---------------
(a) During May 1996, the Partnership entered into an agreement with a finance
company to secure additional working capital funds. The agreement provided
for the Partnership's sale of its health care trade receivables, subject to
various terms and conditions, with limited recourse, with the Partnership
continuing to service accounts. A sale was recorded when the health care
accounts receivable were transferred to the purchaser, net of contractual
allowances. Such sales are not included in the Statements of Operations and
no gain or loss arises in the transaction. This agreement ended in March
1997. Trade receivables at December 31, 1996 are shown net of receivables
purchased by the finance company. Total cash proceeds from the sale of these
receivables amounted to approximately $2,540,000 in 1996. Uncollected sold
receivable balances approximated $484,000 at December 31, 1996. Program fees
and costs, included in "interest expense net", approximated 16% for the
years ended December 31, 1997 and 1996.

(b) In connection with the securitization program above, the third party
purchasing the receivables held reserves as additional collateral for the
receivables purchased from the Partnership. These cash reserves were
released in full upon termination of the securitization program in March
1997.

(c) Notes receivable due from third parties originated with the sale of assets
by related entities of the general partner. The notes are collateralized by
the assets sold. If the notes receivable are not timely paid to the
Partnership, the related company the Wendt-Bristol Health Services
Corporation, as parent, guarantees payment.

The notes receivable are due between 1998 through 2007, with interest rates
ranging from 8% to 10%.

(d) Interest income including related party interest (see Note 6) for 1997, 1996
and 1995 was $28,776, $89,038 and $46,474, respectively.

F-53
<PAGE> 102
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment at December 31, 1997 and 1996, at cost, are
as follows:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Land and improvements............................... $ 175,756 $ 175,756
Building and improvements........................... 1,162,361 1,136,608
Medical equipment................................... 5,975,318 5,399,328
---------- ----------
7,313,435 6,711,692
Accumulated depreciation............................ 3,085,823 2,918,784
---------- ----------
$4,227,612 $3,792,908
========== ==========
</TABLE>

Depreciation expense for 1997, 1996 and 1995 amounted to $463,727,
$454,719 and $389,673, respectively.

The Partnership has committed to certain equipment acquisitions that will
be financed through a combination of current equipment financing relationships
or vendor programs. The cost of such equipment currently on order is
approximately $72,000.

NOTE. 4. LONG-TERM DEBT

Long-term debt as of December 31, 1997 and 1996 is summarized as follows:

<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Equipment notes payable -- interest varying from 10.25% to
12.90%, payable in monthly installments totaling $14,817
including interest, through April 2003, collateralized by
equipment................................................. $ 725,970 $ --
Equipment note payable -- interest at 7.91%, payable in
monthly installments of $13,442 including interest,
through December 2002, collateralized by equipment........ 633,938 723,787
9.41% mortgage, payable in monthly installments of $6,600
plus interest, through April 2016......................... 690,661 704,172
Equipment notes payable -- interest varying from 8.42% to
12.98%, payable in monthly installments totaling $14,284
including interest, through February, 2004, collateralized
by equipment.............................................. 771,578 871,302
Equipment note payable -- interest at 12.59%, payable in
monthly installments of $29,391 including interest,
through March, 2002, collateralized by equipment.......... 936,808 1,156,318
---------- ----------
3,758,955 3,455,579
Less current installments................................... 641,341 459,458
---------- ----------
Long-term portion........................................... $3,117,614 $2,996,121
========== ==========
</TABLE>

F-54
<PAGE> 103
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Aggregate future principal payments of long-term debt are as follows:

<TABLE>
<CAPTION>
TOTAL
----------
<S> <C>
1998..................................................... $ 641,341
1999..................................................... 654,000
2000..................................................... 729,975
2001..................................................... 504,169
2002..................................................... 401,853
Thereafter............................................... 827,617
----------
$3,758,955
==========
</TABLE>

Interest expense for 1997, 1996 and 1995 for long-term debt was $406,234,
$332,105 and $199,833, respectively.

Commitments

The Partnership has committed to certain equipment acquisitions that will
be financed by current equipment financing relationships. The cost of such
equipment currently on order approximates $72,000. The general partner has
guaranteed approximately $49,000 of these purchase commitments.

NOTE 5. LEASE COMMITMENTS

The Partnership has several noncancelable lease agreements, accounted for
as operating leases, expiring through 2001. As of December 31, 1997, the minimum
rental payments due under such leases are as follows:

Rent expense for 1997, 1996 and 1995 was $23,930 $28,199 and $15,524,
respectively.

NOTE 6. RELATED PARTY TRANSACTIONS

Advances to and borrowings from various entities controlled by the parent
company of the general partner were made to fund the operating cash needs of the
affiliates and the partnership. At December 31, 1997, the related party payable
balance, including interest, was $27,428. During 1997 and 1996, net payments or
receipts and other adjustments to affiliated companies amounted to receipts and
adjustments for 1997 of $963,855 and payments of $320,084 for 1996.

Certain officers and directors of the parent company of the general
partner, in the aggregate, own approximately 6% of the outstanding depository
units in Diagnostics L.P.

The parent company of the general partner provides various management
services through the general partner to Diagnostics L.P. for a contractual fee
paid to the general partner calculated at 10% of collected receivables; such
fees amounted to $401,728, $410,852 and $423,356 for the years ended December
31, 1997, 1996 and 1995, respectively.

Advances from affiliates, net, in which the general partner owns equity
interests ranging from 22.5% to 50% totaling $27,428 at December 31, 1997
represent net payments and other adjustments.

F-55
<PAGE> 104
WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
(A LIMITED PARTNERSHIP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Diagnostics LP sold medical equipment to an unconsolidated affiliate of the
general partner which resulted in a gain on sale of property and equipment
totaling $18,621 and reduced advances from unconsolidated affiliates of $40,000
which is included in the Statement of Operations for the year ended December 31,
1997.

NOTE 7. RETIREMENT PLAN

Wendt-Bristol Health Services Corporation adopted, effective July 1, 1989,
a retirement plan, under Section 401(k) of the Internal Revenue Code, covering
substantially all employees with more than one year of service. The plan
provides for the Company to contribute, on an annual basis, 10% of the
employee's eligible deferred compensation; such employer contribution is in the
form of Wendt-Bristol Health Services Corporation common stock. During 1997, the
partnership contributed 585 shares of Wendt-Bristol Health Services Corporation,
and recorded an expense of $878 for the transfer of these shares to the plan.

NOTE 8. PROPOSED PURCHASE OF LIMITED PARTNERSHIP INTEREST

The Wendt-Bristol Health Services Corporation ("WBHSC") announced on June
23, 1998 that it is proceeding with plans to acquire all of the limited
partnership interests in Diagnostics L.P. WBHSC has approved (subject to the
satisfactory completion of the appropriate filings with the Securities and
Exchange Commission and any other required approvals) the issuance of
authorized, but unissued convertible Preferred Stock with a stated value of
$20.00 per share and cumulative dividends at $1.20 per share per annum payable
quarterly to accomplish the acquisition of the limited partnership interest that
are not held by WBHSC. A special meeting of the unitholders is expected in the
first quarter of 1999 for purposes of approving the transaction.

F-56
<PAGE> 105

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION

Though there is no specific provision made for indemnification in the case
of Security Act of 1933 liability, the Company's governing documents do provide
for the indemnification of certain individuals under certain circumstances.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers or other persons controlling the
Company pursuant to the foregoing provisions, the Company has been informed by
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.

ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibit Index

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
2.1 Merger Agreement by and among The Wendt-Bristol Health
Services Corporation, Wendt-Bristol Acquisition, Inc. and
Wendt-Bristol Diagnostics Company
2.2 Merger Agreement by and among The Wendt-Bristol Health
Services Corporation, Wendt-Bristol Acquisition LLC and
Wendt-Bristol Health Diagnostics Company, L.P.
3.1 Certificate of Incorporation of registrant. Filed as Exhibit
B to the Company's Proxy Statement (June 27, 1988) and
incorporated herein by reference pursuant to Rule 411(c)
3.2 By-Laws of the Company. Filed as Exhibit C to the Company's
Proxy Statement (June 27, 1988) and incorporated herein by
reference pursuant to Rule 411(c)
4 The Wendt-Bristol Health Services Corporation Terms of
Series 1 Cumulative Dividend Convertible Preferred Stock
4.1 See Exhibits numbered Exhibit 3.1 and 3.2
4.2 Warrant Agreement, dated April 29, 1988, between The
Wendt-Bristol Company, Corna & Co., Inc. and Mellon
Securities Trust Company, as Warrant Agent. Filed as Exhibit
4.2 to Registration Statement on Form S-1 of The
Wendt-Bristol Company (Reg. No. 33-8399, filed October 15,
1986) and incorporated herein by reference to Rule 411(c)
4.3 Warrant Agreement, dated April 29, 1988, between The
Wendt-Bristol Company, Pittsburgh National Bank, N.A., and
The Fifth Third Bank, as Warrant Agent. Filed as Exhibit 4.3
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992 and incorporated herein by reference
pursuant to Rule 411(c)
5 Opinion of Schottenstein, Zox & Dunn Co., L.P.A. regarding
the legality of the Series 1 Cumulative Dividend Preferred Stock.
9 Voting Trust Agreement, dated December 4, 1992, between The
Wendt-Bristol Health Services Corporation, Corporate Life
Insurance Company and Marvin D. Kantor, as Voting Trustee.
Filed as Exhibit 9 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993 and incorporated
herein by reference pursuant to Rule 411(c)
10.1 Employee Stock Option Plan, as amended. Filed as Exhibit
28.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference pursuant to Rule 411(c)
10.2 Loan and Security Agreement, dated March 27, 1996, between
Ethan Allen Care Center, Inc. dba Bristol House of
Springfield and DVI Capital Company relating to equipment
financial. Filed as Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference pursuant to Rule 411(c)
</TABLE>

