NUMED HOME HEALTH CARE INC, 10KSB, 1999-06-29

NUMED HOME HEALTH CARE INC
10KSB, 1999-06-29
HOME HEALTH CARE SERVICES

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB

[X] ANNUAL REPORT UNDER SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 1-12992

NUMED HOME HEALTH CARE, INC.
----------------------------------------------
(Name of small business issuer in its charter)

STATE OF NEVADA 34-1711764
--------------- -----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

5770 ROOSEVELT BOULEVARD, SUITE 700, CLEARWATER, FLORIDA 33760
- -------------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)

Issuer's telephone number: (727) 524-3227

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, PAR VALUE $.001 PER SHARE
REDEEMABLE COMMON STOCK PURCHASE WARRANTS
(Title of Class)

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

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

Issuer's net revenue for its most recent fiscal year was $17,086,163.

The number of shares outstanding of the Issuer's Common Stock, $.001
par value, as of June 21, 1999, was 5,867,012 (exclusive of Treasury Shares).
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the average of the bid and ask prices of such Common Stock, as
of June 21, 1999, was $1,349,413.

TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT: YES [ ] NO [ X ]

<PAGE>

PART I

ITEM 1. BUSINESS

CAUTIONARY STATEMENTS FOR FORWARD-LOOKING INFORMATION

The statements contained in this report on Form 10-KSB that are not purely
historical are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, including statements regarding the Company's expectations, hopes, beliefs,
intentions, or strategies regarding the future. Forward-looking statements
include statements regarding, among other things: (i) the potential loss of
material customers; (ii) the failure to properly manage growth and successfully
integrate acquired businesses; (iii) the Company's financing plans; (iv) trends
affecting the Company's financial condition or results of operations; (v) the
Company's growth and operating strategies; (vi) the ability to attract and
retain qualified nursing personnel, physical and occupational therapists,
speech/language pathologists, and management personnel; (vii) the impact of
competition from new and existing competitors; (viii) the financial condition of
the Company's clients; (ix) potential increases in the Company's costs; (x) the
declaration and payment of dividends; (xi) the potential for unfavorable
interpretation of existing government regulations or new government legislation;
(xii) the ability of the Company and its significant suppliers and large
customers to address the year 2000 Issue; and (xiii) the outcome of certain
litigation involving the Company. Prospective investors are cautioned that any
such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected in the forward-looking statements as a result of various
factors. All forward-looking statements included in this document are based on
information available to the Company on the date hereof, and the Company assumes
no obligation to update any such forward-looking statement. Among the factors
that could cause actual results to differ materially are the factors detailed in
Items 1 through 3 and 7 of this report and the risks discussed under the caption
"Risk Factors" included in the Company's filings under the Securities Act of
1933. Prospective investors should also consult the risks described from time to
time in the Company's Reports on Form 10-QSB, 8-K, 10-KSB and Annual Reports to
Stockholders.

INTRODUCTION

NuMED Home Health Care, Inc., (the "Company") is a holding company that
conducts operations through eight subsidiaries, seven of which offer home health
care services and temporary nursing staffing in selected markets in Florida,
Ohio and Pennsylvania. In addition, the Company provides contract staffing of
physical and occupational therapists and speech/language pathologists in certain
markets of Ohio, Pennsylvania, and Kentucky through its subsidiary NuMED
Rehabilitation, Inc. ("NuMED Rehabilitation") organized in connection with the
April 4, 1995 acquisition of two wholly-owned subsidiaries of Rehab America,
Inc.

The Company delivered approximately 166,000 intermittent home health care
visits in fiscal 1999 to clients of all ages. The Company provides home health
care for approximately 860 private duty clients and temporary staffing of
certified nurses aides, licensed practice nurses and registered nurses for
approximately 50 health care facilities. In addition, the Company, through NuMED
Rehabilitation, provides physical, occupational, and speech/language therapy for
approximately 25 health care facilities.

The Company was formed in 1987 under the laws of the State of Nevada. Its
principal office is located at 5770 Roosevelt Boulevard, Suite 700, Clearwater,
Florida 33760, and its telephone number is (727) 524-3227.

INDUSTRY OVERVIEW

The Company's home health care and rehabilitation business is part of a
needed and growing U.S. market for health care services primarily driven by the
general aging of the United States population and the continuing focus on
cost-effective use of health care dollars. The Company's home health care
business has benefited from the increased use of treatment at home as an
alternative to hospitalization and the desire of patients to be cared for at
home rather than in a hospital. The fixed amount of Medicare reimbursement to
hospitals based upon a patient's diagnosis, regardless of the cost of service or
length of stay, has also provided hospitals an incentive to minimize the length
of a patient's stay, thereby

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increasing the utilization of home health care services. In addition, advances
in medical technology have enabled a growing number of treatments to be provided
on an outpatient basis, or in the patient's home, nursing homes or clinics
rather than in a hospital.

The current demand for temporary and contract staffing services is a
result of a shortage of nursing personnel trained in certain specialty areas in
addition to the cyclical staffing needs of hospitals, nursing homes and clinics.
Increases in the intensity of required patient care and increases in labor
intensive medical technology has similarly increased the demand for nurses and
other medical personnel such as physical, occupational and respiratory
therapists, speech/language pathologists and radiological and surgical
technicians. Temporary and contract staffing accommodates the desire of
hospitals and other health care facilities to contain costs by having staff
available only when needed. Hospital budgetary cycles, the need for nurses and
therapists trained in particular specialties, and fluctuations in patient
admissions due to seasonal and other factors continue to require hospitals and
other health care facilities to obtain the services of temporary and long-term
contract staffing businesses.

The programs currently proposed to reform the United States health care
system [including the IPS (Interim Payment System) and PPS (Perspective Payment
System)] and ongoing significant changes in the industry itself may result in
increased government involvement in health care, lower reimbursement rates and
may otherwise change the operating environment for the Company's customers.
Hospitals and other health care facilities are now consolidating through mergers
and acquisitions as a result of increasing cost pressures and changes in
reimbursement policies adopted by federal, state and insurance company third
party payors. The Company is unable to predict with any degree of certainty how
changes in the health care industry will effect the Company's operations.

BUSINESS STRATEGY

The Company's strategy is to grow by adding new services to existing
locations and by implementing targeted marketing to local health care providers
that cross sells the Company's home health care, staffing and rehabilitation
services.

A key component to the Company's strategy for growth is management's
belief that home health care providers must be capable of providing a broad
range of services to permit customers to obtain their home health care and
staffing needs from one source. By expanding and adding a new list of the
services which the Company offers in each of its markets, the Company believes
it can more effectively offer the broad range of services required by its
customers. Because the Company's success is also dependent upon developing and
educating referral sources and employees about the range and benefits of the
Company's services, the Company aggressively markets to local third party payors
and medical organizations in a manner that cross sells the Company's home health
care, staffing and rehabilitation services. Additionally, an aggressive employee
education program is underway. Management has focused its strategy for the
Company's rehabilitation operations on intermediate sized facility operators
owning three to ten long term care facilities. Management believes that this
strategy allows the Company to more effectively offer its specialized programs
and expertise and better respond to a specific community's needs.

The Company has sought and will later this year continue to seek
expansion of its business through strategic acquisitions of businesses which
should expand the Company's clients, services and referral sources in existing
and new markets. The Company believes that the nature of the home health care
industry provides a favorable environment for strategic acquisitions.

ACQUISITIONS AND DISPOSITIONS

On February 18, 1998, the Company signed a definitive agreement to
merge with Banyan Healthcare Services, Inc. ("Banyan"). Banyan was formed to
acquire health care related companies to consolidate and provide full services.
In June, 1998, the Company terminated its discussions. A merger agreement was
signed August 19, 1998 with Mednu Acquisition Corporation ("Mednu") and then it
was terminated on October 14, 1998. In connection, the Company incurred
professional fees of approximately $118,000 and $130,000 during the years ended
March 31, 1999 and 1998, respectfully, associated with the proposed
transactions.