II-1
<PAGE> 106

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.3 Asset Purchase Agreement, dated April 15, 1996, between
Congress Liquors, Inc. and MHK Corp. Filed as Exhibit 10.11
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference
pursuant to Rule 411(c)
10.4 Mortgage and security agreement dated April 1, 1996, between
Wendt-Bristol Diagnostics Co. L.P. and National City Bank.
Filed as Exhibit 10.11 to the Company's Form 10-Q for the
quarter ended June 30, 1996 and incorporated herein by
reference pursuant to Rule 411(c)
10.5 Mortgage and security agreement dated April 19, 1996 between
The Wendt-Bristol Health Services Corporation and Grand
Pacific Finance Corp. Filed as Exhibit 10.12 to the
Company's Form 10-Q for the quarter ended June 30, 1996 and
incorporated herein by reference pursuant to Rule 411(c)
10.6 Receivables purchase and sale agreement dated May 30, 1996
between The Wendt-Bristol Company, et al, and HealthPartners
Funding L.P., relating to the health care receivables
securitization program. Filed as Exhibit 10.13 to the
Company's Form 10-Q for the quarter ended June 30, 1996 and
incorporated herein by reference pursuant to Rule 411(c)
10.7 Amendment to Receivables Purchase and Sale Agreement dated
August 29, 1996 between The Wendt-Bristol Company, et al,
and HealthPartners Funding L.P., relating to the health care
receivables financing program. Filed as Exhibit 10.14 to the
Company's Form 10-Q for the quarter ended September 30, 1996
and incorporated herein by reference pursuant to Rule 411(c)
10.8 Convertible subordinated bond, dated December 23, 1996, by
and between The Wendt-Bristol Health Services Corporation
and Societe Generale Bank & Trust, or registered assigns.
Filed as Exhibit 1 to the Company's Form 8-K dated December
23, 1996 and incorporated herein by reference pursuant to
Rule 411(c)
10.9 Series 1 Bond dated February 14, 1997, by and between The
Wendt-Bristol Health Services Corporation and Societe
Generale Bank & Trust, or registered assigns, with Schedule
1. Filed as Exhibit 1 to the Company's Form 8-K dated
February 14, 1997 and incorporated herein by reference
pursuant to Rule 411(c)
10.10 Series 1 Warrant dated February 14, 1997, by and between The
Wendt-Bristol Health Services Corporation and Societe
Generale Bank & Trust, or registered assigns, with Schedule
1. Filed as Exhibit 2 to the Company's Form 8-K dated
February 14, 1997 and incorporated herein by reference
pursuant to Rule 411(c)
10.11 Temco National Corporation 401(k) Profit Sharing Plan. Filed
as Exhibit 28.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991, and incorporated
herein by reference pursuant to Rule 411(c)
10.12 Sales and Subservicing Agreement, dated as of February 5,
1993, among The Wendt-Bristol Company, et al, NPF IV, Inc.
and National Premier Financial Services, Inc., relating to
the health care receivables securitization program. Filed as
Exhibit 28.6 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992, and incorporated herein by
reference pursuant to Rule 411(c)
10.13 Stock Purchase Agreement, dated June 4, 1993, between The
Wendt-Bristol Health Services Corporation and Corporate Life
Insurance Company. Filed as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1993 and incorporated herein by reference pursuant to Rule
411(c)
10.14 Installment Business Loan Note, dated January 30, 1996,
between The Wendt-Bristol Company and Marvin D. Kantor
related to working capital loan. Filed as Exhibit 10.5 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, and incorporated herein by reference
pursuant to Rule 411(c)
</TABLE>

II-2
<PAGE> 107

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10.15 Stock Pledge Agreement dated January 30, 1996, between The
Wendt-Bristol Company and Marvin D. Kantor related to
working capital loan. Filed as Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference pursuant to Rule
411(c)
10.16 Loan and Security Agreement, dated March 27, 1996, between
Wendt-Bristol Diagnostics Company, L.P. and DVI Capital
Company relating to equipment financing. Filed as Exhibit
10.7 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995, and incorporated herein by
reference pursuant to Rule 411(c)
10.17 Loan and Security Agreement, dated March 27, 1996, between
Health America, Inc. dba Wendt-Bristol Center and DVI
Capital Company relating to equipment financing. Filed as
Exhibit 10.8 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference pursuant to Rule 411(c)
10.18 Loan and Security Agreement, dated March 27, 1996, between
American Care Center, Inc. dba Bristol House of Columbus and
DVI Capital Company relating to equipment financing. Filed
as Exhibit 10.9 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 and incorporated herein
by reference pursuant to Rule 411(c)
10.19 Series 2 Bond dated December 7, 1998, by and between The Wendt-Bristol
Health Services Corporation and Banca Del Sempione, or registered
assigns
12 Statement regarding computation of ratios
21 Subsidiaries of Registrant
23.1 Consent of Hausser + Taylor LLP relating to The
Wendt-Bristol Health Services Corporation
23.2 Consent of Hausser + Taylor LLP relating to The
Wendt-Bristol Diagnostics Company L.P.
24 Power of attorneys
27 EDGAR Financial Data Schedule
</TABLE>

<TABLE>
<S> <C> <C>
(b) Financial Statement Schedule
Condensed Financial Information............................. S-1
Valuation and Qualifying Accounts........................... S-2

ITEM 22. UNDERTAKINGS

(a) The undersigned registrant undertakes as follows:

(1) that prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is part of this
registration statement, by any person or party who is deemed to be
an underwriter within the meaning of Rule 145(c), the issuer
undertakes that such reoffering prospectus will contain the
information called for by the applicable registration form with
respect to reofferings, by persons who may be deemed underwriters,
in addition to the information called for by the other Items of the
applicable form.

(2) that every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the
requirements of section 10(a)(3) of the Act and is used in
connection with an offering of securities subject to Rule 415
(sec.230.415 of this chapter), will be filed as a part of an
amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining
any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

II-3
<PAGE> 108

(b) The undersigned registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.

(c) The undersigned registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of an included
in the registration statement when it became effective.

(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

II-4
<PAGE> 109

SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has duly
caused this post-effective amendment No. 2 to the registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Columbus, State of Ohio, on February ___, 1999.

THE WENDT-BRISTOL HEALTH SERVICES
CORPORATION
(Registrant)

By: /s/ MARVIN D. KANTOR

------------------------------------
Marvin D. Kantor, Chairman of the
Board

Pursuant to the requirements of the Securities Act of 1933, this
post-effective amendment No. 2 to the registration statement has been signed
by the following persons in the capacities and on February ___, 1999.

<TABLE>
<CAPTION>
SIGNATURES CAPACITY
---------- --------
<C> <S>

/s/ MARVIN D. KANTOR Chairman of the Board; Director
- ------------------------------------------------
Marvin D. Kantor

/s/ SHELDON A. GOLD President (Principal Executive Officer); Director
- ------------------------------------------------
Sheldon A. Gold

HAROLD T. KANTOR* Vice Chairman of the Board; Director
- ------------------------------------------------
Harold T. Kantor

REED A. MARTIN* Executive Vice President; Chief Operating Officer;
- ------------------------------------------------ Director
Reed A. Martin

PAUL H. LEVINE* Director
- ------------------------------------------------
Paul H. Levine

GERALD M. PENN* Director
- ------------------------------------------------
Gerald M. Penn

/s/ CHARLES R. CICERCHI Vice President of Finance, Principal Financial and
- ------------------------------------------------ Accounting Officer
Charles R. Cicerchi

CLEMENTE DEL PONTE* Director
- ------------------------------------------------
Clemente Del Ponte
</TABLE>

- ---------------
* The above-named directors of the registrant execute this post-effective
amendment No. 2 to the registration statement by Sheldon A. Gold and Charles
R. Cicerchi, their Attorneys-in-fact, pursuant to powers of attorney executed
by the above-named directors and filed with the Securities and Exchange
Commission as Exhibit 24 to the registration statement.

By: /s/ SHELDON A. GOLD
-----------------------------------
Sheldon A. Gold

By: /s/ CHARLES R. CICERCHI
-----------------------------------
Charles R. Cicerchi

II-5
<PAGE> 110

FINANCIAL INFORMATION

SELECTED WENDT-BRISTOL HEALTH SERVICES CORPORATION
HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT SHARE DATA)

(A) Calculated on a diluted share basis
</TABLE>

SELECTED WENDT-BRISTOL DIAGNOSTICS CO. L.P.
HISTORICAL FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT UNIT DATA)

<TABLE>
<CAPTION>
AT OR FOR
THE NINE MONTHS
ENDED AT OR FOR THE YEAR ENDED DECEMBER 31,
SEP 30, 1998 ----------------------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues ..................................... $ 3,481 $ 4,143 $ 4,218 $ 4,087 $ 3,824 $ 3,821
Income (loss) from continuing operations ..... $ (131) $ (155) $ 405 $ 622 $ 212 $ 315
Income (loss) from continuing operations
per limited partner's unit ................ (1.74) (2.12) (0.14) 0.83 (1.38) (0.99)
Income (loss) from continuing operations
per general partner's share ............... 119,500.00 149,527.00 425,177.00 501,856.00 410,423.00 456,992.00
Cash distributions per unit .................. 0.00 $ 1.00 0.00 $ 1.00 $ 1.40 $ 2.10
Limited partners' share of income (loss) ..... (250) $ (305) $ (20) $ 120 $ (198) $ (142)

Cash dividends/distributions
per share 0.00 0.00 0.00 0.00

Income (loss) per share
from continuing operations $ (0.01) $ 0.26 $ (0.06) $ 0.21
</TABLE>

Cash dividends/distributions
per share 0.00 1.00 0.00 0.00

Income (loss) per share
from continuing operations (1.74) (2.12) (0.12) 0.42
</TABLE>