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Regarding another matter, anticipating the reimbursement adversity of
PPS, the Company took measures in the third and fourth quarters to minimize the
impact by restructuring the Rehabilitation Division:

o Rehabilitation employees received two tiers of salary reductions.

o Most salaried positions were eliminated with employees paid hourly or
per visit.

o In November 1998, the Cincinnati, OH Rehabilitation office was
consolidated into shared space with Parke Home Health Care, Inc.

o The Horsham, PA office of NuMED Rehabilitation was closed January,
1999.

o Unprofitable contracts were renegotiated or terminated.

SERVICES

The Company offers a broad range of health care related services from
delivering comprehensive health care in the client's home to providing temporary
staffing of nursing personnel and contractual long-term staffing of physical and
occupational therapists and speech/language pathologists to hospitals, clinics,
long-term care facilities, physician offices and other health care facilities.
Home health care is generally conducted on a per visit basis while related
staffing is generally performed on a per shift basis. The Company's
rehabilitation business generally provides its occupational and physical
therapists and speech/language pathologists on an annual basis. The following
provides a brief description of the types of services provided by personnel
employed by the Company:

o REGISTERED NURSES provide a broad range of nursing care services, including
skilled observation and assessment, instruction of patients regarding
medical and technical procedures, direct hands-on treatment, and
communication and coordination with the attending physician or other
service agencies. Some specially trained registered nurses provide
extensive intravenous therapy interventions, wound care, diabetic care,
psychiatric care and pediatric care.

o LICENSED PRACTICAL NURSES, under the supervision of a registered nurse,
perform technical nursing procedures, including injections, dressing
changes, assistance with ambulation and catheter care.

o PHYSICAL THERAPISTS provide rehabilitation services aimed at improving
functional mobility via use of strengthening/range of motion exercises,
training for ambulation, transfers and balance as well as the application
of physical agents to reduce pain, spasms and edema.

o OCCUPATIONAL THERAPISTS assist patients in restoring their ability to
perform routine activities of daily living by offering instruction in self
care, discussing techniques for coping with physical disability and
suggesting the use of assistant devices or home adaptation to make living
at home easier.

o SPEECH/LANGUAGE PATHOLOGISTS evaluate and treat patients who have
swallowing difficulties and assess and treat patients with speech, language
and voice disorders to improve their physical capabilities or communication
abilities.

o LICENSED PHYSICAL THERAPY ASSISTANTS ("PTAS") AND CERTIFIED OCCUPATIONAL
THERAPY ASSISTANTS ("COTAS") work under the supervision of a therapist and
assist the therapist in implementing treatment programs according to a
physician's prescription. The scope of a therapy assistant's job varies
from state to state.

o MEDICAL SOCIAL WORKERS help patients and their families deal with the
emotional, social, financial and personal problems that may occur as a
result of illness or disability, including the identification and
coordination of services with other community resources.

o HOME HEALTH AIDES AND CERTIFIED NURSE AIDES, working under the supervision
of a nurse, provide health related services and personal care, such as
assistance with ambulation, limited range-of-motion exercises, monitoring
of vital signs, non-sterile dressing changes and bathing.

o HOMEMAKER/COMPANIONS provide personal care and assistance with daily living
activities, including bathing, dressing, grooming, meal preparation, light
housekeeping and occasional shopping for essential items.

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The following chart sets forth the services provided by each of the
Company's eight wholly-owned subsidiaries and identifies those subsidiaries that
are Medicare certified:

HOME HEALTH CARE TEMPORARY AND
SUBSIDIARY INTERMITTENT PRIVATE DUTY MEDICARE CERTIFIED CONTRACT STAFFING
- ---------- ------------ ------------ ------------------ -----------------
<S> <C> <C> <C> <C>

NuMED Rehabilitation................................................................................x
Parke Home Health Care, Inc...............x............x.........................x..................x
Whole Person in PA........................x......................................x...................
PA Medical Concepts....................................x............................................x
Whole Person in OH........................x............x.........................x...................
Florida Nursing........................................x............................................x
Total Professional........................x......................................x...................
Countryside............................................x............................................x
</TABLE>

PERSONNEL

The Company's business is dependent upon its ability to recruit and
retain registered nurses, licensed practical nurses, certified nurses aides,
home health aides, homemaker companions, medical social workers, physical and
rehabilitation therapists, occupational therapists, speech/language
pathologists, PTAs and COTAs. There is competition for medical personnel, and
particularly for certified nurse aides and home health aides. As the Company
expands, its needs for qualified personnel will continue to increase. The
Company faces competition for personnel from both other agencies as well as
other providers of medical services, such as hospitals and long-term care
facilities. Most of the Company's personnel are employed on a full-time or
regular-part time basis. A modest portion of the Company's personnel are
employed on a per diem basis depending upon client demand and are paid only for
the time they actually work or specific visits made.

COMPETITION

The home health and rehabilitation industries are highly competitive
with limited barriers to entry. The Company faces competition from hospitals
that have their own home health care agencies, national and local home health
care and rehabilitation therapy organizations, and other nursing home contract
service providers, many of which have capital and other resources substantially
greater than those of the Company. The Company believes that most home health
care business is generated by referrals from local third party payors and
medical related organizations. The Company competes in its home care markets by
developing relationships with referral sources. Home health care agencies
compete based on the ability to provide qualified personnel and service on a
cost-effective and timely basis. The Company competes in the rehabilitation
therapy market through direct marketing to long-term, acute care, and outpatient
facilities as well as school districts, emphasizing the Company's ability to
provide qualified personnel with specialized programs on a timely basis and in a
cost-effective manner. The Company is continuing to obtain accreditation from
the Joint Commission on Accreditation of Healthcare Organizations ("JCAHO"). One
subsidiary, Parke Home Health Care, Inc. has received JCAHO accreditation. Three
NuMED Home Health Care, Inc. subsidiaries, Whole Person Home Health Care, Inc.,
Pennsylvania Medical Concepts, Inc. and Whole Person Home Health Care of Ohio,
Inc. received JCAHO accreditation with commendation. The Company, though it is
presently exploring the full cost benefit, intends to utilize its management
information systems in order to provide quantitative analyses necessary to
compete in the statistically oriented care arena.

The Company's temporary staffing business competes with other medical
recruitment organizations which offer the same or similar services as are
provided by the Company. Many of these competitors have greater capital and
other resources than are available to the Company. Competition is generally
based on the ability to provide qualified personnel on a timely basis and in a
cost effective manner.

The Company believes that the key competitive factors in its business
include service, price and the ability to provide quality care and outcome
oriented data. The range of specialized services offered, together with the
ability to accommodate specific client needs are also competitive factors in
attracting clients. The Company has focused its

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marketing efforts in suburban/urban areas with moderate populations of persons
over 65 years of age as well as certain other areas where there is demand for
the Company's specialized services. With the current trend toward managed care,
management also believes that the capacity to provide clinical statistical and
analytical support to managed care organizations will be crucial to competing
for managed care contracts.

SALES AND MARKETING

The Company provides its home care services generally to patients
placed through referrals from third parties, such as physicians, podiatrists,
managed care providers, case managers, and hospital discharge planners. Key
elements in the Company's strategy are to provide compassionate quality care,
delivered in a cost effective manner and provide certain specialty skilled
programs. The Company seeks to educate its referral sources on the range,
benefits and features of the Company's services. The Company utilizes one-to-one
education of referral sources, as well as community educational programs
presented by the Company's nurse liaisons and discharge planners. The Company
also actively markets its rehabilitation therapy services directly to long-term
care, acute care and outpatient facilities through solicitation of directors of
nursing, administrators and owners emphasizing quality care delivered in a cost
effective manner.

REIMBURSEMENT AND CUSTOMERS

Payments for the Company's home health care services are derived from a
variety of sources. Payment for home health care services generally comes from
Medicare, local government health care programs, commercial insurance carriers,
health maintenance organizations, Medicaid and individual patients. In instances
where the patient has more than one source of reimbursement, the portion of the
Company's charges that is not covered by a primary source may be covered by a
secondary source of reimbursement. Payment for the Company's temporary staffing
and rehabilitation services generally are derived directly from the Company's
customers who are reimbursed from Medicare and other third-party payors.

Medicare accounted for approximately $5.5 million (32%) and $7.7
million (34%), respectively, of the Company's revenue for the fiscal years ended
March 31, 1999 and 1998. Medicare reimburses 100% of the allowable cost of
services up to certain cost and per beneficiary limits. To the extent Medicare
limits exceed the provider's direct cost for a particular service, the provider
can seek reimbursement for certain indirect costs up to an aggregate amount
equal to the Medicare defined limits for that service. The Company is designated
to receive prospective interim payments ("PIP") for its Medicare services
rendered in the State of Florida. PIP allows the Company to collect estimated
payments every other week for Medicare services, with an accounting after the
quarter to verify the actual amount of Medicare services rendered. There can be
no assurance that the Company will continue to be eligible to receive
prospective interim payments. The Company has generally received Medicare
reimbursement sufficient to cover substantially all of the costs of its
services. If a Medicare audit resulted in the Company not being reimbursed for a
significant amount of services which it had provided, it would have a material
adverse effect on the Company's financial position or results of operations.

ADVISORY BOARD

Certain of the Company's subsidiaries require advisory boards. The
Advisory Boards should consist of at least one physician, one registered nurse
and one representative of each professional discipline for which the subsidiary
is certified, including physical, occupational and speech therapy and medical
social work. The Advisory Boards establish and annually review the subsidiary's
budget and policies governing the scope of services offered, admission and
discharge policies, medical supervision, plans of treatment, emergency care,
clinical records, personnel qualifications, program evaluations, and patient
care policies and procedures. In addition, each Advisory Board assists
management in identifying consumer needs and educating consumers of the services
provided by the subsidiary. Each Advisory Board usually meets four times each
year and conducts an overall evaluation of the subsidiary's business every year.

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SEASONALITY

Historically, the Company's business has been seasonal, with a higher
proportion of revenues derived in the fall and winter months. The Company's
third and fourth fiscal quarters will continue to generate greater home health
revenues due to increased demand for these services in all regions during these
months.

REGULATIONS

The health care industry is highly regulated at the federal, state and
local levels. Several programs have been proposed to reform the United States
health care system. These programs include proposals to increase governmental
involvement in health care, lower reimbursement rates and otherwise change the
operating environment for the Company and its customers. Management believes
that the adoption of comprehensive health care reform may have a significant
impact on the Company's business, although different aspects of the Company's
business may be affected in different ways, either positively or negatively, by
the adoption of such legislation. There can be no assurance that the Company
will be able to capitalize on the effect of such legislation or that such
legislation will not have a negative impact on the Company's operations.

Federal and state anti-remuneration laws, such as the Medicare/Medicaid
anti-kickback law, govern certain financial arrangements (including employment
or service contracts) between health care providers and others who may be in a
position to refer or recommend patients or services to such providers. These
laws prohibit, among other things, certain direct and indirect payments that are
intended to induce the referral of patients to, the arranging for services by,
or the recommending of a particular provider of health care items or services.
The Medicare/Medicaid anti-kickback law has been broadly interpreted to apply to
certain contractual relationships between health care providers and sources of
patient referral. A number of similar state laws exist which often have not been
interpreted by courts or regulatory agencies. The Department of Health and Human
Services periodically issues `special fraud alerts' which address specific areas
of concern, including a June 1995 alert that related to fraudulent practices in
the provision of home health care. The alert identified fraudulent home health
care practices such as cost report fraud, billing for excessive services or
services not rendered, use of unlicensed or untrained staff and kickbacks.
Additionally, federal "Stark" legislation prohibits, with limited exceptions,
the referral of patients for certain services, including home health care
services, physical therapy and occupational therapy, by a physician to entities
in which they have an ownership or financial interest. Violation of these laws
can result in loss of licensure, civil and criminal penalties, and exclusion of
health care providers or suppliers from participating in the Medicare and
Medicaid programs. Additionally, the Balanced Budget Act of 1997 (the "Budget
Act"), signed into law on August 5, 1997, contains a number of anti-fraud
provisions designed to further fight abuse and enhance program integrity.
Furthermore, some states restrict certain business or fee relationships between
physicians and other providers of health care services.

Effective October 1, 1997 (signed August 5, 1997) Congress enacted and
the President signed the Balanced Budget Act of 1997. The goal was to cut $115
billion from the Medicare budget in five years of which $16.2 billion would be
cut from home care Medicare and $13 billion cut in Medicaid through systems
termed Interim Payment System ("IPS") and Perspective Payment System ("PPS").
Both the home health and long term care facilities (thus contract rehabilitation
companies like NuMED Rehabilitation) were affected.

What it meant to home care nationwide:
1. The major strategy was to cut home care dollars through the use
of the IPS using data from three year old cost reports of 1994.
2. The cost limits per discipline (Nursing, Physical Therapy,
Occupational Therapy, Speech/Language Therapy, Medical Social
Work) were reduced about 15%.
3. Reimbursement by HCFA (Health Care Financial Administration) may
be cut 20% in FY 2000.

NuMED believes that its operations are in substantial compliance with
the laws applicable to Medicare and Medicaid providers, including anti-fraud and
abuse provisions; however, there can be no assurance that the administrative or
judicial interpretation of such laws or the regulations promulgated thereunder
will not in the future have a material adverse impact on NuMED's operations or
that NuMED will not be subject to an investigation which would require a
significant investment of time and effort by NuMED. Although NuMED believes that
it complies with federal and state anti-

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remuneration statutes at all times, there can be no assurance that such laws
will be interpreted in a manner consistent with the practices of NuMED.

NuMED is dependent on third-party payors for a majority of its
revenues. Medicare, Medicaid and other payors, such as managed care
organizations (including health maintenance organizations ("HMOs") and preferred
provider organizations ("PPOs")), traditional indemnity insurers and third-party
administrators ("TPAs") are increasing pressures both to control health care
utilization and to limit reimbursement. Since substantially all of NuMED's
revenues are attributable to payments received from Medicare and a limited
number of other payor categories, the level of revenues and profitability of
NuMED will be subject to the effect of possible changes in the mix of NuMED's
patients among Medicare, Medicaid and third-party payor categories, increases in
case management and review of services or reductions in coverage or
reimbursement rates by such payors. Such changes could have a material adverse
effect on the Company's business, results of operations or financial condition.

The following is a summary of other key regulatory provisions which
currently affect the Company's operations.

MEDICARE CERTIFICATION AND LICENSING. Home health care agency
certification by HCFA is required to enable the Company to receive reimbursement
for services from Medicare. HCFA requires, as a condition to participation as a
home health care agency in the Medicare program, the satisfaction of certain
standards with respect to personnel, services and supervision, appropriation of
annual budgets, cost reports and capital expenditure plans, and the
establishment of a professional advisory group. Many states also require an
entity to obtain a certificate of need ("CON") in order for the entity to
provide Medicare and Medicaid services. Under CON laws, a health care provider
generally is required to substantiate the need for, and financial feasibility
of, certain expenditures relative to such services. In states requiring a CON,
HCFA will only grant certification to those providers who have obtained a CON.
Florida is the only state in which the Company currently operates a home health
care business which requires a CON. Total Professional has received a CON from
the State of Florida to provide Medicare services in Districts V and VI, which
include Pasco and Pinellas counties and Hardee, Highlands, Hillsborough,
Manatee, and Polk counties. The Company is presently licensed to provide such
Medicare services in Hillsborough, Pasco and Pinellas counties.