S-1
<PAGE> 111

WENDT-BRISTOL HEALTH SERVICES CORPORATION AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
-------- ---------- ---------- ---------- ---------
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
OF PERIOD EXPENSES DEDUCTIONS OF PERIOD
-------- -------- -------- --------
<S> <C> <C> <C> <C>
December 31, 1997
Reserve deducted from asset to which it
applies:
Allowance for doubtful trade
accounts.......................... $ 90,000 $ 58,000 $ 47,000(a) $101,000
======== ======== ======== ========
Valuation allowance for deferred tax
assets.............................. $200,000 $ -- $200,000 $ --
======== ======== ======== ========
December 31, 1996
Reserve deducted from asset to which it
applies:
Allowance for doubtful trade
accounts.......................... $264,700 $ 65,480 $240,180(a) $ 90,000
======== ======== ======== ========
Valuation allowance for deferred tax
assets.............................. $300,000 $ -- $100,000 $200,000
======== ======== ======== ========
December 31, 1995
Reserve deducted from asset to which it
applies:
Allowance for doubtful trade
accounts.......................... $120,000 $ 64,596 $(80,124)(a)(b) $264,700
======== ======== ======== ========
Valuation allowance for deferred tax
assets.............................. $400,000 $ -- $100,000 $300,000
======== ======== ======== ========
</TABLE>

Notes: (a) Write-off of uncollectible amounts

(b) Net of reserves of approximately $150,000 which are no longer
connected with a financing arrangement involving the securitization
of accounts receivable.

S-2
<PAGE> 112

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

Notes: (a) Write-off of uncollectible amounts

S-3
<PAGE> 113

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors
The Wendt-Bristol Health Services Corporation
Columbus, Ohio

/s/ HAUSSER + TAYLOR LLP

Columbus, Ohio

April 20, 1998, except for Note 17 as to which the date is June 23, 1998 and
Note 18 as to which the date is January 27, 1999.

R-1
<PAGE> 114

To the General and Limited partners
Wendt-Bristol Diagnostics Company L.P.
(A Limited Partnership)
Columbus, Ohio

INDEPENDENT AUDITORS' REPORT

We have audited the accompanying balance sheets of the Wendt-Bristol
Diagnostics Company L.P. (A Limited Partnership) as of December 31, 1997 and
1996 and the related statements of operations, changes in partners' capital and
cash flows each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these 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 audit to obtain
reasonable assurance about whether the financial statements are freed 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.

/S/ HAUSSER + TAYLOR LLP

Columbus, Ohio

April 20, 1998, except for Note 8, as to
which the date is June 23, 1998

R-2
<PAGE> 115

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

------------------------
FORM S-4
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

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

THE WENDT-BRISTOL HEALTH
SERVICES CORPORATION

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

EXHIBITS
------------------------
<PAGE> 116

EXHIBIT INDEX

<TABLE>
<CAPTION>
PAGE IN
MANUALLY
SIGNED
EXHIBIT ORIGINAL
- ------- --------
<C> <S> <C>
2.1 Merger Agreement by and among The Wendt-Bristol Health
Services Corporation, Wendt-Bristol Acquisition LLC and
Wendt-Bristol Diagnostics Company, L.P. .................... 1
2.2 Merger Agreement by and among The Wendt-Bristol Health
Services Corporation, Wendt-Bristol Acquisition, Inc. and
Wendt-Bristol Diagnostics Company........................... 13
3.1 Certificate of Incorporation of registrant. Filed as Exhibit
B to the Company's Proxy Statement (June 27, 1988) and
incorporated herein by reference pursuant to Rule 411(c).... --
3.2 By-Laws of the Company. Filed as Exhibit C to the Company's
Proxy Statement (June 27, 1988) and incorporated herein by
reference pursuant to Rule 411(c)........................... --
4 The Wendt-Bristol Health Services Corporation Terms of
Series 1 Cumulative Dividend Convertible Preferred Stock.... 25
4.1 See Exhibits numbered Exhibit 3.1 and 3.2................... --
4.2 Warrant Agreement, dated April 29, 1988, between The
Wendt-Bristol Company, Corna & Co., Inc. and Mellon
Securities Trust Company, as Warrant Agent. Filed as Exhibit
4.2 to Registration Statement on Form S-1 of The
Wendt-Bristol Company (Reg. No. 33-8399, filed October 15,
1986) and incorporated herein by reference to Rule 411(c)... --
4.3 Warrant Agreement, dated April 29, 1988, between The
Wendt-Bristol Company, Pittsburgh National Bank, N.A., and
The Fifth Third Bank, as Warrant Agent. Filed as Exhibit 4.3
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1992 and incorporated herein by reference
to Rule 411(c).............................................. --
5 Opinion of Schottenstein, Zox & Dunn Co., L.P.A. regarding
the legality of the Series 1 Cumulative Dividend Preferred
Stock....................................................... --
9 Voting Trust Agreement, dated December 4, 1992, between The
Wendt-Bristol Health Services Corporation, Corporate Life
Insurance Company and Marvin D. Kantor, as Voting Trustee.
Filed as Exhibit 9 to the Company's Annual Report on Form
10-K for the year ended December 31, 1993 and incorporated
herein by reference pursuant to Rule 411(c)................. --
10.1 Employee Stock Option Plan, as amended. Filed as Exhibit
28.1 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1991, and incorporated herein by
reference pursuant to Rule 411(c)........................... --
10.2 Loan and Security Agreement, dated March 27, 1996, between
Ethan Allen Care Center, Inc. dba Bristol House of
Springfield and DVI Capital Company relating to equipment
financial. Filed as Exhibit 10.10 to the Company's Annual
Report on Form 10-K for the year ended December 31, 1995 and
incorporated herein by reference pursuant to Rule 411(c).... --
10.3 Asset Purchase Agreement, dated April 15, 1996, between
Congress Liquors, Inc. and MHK Corp. Filed as Exhibit 10.11
to the Company's Annual Report on Form 10-K for the year
ended December 31, 1995 and incorporated herein by reference
pursuant to Rule 411(c)..................................... --
10.4 Mortgage and security agreement dated April 1, 1996, between
Wendt-Bristol Diagnostics Co. L.P. and National City Bank.
Filed as Exhibit 10.11 to the Company's Form 10-Q for the
quarter ended June 30, 1996 and incorporated herein by
reference pursuant to Rule 411(c)........................... --
</TABLE>

<PAGE> 117

<TABLE>
<CAPTION>
PAGE IN
MANUALLY
SIGNED
EXHIBIT ORIGINAL
- ------- --------
<C> <S> <C>
10.5 Mortgage and security agreement dated April 19, 1996,
between The Wendt-Bristol Health Services Corporation and
Grand Pacific Finance Corp. Filed as Exhibit 10.12 to the
Company's Form 10-Q for the quarter ended June 30, 1996 and
incorporated herein by reference pursuant to Rule 411(c).... --
10.6 Receivables purchase and sale agreement dated May 30, 1996
between The Wendt-Bristol Company, et al, and HealthPartners
Funding L.P., relating to the health care receivables
securitization program. Filed as Exhibit 10.13 to the
Company's Form 10-Q for the quarter ended June 30, 1996 and
incorporated herein by reference pursuant to Rule 411(c).... --
10.7 Amendment to Receivables Purchase and Sale Agreement dated
August 29, 1996 between The Wendt-Bristol Company, et al,
and HealthPartners Funding L.P., relating to the health care
receivables financing program. Filed as Exhibit 10.14 to the
Company's Form 10-Q for the quarter ended September 30, 1996
and incorporated herein by reference pursuant to Rule
411(c)...................................................... --
10.8 Convertible subordinated bond, dated December 23, 1996, by
and between The Wendt-Bristol Health Services Corporation
and Societe Generale Bank & Trust, or registered assigns.
Filed as Exhibit 1 to the Company's Form 8-K dated December
23, 1996 and incorporated herein by reference pursuant to
Rule 411(c)................................................. --
10.9 Series 1 Bond dated February 14, 1997, by and between The
Wendt-Bristol Health Services Corporation and Societe
Generale Bank & Trust, or registered assigns, with Schedule
1. Filed as Exhibit 1 to the Company's Form 8-K dated
February 14, 1997 and incorporated herein by reference
pursuant to Rule 411(c)..................................... --
10.10 Series 1 Warrant dated February 14, 1997, by and between The
Wendt-Bristol Health Services Corporation and Societe
Generale Bank & Trust, or registered assigns, with Schedule
1. Filed as Exhibit 2 to the Company's Form 8-K dated
February 14, 1997 and incorporated herein by reference
pursuant to Rule 411(c)..................................... --
10.11 Temco National Corporation 401(k) Profit Sharing Plan. Filed
as Exhibit 28.2 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1991, and incorporated
herein by reference pursuant to Rule 411(c)................. --
10.12 Sale and Subservicing Agreement, dated as of February 5,
1993, among The Wendt-Bristol Company, et al, NPF IV, Inc.
and National Premier Financial Services, Inc., relating to
the health care receivables securitization program. Filed as
Exhibit 28.6 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1992, and incorporated herein by
reference pursuant to Rule 411(c)........................... --
10.13 Stock Purchase Agreement, dated June 4, 1993, between The
Wendt-Bristol Health Services Corporation and Corporate Life
Insurance Company. Filed as Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1993 and incorporated herein by reference pursuant to Rule
411(c)...................................................... --
10.14 Installment Business Loan Note, dated January 30, 1996,
between The Wendt-Bristol Company and Marvin D. Kantor
related to working capital loan. Filed as Exhibit 10.5 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 and incorporated herein by reference
pursuant to Rule 411(c)..................................... --
10.15 Stock Pledge Agreement dated January 30, 1996, between The
Wendt-Bristol Company and Marvin D. Kantor related to
working capital loan. Filed as Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference pursuant to Rule
411(c)...................................................... --
</TABLE>
<PAGE> 118