MEDICARE ANTI-KICKBACK PROVISIONS. The Medicare Anti-Kickback Statute
(the "Anti-Kickback Statute") prohibits the offering, payment, solicitation or
receipt of any form of remuneration in return for the referral of Medicare or
Medicaid patients or the ordering of services that is covered by Medicare or
Medicaid. Violation of the Anti-Kickback Statute is punishable by substantial
fines, imprisonment for up to five years or both. In addition, the Medicare and
Medicaid Patient and Program Protection Act of 1987 (the "Protection Act")
provides that persons guilty of violating the Anti-Kickback Statute may be
excluded from the Medicare or Medicaid programs for a minimum of five years.
Investigations leading to prosecutions and/or program exclusion may be conducted
by the Office of the Inspector General ("OIG") of the United States Department
of Health and Human Services ("HHS") or the United States Department of Justice.

Under the Anti-Kickback Statute, law enforcement authorities, HHS and
the courts are increasingly scrutinizing arrangements between health care
providers and referral sources (such as physicians) in order to ensure that the
arrangements are not designed as a mechanism to exchange remuneration for
patient referrals. This scrutiny is not limited to financial arrangements that
involve a direct payment for patient referrals, but extends to payment
mechanisms that carry the potential for inducing Medicare or Medicaid referrals,
including situations where physicians hold investment interests in, or
compensation arrangements with, a health care entity to which such physicians
refer patients. Although the OIG has published safe harbor regulations relating
to investment in public companies by referring physicians, the Company does not
currently possess the net tangible assets necessary in order to qualify under
the safe harbor regulations. Therefore, in order to avoid any issue regarding
fraud and abuse compliance, a physician who owns any of the Company's securities
is prohibited from making any patient referrals to the Company.

FLORIDA PROHIBITION OF REFERRALS. The Patient Self-Referral Act of 1992
(the "1992 Act") regulates and, in some cases, prohibits physicians' referrals
of patients to facilities in which they own an investment interest. In addition,
the 1992 Act would prohibit referrals by a health care provider to a public
company in which the provider is an investor unless the company meets safe
harbor criteria similar to that promulgated under the Anti-Kickback Statute. The
Company does not meet these criteria and, therefore, a physician who owns any of
the Company's securities is prohibited by the 1992 Act from making any patient
referrals to the Company.

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OMNIBUS BUDGET RECONCILIATION ACT OF 1993. As part of the Omnibus
Budget Reconciliation Act of 1993, Congress passed a self-referral ban, commonly
known as the "Stark II" law. The Stark II law became effective January 1, 1995
and prohibits a physician from referring Medicare and other federal program
patients for designated health services, including home health care, to certain
entities with which the physician or a member of his or her immediate family has
a financial relationship. A "financial relationship" includes either an
ownership interest in, or compensation arrangement with, the entity. Thus,
unless a Stark II exemption is met, a physician with such a financial
relationship with the Company would be prohibited by Stark II from making any
patient referrals of Medicare and Medicaid business to the Company.

POTENTIAL REDUCTIONS IN MEDICARE AND OTHER REIMBURSEMENT. The Federal
government has instituted significant changes in home health that have begun
planned reductions in Medicare spending. The Senate and the House of
Representatives have passed budget resolutions calling for reductions of up to
$270 billion in forecasted Medicare expenditures over the next seven years. As
part of its fiscal 1998 budget, the Clinton Administration completed Medicare
reforms including a prospective payment system for home health care estimated to
result in $20 billion in savings over six years.

In addition to extensive existing government health care regulation,
there are many initiatives on the federal and state levels for comprehensive
reforms affecting the payment for and availability of health care services. It
is not clear what proposals, if any, will be adopted, or what effect such
proposals would have on NuMED's business. Various aspects of these health care
proposals, such as reductions in funding of the Medicare and Medicaid programs,
potential changes in reimbursement regulations by the HCFA, enhanced pressure to
contain health care costs by Medicare, Medicaid and other payors and permitting
greater state flexibility in the administration of Medicaid, could adversely
affect NuMED's business, results of operations and financial condition. NuMED's
businesses that participate in applicable state Medicaid programs are subject to
the risk of changes in Medicaid reimbursement and payment delays resulting from
budgetary shortfalls of state Medicaid programs. NuMED's current concentration
of business in a limited number of states exposes it to the risk of changes in
Medicaid reimbursement programs in those states. Medicare and Medicaid
certification is a critical factor contributing to the revenues and
profitability of NuMED. Changes in certification and participation requirements
of the Medicare and Medicaid programs have restricted, and are likely to further
restrict, eligibility for reimbursement under those programs. Failure to obtain
and maintain Medicare and Medicaid certification could result in a significant
loss of revenue.

Private payors, including managed care payors, increasingly are
demanding that providers accept discounted fees or assume all or a portion of
the financial risk for delivery of health care services, including capitated
payments where the provider is responsible, for a fixed fee, for providing all
services needed by certain patients. Capitated payments can result in
significant losses when patients require expensive treatments not adequately
covered by the capitated rate. Efforts to impose reduced payments, greater
discounts and more stringent cost controls by government and other payors are
expected to continue. NuMED cannot predict what reform proposals or
reimbursement limitations will be adopted in the future or the effect any such
changes will have on its operations. There can be no assurance that currently
proposed legislation, future health care legislation, reforms or changes in the
administration or interpretation of governmental health care programs or
regulations will not have a material adverse effect on NuMED's business, results
of operations and financial condition. Concern about the potential effect on
NuMED's business, results of operations and financial condition. Concern about
the potential effect of various proposed health care reforms has contributed to
volatility of prices of securities of health care companies and could similarly
affect the price of the new common stock in the future.

REIMBURSEMENT PAYMENT DELAYS. NuMED generally is paid for its services
by government health administration authorities, insurance companies, or other
third party payors, not by the patients themselves. The home health care
industry is generally characterized by long collection cycles for accounts
receivable due to the complex and time consuming requirements for obtaining
reimbursement from private and governmental third party payors. In addition,
reimbursement from government payors is subject to examination and retroactive
adjustment. Such delays or retroactive adjustments could lead to cash shortages,
which may require NuMED to borrow funds, issue equity securities or take other
action to meet its ongoing obligations. NuMED would be adversely affected if it
were to experience such difficulties and were unable to obtain funds on
acceptable terms to meet possible cash shortages.

DEPENDENCE ON RELATIONSHIPS WITH REFERRAL SOURCES. The growth and
profitability of NuMED depends on its ability to establish and maintain close
working relationships with referral sources, including payors, hospitals,
physicians and other health care professionals. Hospitals, physicians and
managed care organizations, which are exerting an increasing amount of influence
over the health care industry, have been consolidating to enhance their ability
to impact the delivery

9
<PAGE>

of health care services. There can be no assurance that NuMED will be able to
successfully maintain existing referral sources or develop and maintain new
referral sources, or that some of its referral sources will not become competing
providers of home health care services. The loss of any significant number of
existing referral sources or the failure to develop new referral sources could
have a material adverse effect on NuMED's business, results of operations or
financial condition. NuMED's relationships with certain existing and future
referral sources also could be adversely affected by a loss of Joint Commission
on Accreditation of Healthcare Organizations ("JCAHO") accreditation or by the
inability of an acquisition to obtain JCAHO accreditation. Accredited companies
are subject to periodic resurveys by JCAHO.

MISCELLANEOUS. All states in which the Company operates require
therapists practicing in such states to be licensed and many states require
continuing education for maintaining licensure. In addition, environmental
standards and Occupational Safety and Health Administration ("OSHA") regulations
concerning the disposal and handling of medical wastes are generally monitored
at the state and local level in accordance with OSHA guidelines. The Company
believes that it is in material compliance with such licensure requirements and
standards in each of the states where it operates. Although the Company believes
that it is in material compliance with all applicable federal and state laws and
regulations, there can be no assurance that such laws or regulations will not be
interpreted or applied in the future in such a way as to have a material adverse
impact on the Company, or that federal or state governments will not impose
additional laws or regulations upon all or a portion of the Company's
activities, which might adversely affect the Company's business.

EMPLOYEES

As of March 31, 1999, the Company had approximately 600 employees
working full-time and part-time depending on certain assignments, 50 of whom
perform administrative and clerical duties. Employees do not necessarily work
full-time shifts and may not work exclusively for the Company. The Company
believes its relations with its employees are good. The Company's employees are
not represented by a union.

10
<PAGE>

ITEM 2. PROPERTY

The Company maintains its principal offices at 5770 Roosevelt
Boulevard, Suite 700, Clearwater, Florida 33760. The Company's regional offices
are typically located in suburban office parks and are all leased. The offices
range in size from 1,000 square feet to 6,000 square feet. The Company's office
leases require an aggregate annual rental of approximately $300,000 and expire
on various dates through 2002. All offices are well maintained and in good
repair. As of March 31, 1999, the Company had the offices listed below in the
following locations:

PRINCIPAL OPERATION LOCATIONS FUNCTION
- ------------------- --------- --------
<S> <C> <C>

NuMED Home Health Care, Inc. Clearwater, FL Corporate administrative and finance office

NuMED Rehabilitation, Inc. Cincinnati, OH Rehabilitation administrative offices
Human Resources and management of Physical Therapy,
Occupational Therapy and Speech/Language Pathology

Total Professional Health Care Clearwater, FL Comprehensive home health care services
Tampa, FL
St. Petersburg, FL
Holiday, FL
Port Richey, FL (drop-off office only)

Florida Nursing Services St. Petersburg, FL Private duty & temporary staffing

Countryside Health Services, Inc. Clearwater, FL Private duty & temporary staffing
Holiday, FL
Tampa, FL

Whole Person Home Health Care of Ohio, Inc. Conneaut, OH Comprehensive home health care services
Youngstown, OH including private duty

Whole Person Home Health Care, Inc. Erie, PA Comprehensive home health care services
Albion, PA (drop-off office only)

PA Medical Concepts, Inc. Erie, PA Comprehensive home health care services
Albion, PA including Private Duty (Albion, drop-off office
only)

Parke Home Health Care, Inc. Cincinnati, Ohio Comprehensive home health care services
including Private Duty and temporary staffing
</TABLE>

ITEM 3. LEGAL PROCEEDINGS

LEGAL PROCEEDINGS

The Company is involved in certain litigation and claims as a defendant
or plaintiff arising in the ordinary course of operations. Management, after the
advice of legal counsel, believes that the range of potential liabilities will
not materially affect the financial position of the Company.

The Company maintains professional liability insurance in amounts
believed to be adequate by the Company based on its experience. Currently, the
Company maintains coverage on its home health care operations in the amount of
$1,000,000 per occurrence with a $3,000,000 annual limit. The Company maintains
coverage on its rehabilitation therapy operations in the amount of $2,000,000
per occurrence with a $4,000,000 annual limit. The Company may be subject to
liability for the actions of its employees who provide medical services. There
can be no assurance that the Company's

11
<PAGE>

professional liability insurance will
cover all types of claims, that such insurance will continue to be available to
the Company on terms that are acceptable to it, or that the amount of such
insurance will be sufficient.

On November 17, 1998, the Company filed a suit against Turkey Vulture
Fund XIII, Ltd. ("Turkey Vulture Fund") in the United States District Court,
Middle District of Florida, Tampa Division. Although the suit was filed on
November 17, 1998, it was not served until November 24, 1998, because certain
directors of the Company were attempting to amicably resolve the disagreements
with Turkey Vulture Fund. In the Complaint, the Company sought injunctive relief
for Turkey Vulture Fund's alleged violations of Section 13(d) of the Securities
Exchange Act of 1934. Specifically, the Company alleged that Turkey Vulture Fund
failed to timely amend its Schedule 13(d) to reflect its true intention, as
stated in its November 12, 1998 Proxy Statement, to oust current management,
gain control of the Company through a proxy fight, and eliminate the Company's
staggered Board of Directors, and indicate its increased ownership of shares. As
a result of these allegations, the Company sought (i) a temporary and permanent
Schedule 13(d), which will accurately reflect its true purpose, (ii) a temporary
injunction injoining Turkey Vulture Fund from exercising voting rights and
soliciting proxies during the pendancy of this lawsuit, (iii) an appropriate
"cooling off period," to permit the investing public a reasonable amount of time
to digest any amendment to the Schedule 13(d) ordered by the Court and (iv) a
judgement in favor of the Company for the costs and attorneys' fees associated
with bringing lawsuit.

On December 16, 1998, the Company was served with Turkey Vulture Fund's
Verified Amended Answer and Counterclaim for Preliminary Injunction. In its
Answer, Turkey Vulture Fund denied the material allegations against it and
alleged that any violations of Section 13(d) were cured. In its Counterclaim,
Turkey Vulture Fund requested that the court (i) preliminarily and permanently
enjoin the Company and its directors from (a) taking or authorizing any action
outside of the ordinary course of business, and (b) taking any action that have
the effect of bestowing a benefit upon the Company's directors, officers, or
employees; (ii) preliminarily and permanently enjoin the Company from changing
the date of the stockholders' meeting or advancing the record date of the
meeting; and (iii) require the Company to provide Turkey Vulture Fund an updated
stockholders ledger. On December 29, 1998, the Company filed a Motion to Dismiss
the Counterclaim.

On January 6, 1999, the Company and its Board of Directors reached an
agreement with Turkey Vulture Fund to settle all outstanding litigation and
present to NuMED's stockholders a combined slate of nominees to the Board of
Directors for this Meeting. Pursuant to the settlement agreement, Turkey Vulture
Fund agreed to cause the Committee for a New NuMED to withdraw its proxy
statement that had been filed in opposition to the Board of Directors' proxy
statement. The parties to the settlement agreement agreed to take all
appropriate steps pursuant to applicable law necessary to allow the Turkey
Vulture Fund to enter into a stock purchase agreement for 744,680 shares of
common stock directly from the Company, from its currently authorized but
unissued stock for $350,000 in cash. The settlement agreement provided that the
closing was to occur within two days of the shareholders' approval. However,
Stockholder approval was not required under Nevada law, and accordingly, no such
approval was sought. As of June 21, 1999 the Stock Purchase Agreement with the
Turkey Vulture Fund has not been consummated.

As part of the settlement agreement Management agreed to recommend a
slate consisting of the following six (6) directors: Susan J. Carmichael, Thomas
V. Chema, J. Michael Gorman, Richard M. Osborne, Thomas J. Smith, and Jugal K.
Taneja. Additionally, all of the parties agreed to vote all of their shares,
which were eligible to vote in favor of the foregoing slate. However, Mr.
Taneja, the Company's former Chairman and Chief Executive Officer, was not
eligible to vote the 744,680 shares of NuMED Common Stock he received in
connection with his Termination, Noncompetition and Mutual Release Agreement at
the Meeting. In addition, the Board had agreed to reduce the number of Directors
to six (6) and amend the By-Laws to eliminate the staggered Board of Directors
prior to the Meeting. Finally, the parties to the settlement agreement agreed to
enter into a standstill agreement on proxy fights through the year 2000 Annual

12
<PAGE>

Stockholders meeting. The Board of Directors did take all required action prior
to the annual meeting of the Stockholders' held on January 28, 1999. Moreover,
the Stockholders elected the aforementioned nominees to the Board.