<TABLE>
<CAPTION>
PAGE IN
MANUALLY
SIGNED
EXHIBIT ORIGINAL
- ------- --------
<C> <S> <C>
10.16 Loan and Security Agreement, dated March 27, 1996, between
Wendt-Bristol Diagnostics Company, L.P. and DVI Capital
Company relating to equipment financing. Filed as Exhibit
10.7 to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and incorporated herein by
reference pursuant to Rule 411(c)........................... --
10.17 Loan and Security Agreement, dated March 27, 1996, between
Health America, Inc. dba Wendt-Bristol Center and DVI
Capital Company relating to equipment financing. Filed as
Exhibit 10.8 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 and incorporated herein by
reference pursuant to Rule 411(c)........................... --
10.18 Loan and Security Agreement, dated March 27, 1996, between
American Care Center, Inc. dba Bristol House of Columbus and
DVI Capital Company relating to equipment financing. Filed
as Exhibit 10.9 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995 and incorporated herein
by reference pursuant to Rule 411(c)........................ --
10.19 Series 2 Bond dated December 7, 1998, by and between The
Wendt-Bristol Health Services Corporation and Banca Del
Sempione, or registered assigns............................. --
12 Statement regarding computation of ratios................... 31
21 Subsidiaries of Registrant.................................. 96
23.1 Consent of Hausser + Taylor LLP relating to The
Wendt-Bristol Health Services Corporation................... 99
23.2 Consent of Hausser + Taylor LLP relating to The
Wendt-Bristol Diagnostics Company L.P....................... 100
24 Power of attorneys.......................................... 101
27 EDGAR Financial Data Schedule............................... --
</TABLE>

<PAGE> 1

Exhibit 2.1

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

MERGER AGREEMENT

AMONG

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION,

WENDT-BRISTOL ACQUISITION, INC.

AND

WENDT-BRISTOL DIAGNOSTICS COMPANY

SEPTEMBER 25, 1998

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

<PAGE> 2

<TABLE>
<S> <C>
1. Definitions.............................................................................................. 1
(a) "Buyer-owned Share" ............................................................................ 1
(b) "Dissenting Share" ............................................................................. 1
(c) "Ohio General Corporation Law" ................................................................. 1
(d) "Person" ....................................................................................... 1
(e) "Preferred Shares" ............................................................................. 1
(f) "Prospectus" ................................................................................... 1
(g) "Requisite Stockholder Approval" ............................................................... 1
(h) "SEC" .......................................................................................... 1
(i) "Securities Act" ............................................................................... 1
(j) "Securities Exchange Act" ...................................................................... 2
(k) "Target Share" ................................................................................. 2
(l) "Target Stockholder" ........................................................................... 2

2. Basic Transaction........................................................................................ 2
(a) The Merger...................................................................................... 2
(b) Closing......................................................................................... 2
(c) Actions at the Closing.......................................................................... 2
(d) Effect of Merger................................................................................ 2
(i) General. .............................................................................. 2
(ii) Articles of Incorporation. ............................................................ 2
(iii) Code of Regulations. .................................................................. 3
(iv) Directors and Officers. ............................................................... 3
(v) Conversion of Target Shares. .......................................................... 3
(vi) Conversion of Capital Stock of the Transitory Subsidiary. ............................. 3
(e) Procedure for Payment........................................................................... 3
(f) Closing of Transfer Records. ................................................................... 4

3. Covenants. .............................................................................................. 4
(a) General. ....................................................................................... 4
(b) Notices and Consents. .......................................................................... 4
(c) Regulatory Matters and Approvals. .............................................................. 4
(i) Securities Act, Securities Exchange Act, and State
Securities Laws. ..................................................................... 4
(ii) Ohio General Corporation Law. ......................................................... 4

4. Conditions to Obligation to Close........................................................................ 5
(a) Conditions to Obligation of the Buyer and the Transitory Subsidiary.
............................................................................................... 5
(b) Conditions to Obligation of the Target. ........................................................ 5

5. Termination. ............................................................................................ 6
(a) Termination of Agreement. ...................................................................... 6
(b) Effect of Termination. ......................................................................... 6

</TABLE>

-i-
<PAGE> 3

<TABLE>
<S> <C>
6. Miscellaneous............................................................................................ 6
(a) No Third-Party Beneficiaries. .................................................................. 6
(b) Entire Agreement. .............................................................................. 6
(c) Succession and Assignment. ..................................................................... 6
(d) Counterparts. .................................................................................. 6
(e) Headings. ...................................................................................... 6
(f) Notices. ....................................................................................... 7
(g) Governing Law. ................................................................................. 7
(h) Amendments and Waivers. ........................................................................ 7
(i) Severability. .................................................................................. 8
</TABLE>

-ii-
<PAGE> 4

MERGER AGREEMENT

This Agreement is entered into effective the 25th day of September, 1998,
by and among The Wendt-Bristol Health Services Corporation, a Delaware
corporation ( "BUYER"), Wendt-Bristol Acquisition, Inc., an Ohio corporation and
a wholly-owned Subsidiary of the Buyer ("TRANSITORY SUBSIDIARY"), and
Wendt-Bristol Diagnostics Company, an Ohio corporation ("TARGET"). Buyer,
Transitory Subsidiary, and Target are referred to collectively herein as the
"PARTIES."

This Agreement contemplates a transaction in which the Buyer (or its
wholly owned Subsidiary) will acquire all of the outstanding capital stock of
the Target for the Preferred Shares through a reverse subsidiary merger of the
Transitory Subsidiary with and into the Target.

Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.

1. DEFINITIONS.

(a) "BUYER-OWNED SHARE" means any Target Share that the Buyer or the
Transitory Subsidiary owns beneficially.

(b) "DISSENTING SHARE" means any Target Share which any stockholder
who or which has exercised his or its appraisal rights under the Ohio General
Corporation Law holds of record.

(d) "PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).

(e) "PREFERRED SHARES" means The Series 1 preferred shares of the
Buyer.

(f) "PROSPECTUS" means the final prospectus relating to the
registration of the Preferred Shares under the Securities Act.

(g) "REQUISITE STOCKHOLDER APPROVAL" means the affirmative vote of the
holders of a majority of the Target Shares in favor of this Agreement and the
Merger.

(h) "SEC" means the Securities and Exchange Commission.

(i) "SECURITIES ACT" means the Securities Act of 1933, as amended.

<PAGE> 5

(j) "SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended.

(k) "TARGET SHARE" means any share of the Common Stock of the Target.

(l) "TARGET STOCKHOLDER" means any Person who or which holds any
Target Shares.

2. BASIC TRANSACTION.

(a) THE MERGER. On and subject to the terms and conditions of
this Agreement, Transitory Subsidiary will merge with and into the Target
("MERGER") at the Effective Time. The Target shall be the corporation surviving
the Merger ("SURVIVING CORPORATION").

(b) CLOSING. The closing of the transactions contemplated by this
Agreement ("CLOSING") shall take place at the offices of Schottenstein, Zox &
Dunn Co., L.P.A. in Columbus, Ohio, commencing at 9:00 a.m. local time on the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself) or such other date as the Parties may mutually
determine ("CLOSING DATE").

(c) ACTIONS AT THE CLOSING. At the Closing, (i) Target and
Transitory Subsidiary will file with the Secretary of State of the State of Ohio
a Certificate of Merger ("CERTIFICATE OF MERGER"), and (ii) the Buyer will cause
the Surviving Corporation to deliver the Preferred Shares to the Exchange Agent
in the manner provided below in this Section 2.

(d) EFFECT OF MERGER.

(i) GENERAL. The Merger shall become effective at the time ("EFFECTIVE
TIME") the Target and the Transitory Subsidiary file the Certificate of
Merger with the Secretary of State of the State of Ohio. The Merger shall
have the effect set forth in the Ohio General Corporation Law. The
Surviving Corporation may, at any time after the Effective Time, take any
action (including executing and delivering any document) in the name and on
behalf of either the Target or the Transitory Subsidiary in order to carry
out and effectuate the transactions contemplated by this Agreement.

(ii) ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Surviving Corporation as in effect immediately prior to the Effective Time
shall remain unchanged.

2
<PAGE> 6

(iii) CODE OF REGULATIONS. The Code of Regulations of the Surviving
Corporation as in effect immediately prior to the Effective Time shall
remain unchanged.

(iv) DIRECTORS AND OFFICERS. The directors and officers of Target
shall continue as the directors and officers of the Surviving Corporation
at and as of the Effective Time (retaining their respective positions and
terms of office).

(v) CONVERSION OF TARGET SHARES. At and as of the Effective Time, (A)
the Target Stockholders (other than any Dissenting Share or Buyer-owned
Share) shall have the right to receive 1 Preferred Share ("Conversion
Ratio") for each four (4) Target Shares (the "Merger Consideration"), (B)
each Dissenting Share shall be converted into the right to receive payment
from the Surviving Corporation with respect thereto in accordance with the
provisions of the Ohio General Corporation Law, and (C) each Buyer-owned
Share shall be cancelled; provided, however, that the Merger Consideration
shall be subject to equitable adjustment in the event of any stock split,
stock dividend, reverse stock split, or other change in the number of
Target Shares outstanding. No Target Share shall be deemed to be
outstanding or to have any rights other than those set forth above in this
Section2(d)(v) after the Effective Time. No fractional Preferred Shares
shall be issued and, in lieu thereof, cash shall be paid to such Target
Stockholders at the rate of $5.00 per Target Share.

(vi) CONVERSION OF CAPITAL STOCK OF THE TRANSITORY SUBSIDIARY. At and
as of the Effective Time, each share of Common Stock of the Transitory
Subsidiary shall be cancelled.

(e) PROCEDURE FOR PAYMENT.