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

As a result of the settlement negotiations with Turkey Vulture Fund on
November 23, 1998, at the Company's 1998 Annual Meeting of Stockholders held on
January 28, 1999 the only matter that the stockholders voted on was the election
of directors. Six (6) directors were elected to the Board of Directors of the
Company, to serve until the next annual meeting of stockholders and until their
successors are duly elected and qualified. The following table sets forth
certain information with respect to the election of the directors at the annual
meeting:

SHARES WITHHOLDING
NAME OF NOMINEE SHARES VOTED FOR AUTHORITY
--------------- ---------------- ------------------
<S> <C> <C>
Susan J. Carmichael 4,393,752 37,814
Thomas V. Chema 4,393,752 37,814
J. Michael Gorman 4,393,752 37,814
Richard M. Osborne 4,393,752 37,814
Thomas J. Smith 4,393,752 37,814
Jugal K. Taneja 4,393,752 37,814

</TABLE>

13
<PAGE>

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS.

The principal market for the Common Stock and Common Stock Purchase
Warrants is the NASDAQ OTC-Bulletin Board where they are listed under the
symbols NUMD and NUMDW, respectively. The Company announced November 17, 1998
that it was delisted from the NASDAQ Small Cap Market for failure to meet the
continuing listing requirements for net tangible assets, market capitalization
or net income. Prior to February 1995, the Common Stock was listed on the
American Stock Exchange Emerging Company Marketplace. Prior to May 1994, and
after November 17, 1998 the Common Stock was traded in the over-the-counter
market. The stock prices below are the high and low bid prices as reported on
the NASDAQ Small Cap Market which have been adjusted, as appropriate, to reflect
the 1 for 2.5 reverse stock split completed on April 29, 1994.

FISCAL 1999 FISCAL 1998
----------- -----------
QUARTER HIGH LOW HIGH LOW
------- ---- --- ---- ---
<S> <C> <C> <C> <C>
First Quarter $0.75 $0.19 $1.75 $1.22
Second Quarter 1.50 0.44 1.38 1.00
Third Quarter 0.69 0.13 1.44 0.84
Fourth Quarter 0.53 0.20 1.88 0.81
</TABLE>

The Company has paid no cash dividends on the Common Stock since its
inception. The Company intends to retain earnings, if any, to finance the
expansion of its business and does not anticipate paying any cash dividends in
the foreseeable future. As of June 21, 1999, there were approximately 535
holders of record of Common Stock.

On September 1, 1995, the Board of Directors authorized the officers of
the Company, without further approval of the Board, to purchase in the open
market up to a maximum of 500,000 of the Company's common shares to the extent
that the Company is financially able to make any such purchases. During fiscal
1999, the Company purchased 19,627 Common Shares.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion and analysis should be read in conjunction
with the Company's Consolidated Financial Statements and notes thereto appearing
elsewhere in this report.

OVERVIEW

The Company's revenues are generated primarily from (i) health care
services provided to individuals in their home and temporary staffing of nurses
in health care facilities, such as hospitals, physician offices and long-term
care facilities, and (ii) staffing of physical and occupational therapists and
speech/language pathologists to hospitals and long-term care facilities. A
significant portion of the Company's home health care revenues are paid by
insurance companies and other third-party payors, including Medicare. In fiscal
1999 and 1998, 58% and 56%, respectively, of the Company's revenues were
attributable to third party payors, of which 32% and 34%, respectively, was
attributable to Medicare reimbursements. The Company's revenues are recorded
based on predetermined rates for services provided, less applicable allowances
to reflect third party payor reimbursement requirements. The Company's revenues
are subject to post-collection audit and adjustment by third-party payors.
Direct expenses include direct personnel and other costs associated with the
Company's home health care services and staffing.

The Company's net loss has been negatively impacted by five primary
factors. First, the Company incurred excessive legal and contract buyout
expenses due to attempts to amicably resolve disagreements with the Turkey
Vulture Fund. Second, NuMED incurred excessive legal and other costs related
primarily to failed acquisitions. The Company is undertaking cost containment
efforts as well as implementing new monitoring programs to reduce the level of
expenses. Third, long term care facilities' uncertainty regarding the Balanced
Budget Act caused a reduction in utilization of contract

14
<PAGE>

rehabilitation companies. The Company has renegotiated most contracts in light
of the changes in facility reimbursement. Fourth, the mix of revenue between
home health aides and skilled services has remained disproportionate. Home
health aides, which generally yield lower gross margin than skilled services,
constituted a larger percentage of revenues. In general, third party payors are
requiring that care be provided by lower skilled and less expensive caregivers.
To counter this trend, the Company is pursuing alternative types of business
with higher margins. Fifth, a significant portion of employees in both the Home
Health and Rehabilitation Therapy division were full-time. The labor burden
relating to these full time employees does not fluctuate with changes in
revenue. As revenue decreases, these costs result in an increased direct expense
percentage. The Company has taken measures to impact on the proportion of full
and part time employees.

NuMED Rehabilitation had experienced residual impact from a routine
Medicare audit of a 1996 cost report of one of its key customers. The customer's
fiscal intermediary, in its interpretation of the Medicare prudent buyer
guidelines, had concluded that the cost of certain professional contract therapy
services provided by NuMED Rehabilitation exceeded these guidelines. Management
believes that the fiscal intermediary conducting this audit had applied an
overreaching and erroneous interpretation of applicable reimbursement
guidelines.

The intermediary's first calculations indicated total disallowed costs
of $2.1 million. The Company's client as well as representatives from the
Company were successful in reducing the amount of disallowed costs from $2.1
million to $899,000. The Company was contractually obligated to repay this key
client the amount of Medicare disallowed costs. The settlement for the first
year (client's fiscal year ended June 30, 1995) of the contract was
approximately $197,000. The settlement for the second year (client's fiscal year
ending June 30, 1996) of the contract was approximately $702,000.

During the second and third quarter of fiscal 1997, NuMED paid a total
of $899,000 to this client, representing disallowed costs for the client's
fiscal years ending June 30, 1995 and June 30, 1996. The Company was optimistic
that some of the disallowed costs would be recovered in the appeal process. The
entire disallowed cost was expensed in fiscal year 1997. The Company had reached
an agreement with its client that the appeal of 1995 disallowed costs would not
be pursued. However, the Company vigorously pursued all avenues of appeal to
recover disallowed costs for 1996. On January 27, 1999, the Company was
successful in recovering approximately $512,000 of the $702,000 disallowed costs
for 1996. The recovered costs are classified in General and Administrative
Expenses. Another appeal for a portion of the balance is set for December, 1999.

Following the fiscal year end 1997, this key client and the Company
mutually agreed to terminate several facility contracts during fiscal year 1998.

Several programs have been proposed to reform the United States health
care system. These programs contain proposals to increase government involvement
in health care, lower reimbursement rates and otherwise change the operating
environment for the Company's customers. Due to the wide variety of national and
state proposals relating to health care presently under consideration, the
impact of such proposals on the Company's business cannot be predicted. The
health care industry is a highly regulated industry which is subject to changing
political, economic and regulatory influences that may affect the procurement
practices and operations of hospitals and other health care facilities. During
the past several years, the health care industry has been subject to an increase
in government regulation of, among other things, reimbursement rates and certain
capital expenditures. In addition, major third party payors of health care
services, such as insurance companies, Medicare and Medicaid, have significantly
revised payment procedures in an effort to contain health care costs. These and
other factors affecting the health care industry could have a material adverse
impact on the Company's operating results, financial condition or prospects. The
Company believes that certain trends have developed which will have an impact on
the home health care and temporary staffing industry, including increased use of
capitated payments and the trend towards managed care. The Company seeks to
follow trends in its industry to maximize their resulting benefit and minimize
their resulting negative impact on the Company's operations. The extent and
effect of identified trends on the Company, as well as the effect of trends
which may develop in the future cannot be established either positively or
negatively at this time due to uncertainty in the home health care, temporary
staffing and rehabilitation industries.