(i) Immediately after the Effective Time, (A) the Buyer will furnish
to an exchange agent selected by it ("EXCHANGE AGENT") a stock certificate
(issued in the name of the Exchange Agent or its nominee) representing that
number of Preferred Shares equal to the product of (I) the Conversion Ratio
times (II) the number of outstanding Target Shares (other than any
Dissenting Shares and Buyer-owned Shares) and (B) the Buyer will mail a
letter of transmittal (with instructions for its use) each record holder of
outstanding Target Shares for the holder to use in surrendering the
certificates which represented his or its Target Shares in exchange for a
certificate representing the number of Buyer Shares to which he or it is
entitled.

(ii) The Buyer will not pay any dividend or make any distribution on
Buyer Shares (with a record date at or after the Effective Time) to any
record holder of outstanding Target Shares until the holder surrenders for
exchange his or its certificates which represented Target Shares. The Buyer
instead will pay the dividend

3
<PAGE> 7

or make the distribution to the Exchange Agent in trust for the benefit
of the holder pending surrender and exchange.

(iii) The Buyer may cause the Exchange Agent to return any Buyer
Shares and dividends and distributions thereon remaining unclaimed 180 days
after the Effective Time, and thereafter each remaining record holder of
outstanding Target Shares shall be entitled to look to the Buyer (subject
to abandoned property, escheat, and other similar laws) as a general
creditor thereof with respect to the Buyer Shares and dividends and
distributions thereon to which he or it is entitled upon surrender of his
or its certificates.

(f) CLOSING OF TRANSFER RECORDS. After the close of business on
the Closing Date, transfers of Target Shares outstanding prior to the Effective
Time shall not be made on the stock transfer books of the Surviving Corporation.

3. COVENANTS. The Parties agree as follows with respect to the period
from and after the execution of this Agreement.

(a) GENERAL. Each of the Parties will use its reasonable efforts
to take all action and to do all things necessary, proper, or advisable in order
to consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Section 4 below).

(b) NOTICES AND CONSENTS. The Target will give any notices to
third parties, and will use its reasonable efforts to obtain any third party
consents, that the Buyer reasonably may request.

(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will
give any notices to, make any filings with, and use its reasonable efforts to
obtain any authorizations, consents, and approvals of governments and
governmental agencies. Without limiting the generality of the foregoing:

(i) FEDERAL AND STATE SECURITIES LAWS. The Buyer will prepare and file
with the SEC a registration statement under the Securities Act relating to
the offering and issuance of the Preferred Shares (the "REGISTRATION
STATEMENT") and may make certain associated filings as may be required
under state law. The filing Party in each instance will use its reasonable
efforts to respond to the comments of the SEC or state securities agency,
as the case may be, thereon and will make any further filings (including
amendments and supplements) in connection therewith that may be necessary,
proper, or advisable.

(ii) OHIO GENERAL CORPORATION LAW. The Target will call a special
meeting of its stockholders (the "SPECIAL MEETING"), as soon as reasonably
practicable in order that the stockholders may consider and vote upon the
adoption

4
<PAGE> 8

of this Agreement and the approval of the Merger in accordance with the
Ohio General Corporation Law.

4. CONDITIONS TO OBLIGATION TO CLOSE.

(a) CONDITIONS TO OBLIGATION OF THE BUYER AND THE TRANSITORY
SUBSIDIARY. The obligation of each of the Buyer and the Transitory Subsidiary to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:

(i) the Registration Statement shall have become effective under the
Securities Act;

(ii) all actions to be taken by the Target in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer and the Transitory Subsidiary.

The Buyer and the Transitory Subsidiary may waive any condition specified
in this Section 4(a) if they execute a writing so stating at or prior to the
Closing.

(b) CONDITIONS TO OBLIGATION OF THE TARGET. The obligation of the
Target to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:

(i) the Registration Statement shall have become effective under the
Securities Act;

(ii) this Agreement and the Merger shall have received the Requisite
Stockholder Approval; and

(iii) all actions to be taken by the Buyer and the Transitory
Subsidiary in connection with consummation of the transactions contemplated
hereby and all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Target.

The Target may waive any condition specified in this Section 4(b) if it
executes a writing so stating at or prior to the Closing.

5. TERMINATION.

5
<PAGE> 9

(a) TERMINATION OF AGREEMENT. Any of the Parties may terminate
this Agreement with the prior authorization of its board of directors (whether
before or after stockholder approval) as provided below:

(i) the Parties may terminate this Agreement by mutual written consent
at any time prior to the Effective Time; or

(ii) any Party may terminate this Agreement by giving written notice
to the other Parties at any time after the Special Meeting in the event
this Agreement and the Merger fail to receive the Requisite Stockholder
Approval.

(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section5(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach).

6. MISCELLANEOUS.

(a) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that the
provisions in Section 2 above concerning payment of the Merger Consideration are
intended for the benefit of the Target Stockholders.

(b) ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or among
the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.

(c) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.

(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

(e) HEADINGS. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

6
<PAGE> 10

it is sent by registered or certified mail, return receipt requested, postage
prepaid, and addressed to the intended recipient as set forth below:

If to the Target: Wendt-Bristol Diagnostics Company
Two Nationwide Plaza
280 North High Street, Suite 760
Columbus, Ohio 43215
Attn: Sheldon A. Gold, President

If to the Buyer: The Wendt-Bristol Health Services Corporation
Two Nationwide Plaza
280 North High Street, Suite 760
Columbus, Ohio 43215
Attn: Sheldon A. Gold, President

If to the Transitory Wendt-Bristol Acquisition, Inc.
Subsidiary: Two Nationwide Plaza
280 North High Street, Suite 760
Columbus, Ohio 43215
Attn: Sheldon A. Gold, President

Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.

(g) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Ohio without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Ohio or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Ohio.

(h) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to stockholder approval will be subject
to the restrictions contained in the Ohio General Corporation Law. No amendment
of any provision of this Agreement shall be valid unless the same shall be in
writing and signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any

7
<PAGE> 11

rights arising by virtue of any prior or subsequent such occurrence.

(i) SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
effective the date first above written.

THE WENDT-BRISTOL HEALTH SERVICES
CORPORATION

By:/s/ Sheldon A. Gold
---------------------------------
Sheldon A. Gold, President

WENDT-BRISTOL ACQUISITION, INC.

By:/s/ Sheldon A. Gold
---------------------------------
Sheldon A. Gold, President

WENDT-BRISTOL DIAGNOSTICS COMPANY

By:/s/ Sheldon A. Gold
---------------------------------
Sheldon A. Gold, President

<PAGE> 1

EXHIBIT 2.2

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

MERGER AGREEMENT

AMONG

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION,

WENDT-BRISTOL ACQUISITION LLC

AND

WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.

SEPTEMBER 25, 1998

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

<PAGE> 2

TABLE OF CONTENTS

<TABLE>
<S> <C>
1. Definitions............................................................................................... 1
(a) "Buyer-owned Units" ............................................................................. 1
(b) "Partnership Agreement".......................................................................... 1
(c) "Person" ........................................................................................ 1
(d) "Preferred Shares" .............................................................................. 1
(e) "Prospectus" .................................................................................... 1
(f) "Requisite Unitholder Approval" ................................................................. 1
(g) "SEC" ........................................................................................... 1
(h) "Securities Act" ................................................................................ 1
(i) "Target Unit" ................................................................................... 1
(j) "Target Unitholder" ............................................................................. 2

2. Basic Transaction......................................................................................... 2
(a) The Merger....................................................................................... 2
(b) Closing.......................................................................................... 2
(c) Actions at the Closing........................................................................... 2
(d) Effect of Merger................................................................................. 2
(i) General. ............................................................................... 2
(ii) Partnership Agreement. ................................................................. 2
(iii) General Partner......................................................................... 2
(iv) Conversion of Target Units. ............................................................ 2
(v) Conversion of Membership Interest of the Transitory
Subsidiary.............................................................................. 3
(e) Procedure for Payment............................................................................ 3
(f) Closing of Transfer Records. .................................................................... 4

3. Covenants. ............................................................................................... 4
(a) General. ........................................................................................ 4
(b) Notices and Consents. ........................................................................... 4
(c) Regulatory Matters and Approvals. ............................................................... 4
(i) Federal and State Securities Laws. .................................................... 4
(ii) Partnership Agreement. ................................................................. 4

4. Conditions to Obligation to Close......................................................................... 4
(a) Conditions to Obligation of the Buyer and the Transitory
Subsidiary....................................................................................... 4
(b) Conditions to Obligation of the Target. ......................................................... 5

5. Termination............................................................................................... 5
(a) Termination of Agreement. ....................................................................... 5
(b) Effect of Termination. .......................................................................... 6

6. Miscellaneous............................................................................................. 6
(a) No Third-Party Beneficiaries. ................................................................... 6
(b) Entire Agreement. ............................................................................... 6
</TABLE>

-i-
<PAGE> 3

<TABLE>
<S> <C>
(c) Succession and Assignment. ...................................................................... 6
(d) Counterparts. ................................................................................... 6
(e) Headings. ....................................................................................... 6
(f) Notices. ........................................................................................ 6
(g) Governing Law. .................................................................................. 7
(h) Amendments and Waivers. ......................................................................... 7
(i) Severability. ................................................................................... 7
</TABLE>

-ii-
<PAGE> 4

MERGER AGREEMENT

This Agreement is entered into effective the 25th day of September, 1998,
by and among The Wendt-Bristol Health Services Corporation, a Delaware
corporation ( "BUYER"), Wendt-Bristol Acquisition LLC, a Delaware limited
liability company and a wholly-owned subsidiary of the Buyer ("TRANSITORY
SUBSIDIARY"), and Wendt-Bristol Diagnostics Company L.P., a Delaware limited
partnership ("TARGET"). Buyer, Transitory Subsidiary, and Target are referred to
collectively herein as the "PARTIES."