15
<PAGE>

RESULTS OF OPERATIONS

The following table sets forth for the periods indicated the percentage
of revenues represented by certain items reflected in the Company's statements
of operations.

<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
1999 1998
---- ----
<S> <C> <C>
Revenues.................................................. 100.0% 100.0%
Direct expenses........................................... 73.4 76.1
---- ----
Gross Profit ............................................. 26.6 23.9
General and administrative expenses
(excluding amortization and depreciation) .............. 29.1 26.4
Amortization and depreciation ............................ 3.4 2.7
---- ----
Operating loss ........................................... (5.9) (5.2)
Other revenues (expenses) ................................ (7.0) (1.1)
---- ----
Loss from continuing operations before income tax ........ (12.9) (6.3)
Income tax expense ....................................... 0.0 2.4
---- ----
Net loss.................................................. (12.9) (8.7)
===== ====
</TABLE>

YEAR ENDED MARCH 31, 1999 COMPARED TO YEAR ENDED MARCH 31, 1998.

Revenues decreased $5.5 million, or 24.6% to $17.1 million in fiscal
1999 from $22.6 million in fiscal 1998. Net Medicare revenues decreased by $2.2
million to $5.5 million in fiscal 1999 from $7.7 million in fiscal 1998.
Non-Medicare revenues, including staff relief, private duty, private pay and
rehabilitation therapy decreased by $3.3 million in fiscal 1999 from fiscal
1998. The Balanced Budget Act of 1997 through the new Prospective Payment System
in long-care facilities resulted in a significant decrease in Rehabilitation
business. The Interim Payment System has resulted in a significant decline in
visits to each client (Medicare Beneficiary) as well as a decline due to a
beneficiary cap.

Direct expenses decreased $4.7 million or 27.3% to $12.5 million in
fiscal 1999. As a percentage of revenues, direct expenses decreased to 73.4% in
fiscal 1999 from 76.1% in fiscal 1998. The increase in gross profit can be
partially attributable to the increased labor productivity in the Home Health
Division of 2.4%, while the rehabilitation division percentage decreased 1.2%.
As a result, the gross profit margins increased to 26.6% in 1999 from 23.9% in
1998.

General and administrative expenses (excluding amortization and
depreciation) decreased $1.0 million or 16.9%. As a percentage of revenues, this
represented an increase to 29.1% in 1999 compared to 26.4% in 1998.

There was a marginal decrease of approximately $28,000 in depreciation
and amortization during fiscal 1999.

Other net expenses increased to approximately $1,201,000 in fiscal 1999
from approximately $256,000 in fiscal 1998. In fiscal 1999 other net expenses
include approximately $212,000 cost for a proxy battle fight with the Turkey
Vulture Fund, approximately $118,000 cost for the failed merger agreements with
Banyan/Mednu, and the Termination and Mutual Release Agreement's cost of
$600,000 with Jugal Taneja. Interest expense increased approximately $88,000 as
borrowings increased under the lines of credit.

For both the 1997 and 1998 fiscal years, the Company incurred net
operating losses. As a result of the losses incurred in fiscal 1997, a tax
benefit was recorded. However, as a result of the additional losses incurred in
fiscal 1998, no tax benefit was recorded. In addition, for fiscal 1998 the
Company recorded a valuation allowance associated with the tax benefit recorded
in fiscal 1997. Thus, the net loss for the Company in fiscal 1999 was
($2,201,899) before income taxes and ($2,206,780) after income taxes compared to
a net loss of ($1,432,255) before income taxes and ($1,964,478) after income
taxes in fiscal 1998.

16
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 1999 and 1998, accounts receivable were $4.2 million
(42% of total assets) and $4.3 million (40% of total assets), respectively. The
Company's liquidity is primarily affected by its management and collection of
accounts receivable. The home health care industry is characterized by longer
collection cycles, since most third-party payors require detailed documentation
to support reimbursement claims and review reimbursement claims prior to
payment. The Company generally has experienced collection cycles of its accounts
receivable of approximately 90-120 days and has not experienced material amounts
of write-offs. The Company is designated to receive periodic interim payments
(PIP) for its Medicare services rendered in the State of Florida. PIP allows the
Company to collect estimated payments every other week for Medicare services,
with an accounting after the quarter to verify the actual amount of Medicare
services rendered. PIP Payments to the national Medicare certified firms are
scheduled to be replaced by PPS by the end of the year. Further, the Company's
Medicare business is subject to increasing scrutiny and Medicare audits which
may result in denied claims for reimbursement and write-offs of accounts
receivable. If a Medicare audit revealed substantial overpayments to the Company
for Medicare visits or resulted in the denial of reimbursement for a material
number of visits, it would likely have a material adverse impact on the
Company's results of operations and financial condition.

The Company has completed five acquisitions since August 1992, and
intends to continue to achieve growth through acquisitions. To pursue its
acquisition strategy, the Company may incur additional short-term and long-term
borrowings and/or issue additional shares of Common Stock or other securities.
The Company does not currently have any commitments, understandings or
agreements with respect to any acquisitions.

The Company has a $3,000,000 credit facility, secured by NuMED Home
Health Care, Inc., NuMED Rehabilitation, Inc., Silver Moves, Inc., Countryside
Health Services, Inc., Pennsylvania Medical Concepts, Inc., Whole Person Home
Health Care of Ohio, Inc., and Parke Home Health Care, Inc. The credit advances
are limited to the aggregate accounts receivable balances of qualified accounts
under 120 days. The outstanding balance as of March 31, 1999 and 1998 was
$1,495,265 and $1,596,424, respectively.

The Company also has a $2,000,000 credit facility, secured by NuMED
Home Health Care, Inc. and Whole Person Home Health Care of Florida, Inc. The
credit advances are limited to the aggregate accounts receivable balance of
qualified accounts under 120 days. The outstanding balance as of March 31, 1999
and 1998 was zero.

The Company also has renegotiated and renewed an existing line of
credit for $275,000 which is fully secured by a $275,000 certificate of deposit.
Interest accrues at a rate equal to the lender's certificate of deposit rate
(4.75% as of March 31, 1999) plus 2.0%. The outstanding balance as of March 31,
1999 was $275,000. No monies were drawn as of March 31, 1998.

The Company also has a $1,250,000 line of credit secured by
certificates of deposit. Interest is payable monthly at 175 basis points above
the 90 day certificate of deposit rates (6.72% and 7.06% at March 31, 1999). The
outstanding balance as of March 31, 1999 and 1998 was $901,000.

In connection with the Company's acquisition of Parke Home Health Care
effective January, 1996, the Company financed 50% of the acquisition with a 30
month term loan payable to the previous owners of Parke. The outstanding
principal balance on the note at March 31, 1999 was zero and March 31, 1998 was
approximately $72,000. Interest accrued on the Parke loan at the rate of eight
percent (8%) per annum and was secured by the outstanding stock of Parke
purchased by the Company.

The Company's net income or loss has been and will continue to be
impacted significantly by the non-cash charge of amortization expense of
intangible assets of the Company. At March 31, 1999, net intangible assets of
the Company were $3.9 million. The amortization of intangible assets in the
future will decrease net income or increase net loss of the Company and may
adversely affect the market price of the Company's securities.

The Company funded its cash flow requirements through borrowings. The
Company believes that its current cash reserves, current cash flow and the funds
available under its credit facilities will allow the Company to continue to meet
its expected operating expenses and working capital needs for at least the next
12 months.

17
<PAGE>

To achieve the Company's acquisition strategy, the Company may be
required to seek additional financing and/or issue additional shares of Common
Stock or other securities. There can be no guarantee that sales of the Company's
equity securities will be an available alternative to obtain additional
financing in the future. This may adversely impact the Company's ability to make
additional strategic acquisitions. No additional funding for any of these
purposes has been committed to date.