This Agreement contemplates a transaction in which the Buyer (or its wholly
owned Subsidiary) will acquire all of the outstanding limited partnership units
of the Target for the Preferred Shares through a merger of the Transitory
Subsidiary with and into the Target.

1. DEFINITIONS.

(a) "BUYER-OWNED UNITS" means any Target Unit that the Buyer, the
Transitory Subsidiary, or any of their affiliates own beneficially.

(b) "PARTNERSHIP AGREEMENT" means the Amended and Restated Agreement
and Certificate of Limited Partnership of Wendt-Bristol Diagnostics Company L.P.

(c) "PERSON" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).

(d) "PREFERRED SHARES" means the Series 1 preferred stock of the
Buyer.

(e) "PROSPECTUS" means the final prospectus relating to the
registration of the Preferred Shares under the Securities Act.

(f) "REQUISITE UNITHOLDER APPROVAL" means the affirmative vote of the
holders of a majority of the Target Units in favor of this Agreement and the
Merger.

(g) "SEC" means the Securities and Exchange Commission.

(h) "SECURITIES ACT" means the Securities Act of 1933, as amended.

(i) "TARGET UNIT" means any Depository Unit of the Target.

(j) "TARGET UNITHOLDER" means any Person who or which holds any Target
Units.

<PAGE> 5

2. BASIC TRANSACTION.

(a) THE MERGER. On and subject to the terms and conditions of this
Agreement, Transitory Subsidiary will merge with and into the Target ("MERGER")
at the Effective Time. The Target shall be the entity surviving the Merger
("SURVIVING ENTITY").

(c) ACTIONS AT THE CLOSING. At the Closing, (i) Target and Transitory
Subsidiary will file with the Secretary of State of the State of Delaware a
Certificate of Merger ("CERTIFICATE OF MERGER"), and (ii) the Buyer will cause
the Surviving Entity to deliver the Preferred Shares to the Exchange Agent in
the manner provided below in this Section2.

(d) EFFECT OF MERGER.

(i) GENERAL. The Merger shall become effective at the time
("EFFECTIVE TIME") the Target and the Transitory Subsidiary file the
Certificate of Merger with the Secretary of State of the State of
Delaware. The Merger shall have the effect set forth under Delaware
law. The Surviving Entity may, at any time after the Effective Time,
take any action (including executing and delivering any document) in
the name and on behalf of either the Target or the Transitory
Subsidiary in order to carry out and effectuate the transactions
contemplated by this Agreement.

(ii) PARTNERSHIP AGREEMENT. The Partnership Agreement of the
Surviving Entity as in effect immediately prior to the Effective Time
shall remain unchanged.

(iii) GENERAL PARTNER. The general partner of Target shall
continue as the general partner of the Surviving Entity at and as of
the Effective Time (retaining their respective positions and terms of
office).

(iv) CONVERSION OF TARGET UNITS. At and as of the Effective
Time, (A) the Target Unitholders (other than any Buyer-owned Unit)
shall have the right to receive 1 Preferred Share ("Conversion Ratio")
for each two (2) Target Units (the "Merger Consideration"), and (B)
each Buyer-owned Unit shall be cancelled; provided, however, that the
Merger Consideration shall be subject to equitable adjustment in the
event of any split, distribution, or other change in the number of
Target Units outstanding. No Target Unit shall be deemed to be
outstanding or to

2
<PAGE> 6

have any rights other than those set forth above in this
Section 2(d)(iv) after the Effective Time. No fractional Preferred
Shares shall be issued and, in lieu thereof, cash shall be paid to such
Target Unitholders at the rate of $10.00 per Target Unit.

(v) CONVERSION OF MEMBERSHIP INTEREST OF THE TRANSITORY
SUBSIDIARY. At and as of the Effective Time, the Membership Interests
of the Transitory Subsidiary shall be cancelled.

(e) PROCEDURE FOR PAYMENT.

(i) Immediately after the Effective Time, (A) the Buyer will
furnish to an exchange agent selected by it ("EXCHANGE AGENT") a stock
certificate (issued in the name of the Exchange Agent or its nominee)
representing that number of Preferred Shares equal to the product of
(I) the Conversion Ratio times (II) the number of outstanding Target
Units (other than any Buyer-owned Units) and (B) the Buyer will mail a
letter of transmittal (with instructions for its use) each record
holder of outstanding Target Units for the holder to use in
surrendering the certificates which represented his or its Target
Units in exchange for a certificate representing the number of
Preferred Shares to which he or it is entitled.

(ii) The Buyer will not pay any dividend or make any
distribution on Preferred Shares (with a record date at or after the
Effective Time) to any record holder of outstanding Target Units until
the holder surrenders for exchange his or its certificates which
represented Target Units. The Buyer instead will pay the dividend or
make the distribution to the Exchange Agent in trust for the benefit
of the holder pending surrender and exchange.

(iii) The Buyer may cause the Exchange Agent to return any
Preferred Shares and dividends and distributions thereon remaining
unclaimed 180 days after the Effective Time, and thereafter each
remaining record holder of outstanding Target Units shall be entitled
to look to the Buyer (subject to abandoned property, escheat, and
other similar laws) as a general creditor thereof with respect to the
Buyer Shares and dividends and distributions thereon to which he or it
is entitled upon surrender of his or its certificates.

(f) CLOSING OF TRANSFER RECORDS. After the close of business on
the Closing Date, transfers of Target Units outstanding prior to the Effective
Time shall not be made on the stock transfer books of the Surviving Entity.

3. COVENANTS. The Parties agree as follows with respect to the period from
and after the execution of this Agreement:

(a) GENERAL. Each of the Parties will use its reasonable efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make

3
<PAGE> 7

effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section4
below).

(b) NOTICES AND CONSENTS. The Target will give any notices to third
parties, and will use its reasonable efforts to obtain any third party consents,
that the Buyer reasonably may request.

(c) REGULATORY MATTERS AND APPROVALS. Each of the Parties will give
any notices to, make any filings with, and use its reasonable efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies. Without limiting the generality of the foregoing:

(i) FEDERAL AND STATE SECURITIES LAWS. The Buyer will
prepare and file with the SEC a registration statement under the
Securities Act relating to the offering and issuance of the Preferred
Shares (the "REGISTRATION STATEMENT") and may make certain associated
filings as may be required under state law. The filing Party in each
instance will use its reasonable efforts to respond to the comments of
the SEC or state securities agency, as the case may be, thereon and
will make any further filings (including amendments and supplements)
in connection therewith that may be necessary, proper, or advisable.

(ii) PARTNERSHIP AGREEMENT. The Target will call a special
meeting of its Target Unitholders (the "SPECIAL MEETING"), as soon as
reasonably practicable in order that the Target Unitholders may
consider and vote upon the adoption of this Agreement and the approval
of the Merger in accordance with the Partnership Agreement and
Delaware law.

4. CONDITIONS TO OBLIGATION TO CLOSE.

(i) the Registration Statement shall have become effective
under the Securities Act;

(ii) all actions to be taken by the Target in connection
with consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer and the Transitory
Subsidiary.

4
<PAGE> 8

The Buyer and the Transitory Subsidiary may waive any condition
specified in this Section 4(a) if they execute a writing so stating at or prior
to the Closing.

(i) the Registration Statement shall have become effective
under the Securities Act;

(ii) this Agreement and the Merger shall have received the
Requisite Unitholder Approval; and

(iii) all actions to be taken by the Buyer and the
Transitory Subsidiary in connection with consummation of the
transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to the Target.

The Target may waive any condition specified in this Section4(b) if it
executes a writing so stating at or prior to the Closing.

5. TERMINATION.

(a) TERMINATION OF AGREEMENT. Any of the Parties may terminate this
Agreement with the prior authorization of its manager, general partner or board
of directors, as the case may be (whether before or after the Requisite
Unitholder Approval), as provided below:

(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Effective Time; or

(ii) any Party may terminate this Agreement by giving
written notice to the other Parties at any time after the Special
Meeting in the event this Agreement and the Merger fail to receive the
Requisite Unitholder Approval.

(b) EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 5(a) above, all rights and obligations of the Parties
hereunder shall terminate without any liability of any Party to any other Party
(except for any liability of any Party then in breach).

6. MISCELLANEOUS.

(a) NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors

5
<PAGE> 9

and permitted assigns; provided, however, that the provisions in Section 2 above
concerning payment of the Merger Consideration are intended for the benefit of
the Target Unitholders.

(b) ENTIRE AGREEMENT. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.

(c) SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Parties.

(d) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.

(e) HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.

(f) NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:

If to the Target: Wendt-Bristol Diagnostics Company L.P.
Two Nationwide Plaza
280 North High Street, Suite 760
Columbus, Ohio 43215
Attn: Sheldon A. Gold, President

If to the Buyer: The Wendt-Bristol Health Services Corporation
Two Nationwide Plaza
280 North High Street, Suite 760
Columbus, Ohio 43215
Attn: Sheldon A. Gold, President

If to the Transitory Wendt-Bristol Acquisition LLC
Subsidiary: Two Nationwide Plaza
280 North High Street, Suite 760
Columbus, Ohio 43215
Attn: Sheldon A. Gold, President

6
<PAGE> 10

(g) GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Delaware without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Delaware or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Delaware.

(h) AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors, general partner or
manager, as the case may be; provided, however, that any amendment effected
subsequent to stockholder approval will be subject to the restrictions contained
in Delaware law. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by all of the Parties. No waiver
by any Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement
effective the date first above written.

THE WENDT-BRISTOL HEALTH SERVICES
CORPORATION

By: /s/ Sheldon A. Gold
---------------------------------
Sheldon A. Gold, President

7
<PAGE> 11

WENDT-BRISTOL ACQUISITION LLC

By: /s/ Sheldon A. Gold
--------------------------------
Sheldon A. Gold, Manager

By: WENDT-BRISTOL DIAGNOSTICS COMPANY L.P.
Its: General Partner

By: /s/ Sheldon A. Gold
--------------------------------
Sheldon A. Gold, President

<PAGE> 1

EXHIBIT 4

TERMS OF PREFERRED SHARES

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION
TERMS OF SERIES 1 CUMULATIVE DIVIDEND CONVERTIBLE PREFERRED STOCK

Resolved, that pursuant to the authority vested in the board of directors
of The Wendt-Bristol Health Services Corporation by its Certificate of
Incorporation, as amended, the board of directors hereby assigns the attributes
of previously authorized preferred stock, a series of preferred stock designated
as Series 1 Cumulative Dividend Convertible Preferred Stock ("Series"),
consisting of 500,000 shares, $1 par value each, with a stated value of $20.00
per share, of which the preferences and other special rights and the
qualifications, limitations, or restrictions on such preferences and rights
shall be as follows:

DIVIDENDS

The holders of record of shares of this Series shall be entitled to
receive, when and as declared by the board of directors out of funds legally
available therefor, cash dividends at the rate of $1.20 per share per annum,
payable quarterly on such dates as may from time to time be determined by the
board of di rectors, in preference to and in priority over dividends upon the
Common Stock of the Corporation and all other shares of Preferred Stock of the
Corporation that are by their terms expressly made junior as to dividends to
this Series. The holders of shares of this Series shall not be entitled to any
dividends other than the cash dividends provided for in this Section. No
dividends shall be declared or paid on the Common Stock of the Corporation
during any period when the Corporation has failed to pay a quarter-annual
dividend on this Series for any preceding quarter.

LIQUIDATION

In the event of a liquidation, dissolution, or winding up of the
Corporation, the holders of shares of this Series shall be entitled to receive
out of the assets of the Corporation an amount equal to $20 per share, plus any
accrued and unpaid dividends thereon to the date fixed for distribution, in
preference to and in priority over any such distribution upon the Common Stock
of the Corporation and all other shares of Preferred Stock of the Corporation
that are by their terms expressly made junior as to liquidation preferences to
this Series. If the assets of the Corporation are not sufficient to pay such
amounts in full to the holders of this Series and all other Series of Preferred
Stock of the Corporation ranking equally as to liquidation preferences with the
shares of this Series, the holders of this Series and of all such other Series
shall share ratably in any such distribution of assets in accordance with the
amounts that would be payable on such distribution if the amounts to which the
holders of this and all such other Series are entitled were paid in full.

REDEMPTION

This Series may be redeemed, in whole or in part, at the option of the
Corporation by resolution of its board of directors, at any time and from time
to time, at the redemption price per share of $24 plus any accrued and unpaid
dividends thereon to the date fixed for redemption.

In the event that less than the entire number of the shares of this Series
outstanding is at any one time redeemed by the Corporation, the shares to be
redeemed shall be selected by lot in a manner determined by the board of
directors of the Corporation.

Not less than thirty nor more than sixty days prior to the date fixed for
any redemption of this Series or any part thereof, a notice specifying the time
and place of such redemption shall be given by first-

<PAGE> 2

class mail, postage prepaid, to the holders of record of the shares of this
Series selected for redemption at their respective addresses as the same shall
appear on the books of the Corporation, but no failure to mail such notice or
any defect therein or in the mailing thereof shall affect the validity of the
proceedings for redemption. Any notice that was mailed in the manner herein
provided shall be conclusively presumed to have been duly given whether or not
the holder receives the notice.

After the giving of any notice of voluntary redemption and prior to the
close of business on the date fixed for such redemption, the holders of shares
of this Series called for redemption may convert such stock into Common Stock of
the Corporation in accordance with the conversion privileges set forth below in
"Conversion Privilege and Price." After the date fixed for the redemption of
shares of this Series by the Corporation, the holders of shares selected for
redemption shall cease to be stockholders with respect to such shares and shall
have no interest in or claims against the Corporation by virtue thereof and
shall have no other rights with respect to such shares, except the right to
receive the moneys payable upon such redemption from the Corporation, without
interest thereon, upon surrender (and endorsement, if required by the
Corporation) of their certificates, and the shares represented thereby shall no
longer be deemed to be outstanding. The Corporation may, at its option, at any
time after a notice of redemption has been given, deposit the redemption price
for all shares of this Series designated for redemption and not yet redeemed,
plus any accrued and unpaid dividends thereon to the date fixed for redemption,
with the transfer agent or agents for this Series, as a trust fund for the
benefit of the holders of the shares of this Series designated for redemption.

From and after the making of such deposit, the holders of the shares
designated for redemption shall cease to be stockholders with respect to such
shares and shall have no interest in or claim against the Corporation by virtue
thereof and shall have no other rights with respect to such shares, except the
right to receive from such trust fund the moneys payable upon such redemption,
without interest thereon, upon surrender (and endorsement, if required by the
Corporation) of their certificates, and the shares represented thereby shall no
longer be deemed to be outstanding. Such deposit shall not impair the right of
conversion provided for herein. Any moneys deposited by the Corporation pursuant
to this Section for the redemption of shares thereafter converted into Common
Stock shall be returned to the Corporation forthwith upon their conversion, and
any balance of such moneys remaining unclaimed at the end of the five years
commencing on the date fixed for redemption shall be repaid to the Corporation
upon its request expressed in a resolution of its board of directors, subject to
applicable escheat laws.

NON-VOTING

Except as otherwise expressly provided below or as required by Law, this
Series shall be non-voting.

CHANGES IN PREFERRED STOCK TERMS

The Corporation may, by resolution of its board of directors or as
otherwise permitted by law, from time to time alter or change the preferences,
rights, or powers of this Series. However, no such alteration or change shall be
made that adversely affects the preferences, rights, or powers of the shares of
all outstanding Series of Preferred Stock of the Corporation without the
affirmative vote or the written consent as provided by law of the holders of at
least two thirds of the outstanding shares of all Series of Preferred Stock,
voting as a single class. No alteration or change shall be made that adversely
affects the preferences, rights, or powers of this but not all outstanding
Series of Preferred Stock of the Corporation, without the affirmative vote or
written consent as provided by law of the holders of at least two thirds of the

Page 2 of 5
<PAGE> 3

outstanding shares of this and any other Series so affected by such alteration
or change, voting as a single class. The holders of this Series shall not be
entitled to participate in any such class vote if, at or prior to the time when
any such alteration or change is to take effect, provision is made pursuant to
"Redemption" above for the redemption of all shares of this Series at the time
outstanding. Nothing in this paragraph shall require a class vote or consent in
connection with the authorization, designation, increase, or issuance of any
shares of any class or series of stock (including additional shares of this
Series) that ranks junior to or on a parity with shares of this Series as to
dividends and liquidation rights, or in connection with the authorization,
designation, increase, or issuance of any bonds, mortgages, debentures, or other
obligations of the Corporation.

CONVERSION PRIVILEGE AND PRICE

The holders of shares of this Series shall have the right, at their option,
to convert such shares into full-paid and nonassessable shares of Common Stock
of the Corporation. Each share of this Series shall be convertible into 6 and
2/3rds share of Common Stock. See Adjustment of Conversion Ratio below.

In case shares of this Series are called for redemption by the Corporation
pursuant to "Redemption" above, the right to convert such shares shall cease and
terminate at the close of business on the date fixed for redemption by the
Corporation.

CONVERSION PROCEDURE

In order to convert shares of this Series into Common Stock, the holder
shall surrender at the office of any transfer agent for this Series designated
for that purpose by the board of directors, or at any such other office as may
be designated by the board of directors, the certificate or certificates
therefor, duly endorsed or assigned to the Corporation or in blank, and shall
give written notice to the Corporation at said office that he elects to convert
such shares. No payment or adjustment shall be made upon any conversion on
account of any dividends accrued on the shares of this Series surrendered for
conversion or on account of any dividends on the Common Stock issued upon
conversion.

Shares of this Series shall be deemed to have been converted immediately
prior to the close of business on the day of the surrender of such shares for
conversion in accordance with the foregoing provisions and the person or persons
entitled to receive the Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such Common Stock at
such time. As promptly as practicable on or after the conversion date, the
Company shall issue and shall deliver at said office a certificate or
certificates for the number of full shares of Common Stock issuable upon such
conver sion, together with a payment in lieu of any fraction of a share, as
hereafter provided, to the person or persons entitled to receive the same.

No fractional shares of Common Stock shall be issued upon conversion, but,
instead of any fraction of a share that would otherwise be issuable, the
Corporation shall pay a cash adjustment in respect of such fraction in an amount
equal to the same fraction of the market price per share of Common Stock at the
close of business on the day of conversion. The market value of a share of
Common Stock shall be the last reported sale price on the American Stock
Exchange on the last business day prior to the conversion date when the American
Stock Exchange is open, or, if there is no reported sale on such day, the last
reported closing bid price on the American Stock Exchange at the close of
trading on that day. If the Common Stock is not then listed on the American
Stock Exchange, the market value shall be the prevailing

Page 3 of 5
<PAGE> 4

market value of the Common Stock on any other securities exchange or in the open
market, as determined by the Corporation, which determination shall be
conclusive.

The Corporation will pay any and all documentary, stamp, or similar taxes
that may be payable in respect of the issue or delivery of shares of Common
Stock on conversion of shares of this Series. The Corporation shall not,
however, be required to pay any such tax that may be payable in respect of any
transfer involved in the issue and delivery of shares of Common Stock in a name
other than that in which the shares of this Series so converted were registered,
and no such issue or delivery shall be made unless and until the person
requesting such issue has paid to the Corporation the amount of any such tax, or
has established, to the satisfaction of the Corporation, that such tax has been
paid.

The Corporation shall at all times reserve and keep available, free from
preemptive rights, out of its authorized but unissued Common Stock (or held in
treasury), for the purpose of effecting the conversion of the shares of this
Series, the full number of shares of Common Stock then deliverable upon the
conversion of all shares of this Series then outstanding.

ADJUSTMENT OF CONVERSION RATIO

If the Corporation subdivides or combines in a larger or smaller number of
shares its outstanding shares of Common Stock, then the number of shares of
Common Stock issuable upon the conversion of this Series shall be proportionally
increased in the case of a subdivision and decreased in the case of a
combination, effective in either case at the close of business on the date that
the subdivision or combination becomes effective.

If the Corporation is recapitalized, is consolidated with or merged into
any other corporation, or sells or conveys to any other corporation all or
substantially all of its property as an entity, provision shall be made as part
of the terms of the recapitalization, consolidation, merger, sale, or conveyance
so that the holders of this Series may receive, in lieu of the Common Stock
otherwise issuable to them upon conversion of this Series, at the same
conversion ratio, the same kind and amount or securities or assets as may be
distributable upon the recapitalization, consolidation, merger, sale, or
conveyance with respect to the Common Stock.

If the Corporation at any time pays to the holders of its Common Stock a
dividend in Common Stock, the number of shares of common stock issuable upon the
conversion of Preferred Stock shall be proportionally increased, effective at
the close of business on the record date for determination of the holders of the
Common Stock entitled to the dividend.

If the Corporation at any time pays any dividend or makes any distribution
on its Common Stock in property (other than cash or Common Stock of the
Corporation), then the number of shares of Common Stock issuable upon the
conversion of this Series shall be equitably adjusted at the close of business
on the record date for determination of the holders of the Common Stock entitled
to said dividend or distribution.

These adjustments shall be made successively if more than one of these
events occurs. However, no adjustment in the conversion ratio of this Series
into Common Stock shall be made by reason of:

(a) the payment of a cash dividend on the Common Stock or on any other
class of stock of the Corporation;

Page 4 of 5
<PAGE> 5

(b) the purchase, acquisition, redemption, or retirement by the
Corporation of any shares of common stock or of any other class of stock of the
Corporation, except as provided above in connection with a subdivision or
combination of the outstanding Common Stock of the Corporation;

(c) the issuance, other than as provided above, of any shares of
Common Stock, or of any securities of the Corporation convertible into common
stock or into other securities of the Corporation, or of any rights, warrants or
options to subscribe for or purchase shares of Common Stock or other securities
of the Corporation.

NOTICE TO HOLDERS OF CERTAIN TRANSACTIONS

The Corporation shall cause a notice to be mailed to the transfer
agent or agents for this Series, and to the holders of record of shares of this
Series at their respective addresses as the same shall appear on the books of
the Corporation, in case of any transaction which would result in a change in
the conversion formula.

NO OTHER RIGHTS

The shares of this Series shall not have any relative, participating,
optional, or other special rights or powers other than as set forth above and in
the Certificate of Incorporation of the Corporation, as amended.

Page 5 of 5

<PAGE> 1

February 4, 1999

The Wendt-Bristol Health Services Corporation
280 North High Street, Suite 760
Columbus, Ohio 43215

RE: The Wendt-Bristol Health Services Corporation Registration
Statement on Form S-4

Ladies and Gentlemen:

You have requested our opinion with respect to 71,921 shares of the
Preferred Stock, par value $1.00 per share (the "Shares"), of The Wendt-Bristol
Health Services Corporation, a Delaware corporation (the "Company"). The Shares
are the subject of a Registration Statement on Form S-4 (the "Registration
Statement"), to which this opinion is attached as an exhibit, to be filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended.

We have examined the Company's Amended Certificate of Incorporation and
Bylaws, the Terms of Series 1 Cumulative Dividend Preferred Stock and the Merger
Agreement. We have also examined the records of corporate proceedings taken in
connection with the issuance of the Shares.

Based upon the foregoing examinations and subject to compliance with the
applicable state securities and "blue sky" laws, we are of the opinion that the
Shares, when issued, will be duly authorized, validly issued, fully paid and
non-assessable.

This opinion is issued to you solely for use in connection with this
Registration Statement, and is not to be quoted or otherwise referred to in any
financial statements of the Company or related document, nor is it to be filed
with or furnished to any government agency, firm, corporation or any other
person without our prior written consent.

We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.

Very truly yours,

Schottenstein, Zox & Dunn Co. L.P.A.

SZD/JK/cls

<PAGE> 1

EXHIBIT 12

STATEMENT REGARDING COMPUTATION OF RATIOS

The ratio of earnings to fixed charges was calculated assuming the issuance
of 42,857 shares of the preferred stock for the merger of Wendt-Bristol
Diagnostics Company and 71,921 shares for the merger of Wendt-Bristol
Diagnostics Company L.P. The issuance of such shares results in additional
annual preferred stock dividends totaling approximately $138,000. On an initial
pro forma basis, the earnings would be inadequate to cover fixed charges for the
nine months ended September 30, 1998 by approximately $563,000. Pro forma
depreciation for this same period amounts to approximately $617,000. The ratio
of earnings to fixed charges is presented for both the historical and pro forma
results of operations. Pro forma assumes the successful completion of the
acquisition of 100% of the limited partnership units through the exchange of the
Company's preferred shares in the ratio of two limited partnership units for
each preferred share.

<PAGE> 1

EXHIBIT 21

THE WENDT-BRISTOL HEALTH SERVICES CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF THE REGISTRANT

NAME STATE OF OWNERSHIP OF
INCORPORATION VOTING SECURITIES
Consolidated Subsidiaries:

The Wendt-Bristol Company Delaware 100% by The Wendt-Bristol
("Wendt-Bristol") Health Services Corporation

Wendt-Bristol Home Health Care Ohio 100% by Wendt-Bristol
Company

Wendt-Bristol Diagnostics Ohio 85.5% by Wendt-Bristol
Company

Wendt-Bristol Organizational L.P., Ohio 100% by Wendt-Bristol
Inc.

1275 Olentangy River Road Ohio Wendt-Bristol is the sole
Limited Partnership (1) (2) general and limited partner

Wendt-Bristol Diagnostics Delaware Wendt-Bristol Diagnostics
Company L.P. (1) Company is the sole general
partner

Consolidated Medical Services, Ohio 100% by Wendt-Bristol Home
Inc. Health Care Company

Cmsi Medco Limited Partnership Ohio Consolidated Medical
(1)(2) Services is the sole
general partner

American Living Centers, Inc. Ohio 100% by Wendt-Bristol

American Care Center, Inc. Ohio 100% by American Living
dba Bristol House of Columbus Centers, Inc.

Ethan Allen Care Center, Inc. Ohio 100% by American Living
dba Bristol House of Springfield Centers, Inc.

Congress Liquors, Inc. (2) Florida 100% by Wendt-Bristol

Health America, Inc. Ohio 100% by Wendt-Bristol
dba The Wendt-Bristol Center Diagnostics Company

American Hospital of Athens, Inc. Ohio 100% by Health America,
(2) Inc.

Wendt-Bristol Acquisition, Inc. Ohio 100% by Wendt-Bristol

Wendt-Bristol Acquisition LLC Delaware 100% by Wendt-Bristol
(3)

(1) Limited Partnership

(2) Inactive

(3) Limited Liability Company

<PAGE> 1
EXHIBIT 23.1

INDEPENDENT AUDITORS' CONSENT
RELATING TO WENDT-BRISTOL HEALTH
SERVICES CORPORATION

We consent to the use of our report dated April 20, 1998, except for Note 17 as
to which the date is June 23, 1998 and Note 18 as to which the date is January
27, 1999, in the Registration Statement on Form S-4 and related Prospectus of
Wendt-Bristol Health Services Corporation and Subsidiaries.

/s/ HAUSSER + TAYLOR LLP

Columbus, Ohio
February 1, 1999

<PAGE> 1
EXHIBIT 23.2

INDEPENDENT AUDITORS' CONSENT

We consent to the use of our report dated April 20, 1998 except for Note 8 as
to which the date is June 23, 1998, in the Registration Statement on Form S-4
and related Prospectus of Wendt-Bristol Diagnostics Company L.P. (A Limited
Partnership).

/s/ HAUSSER + TAYLOR LLP

Columbus, Ohio

February 1, 1999

<PAGE> 1
EXHIBIT 24

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Sheldon A. Gold and Charles R. Cicerchi, and each of
them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

/s/ Gerald M. Penn
----------------------------------------
Gerald M. Penn, Director

September 16, 1998

<PAGE> 2
POWER OF ATTORNEY

/s/ Clemente Del Ponte
----------------------------------------
Clemente Del Ponte, Director

September 16, 1998

<PAGE> 3
POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Sheldon A. Gold and Charles R. Cicerchi, and each
of them, his true and lawful attorneys-in-fact and agents with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

September 16, 1998 /s/ Marvin D. Kantor
----------------------------------------
Marvin D. Kantor, Chairman of the Board
and Director

<PAGE> 4
POWER OF ATTORNEY

/s/ Harold T. Kantor
----------------------------------------
Harold T. Kantor, Vice Chairman of the
Board and Director

September 16, 1998

<PAGE> 5
POWER OF ATTORNEY

/s/ Sheldon A. Gold
----------------------------------------
Sheldon A. Gold, President, Principal
Executive Officer and Director

September 16, 1998

<PAGE> 6
POWER OF ATTORNEY

/s/ Reed A. Martin
----------------------------------------
Reed A. Martin, Executive Vice President,
Chief Operating Officer and Director

September 16, 1998

<PAGE> 7
POWER OF ATTORNEY

/s/ Paul H. Levine
----------------------------------------
Paul H. Levine, Director

September 16, 1998

<PAGE> 8
POWER OF ATTORNEY

/s/ Clemente Del Ponte
----------------------------------------
Clemente Del Ponte, Director

September 16, 1998

<ARTICLE> 5

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