Management of the Company has been evaluating its strategy to maximize
shareholder values either through the sale of the Company or merge with an equal
size company in a geographical area suited for the Company to achieve economies
of scale. The Company had also numerous discussions with capital infusion. The
Company signed a definitive agreement to merge with Banyan. Banyan was formed to
acquire health care related companies to consolidate and provide full services.
In June, 1998, the Company terminated its discussions due to issues raised by
the Company's independent accountant and legal advisors. A merger agreement was
signed August 19, 1998 with Mednu and terminated October 14, 1998. In
connection, the Company incurred professional fees of approximately $118,000 and
$130,000 during the year ended March 31, 1999 and 1998, respectfully, associated
with the proposed transactions.

YEAR 2000

NuMED's Company-wide Year 2000 Project ("Project") is proceeding on
schedule. The Project is addressing the issue of applications systems,
information technology (IT) systems and technologies which include embedded
systems being able to distinguish between the year 1900 and the year 2000. In
the fiscal year 1997, the Company began establishing processes for evaluating
and managing the risks associated with the Project. The Project is divided into
six components. These components include program management, communications,
application conversions and technology upgrades, contingency planning, quality
assurance and external entities. The Company is using internal resources to
implement the Project. The work to complete the Project is expected to be
completed by mid to late 1999. The Company has initiated informal communications
with its key third parties and has initiated formal contingency planning
processes to mitigate the risk to the Company if the third parties are not
prepared for the year 2000. This is planned to be completed by mid 1999. There
can be no guarantee that the third parties will successfully and timely
reprogram or replace and test all of their own computer hardware, software and
process control systems. While the failure of a single third party to achieve
year 2000 compliance should not have a material adverse effect on the Company's
results of operations, the failure of several key third parties could have such
an effect.

COST. The total costs associated with required modifications to become
Year 2000 compliance is not expected to be material to the Company's financial
position. The Company has incurred costs to date of $5,000. Estimated costs for
the remainder of work is $1,000 for a total projected Project cost of $6,000.

RISKS. While the effort to assess and correct the Company's Year 2000
issues are expected to be complete prior to related forecasted failure horizons,
the Company is taking specific measures to assess risks and develop specific
contingency plans. A formal process is being developed to assess key business
functions and create action plans which will describe the communications,
operations and IT activities that will be conducted if the contingency plan must
be executed. The costs of the Project and the completion dates are based on
management's best estimates, which were derived from assumptions of future
events including the availability of resources, key third party modification
plans and other factors. There can be no guarantee that these estimates will be
achieved and actual results could vary due to uncertainties. The Company's Year
2000 efforts are ongoing and its overall Project will continue to evolve as new
information becomes available. The failure to correct a material Year 2000
problem could result in an interruption in certain normal business activities
and operations. Due to the general uncertainty inherent in the Year 2000
problem, resulting in part from the uncertainty of the Year 2000 readiness of
third parties on whom the Company relies, the Company is unable to determine at
this time whether the consequences of Year 2000 failures will have a material
adverse impact on the Company's results of operation but the Company believes
that with the implementation of new business systems and completion of the
Project as scheduled, the possibility of significant interruptions of normal
operations should be reduced.

18
<PAGE>

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following documents are filed as a part of this report at the pages indicated: PAGE
----
<S> <C> <C>
1. Report of Independent Auditors...........................................................F-1, 2

2. Consolidated Balance Sheets as of
March 31, 1999 and 1998..................................................................F-3

3. Consolidated Statements of Operations for the
Years Ended March 31, 1999 and 1998......................................................F-4

4. Consolidated Statements of Stockholders' Equity for the
Years Ended March 31, 1999 and 1998......................................................F-5

5. Consolidated Statements of Cash Flows for the Years
Ended March 31, 1999 and 1998............................................................F-6

6. Notes to Consolidated Financial Statements...............................................F-7

</TABLE>

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

None

19
<PAGE>

PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following table sets forth certain information with respect to the
directors and executive officers of the Company.

NAME AGE POSITION WITH COMPANY
---- --- ---------------------
<S> <C> <C>
Susan J. Carmichael 51 President, Chief Executive Officer, and Director
Thomas V. Chema 52 Chairman of the Board and Director
J. Michael Gorman 46 Director
Richard M. Osborne 54 Director
Thomas J. Smith 55 Director
Jugal K. Taneja 55 Director
</TABLE>

Each director holds office until the next annual meeting of
stockholders and until his or her successor has been elected and qualified.

Pursuant to Article X of the Company's By-Laws, on January 20, 1996,
the Board of Directors amended the By-Laws to classify the members of the Board
of Directors into three groups of not less than two nor more than three
Directors each, with terms expiring in alternate years. In January 1999, a new
Board of Directors was elected. That Board voted to eliminate the staggered
Board provisions and amend the Company's bylaws. Accordingly, Directors are
elected for one year terms until their successors are duly elected and
qualified.

SUSAN J. CARMICHAEL was elected President and Chief Executive Officer
by the Board of Directors in January 1999. Ms. Carmichael has served as a
Director of the Company since October 1991 and as President of the Company since
September 1993. She has held the position of President of Whole Person in PA and
PA Medical Concepts (companies acquired by the Company in 1991) since 1985 and
is responsible for the Company's overall operation and expansion. Ms. Carmichael
also serves on the President's Council; American Lung Association. Ms.
Carmichael previously served on the Erie County, Pennsylvania Mental Health and
Mental Retardation Board by appointment of the Erie County Executive. Ms.
Carmichael is a Doctoral Candidate at The Pennsylvania State University.

THOMAS V. CHEMA was elected as Chairman of the Company's Board of
Directors on January 28, 1999 and has been a Director of the Company since April
1994. Mr. Chema is a partner with the law firm Arter & Hadden, Cleveland, Ohio
from 1979 to 1983 and since 1989. He also currently serves as the President of
Gateway Consultants Group, Inc. assembly facility construction and development.
Mr. Chema is also the President of IMN, Inc. which is engaged in the fiber
optics business. He previously served as Executive Director of the Ohio Lottery
Commission and the Public Utilities Commission at various times between 1983 and
1989. He also served as Executive Director of the Gateway Economic Development
Corporation of Greater Cleveland, which managed the financing and construction
of the Jacobs Field and Gund Arena sporting venues.

J. MICHAEL GORMAN is the President and Chief Executive Officer of
Harmony Laboratories, Inc., which develops and distributed over-the-counter
pharmaceuticals and health and beauty aids. From 1990 through 1995, Mr. Gorman
was President of Knox International, Inc., a company that produces and
distributes medical gases and equipment. Prior to that time, Mr. Gorman served
as President of GPI, Inc., a producer of custom plastic devices for the medical
industry.

RICHARD M. OSBORNE is President and Chief Executive Officer of OsAir,
Inc., a company he founded in 1963. OsAir is a manufacturer of industrial gasses
for pipeline delivery and a real property developer. Mr. Osborne is the Manager
of Turkey Vulture Fund XIII, Ltd., which began operations in January 1995.
Turkey Vulture Fund acquires, holds, sells, or otherwise invests in all types of
securities and other instruments. Mr. Osborne is a director of TIS Mortgage
Investment Company, a publicly-held real estate investment trust, a trustee and
Chairman of the Board of Trustees of Meridian Point Realty Trust 83, a
publicly-held real estate investment trust, a director of Central Reserve Life
Corporation, a publicly-held real estate company, and a director and Vice
Chairman of the Board of GLB Bancorp, Inc., a bank holding company.

20
<PAGE>

THOMAS J. SMITH has been the President of Retirement Management
Company, which manages assisted living and retirement facilities, since 1992.
Since April 1996, Mr. Smith has served as the Executive Operating Manager of
Liberty Self-Stor, which owns and operates 13 self-storage facilities. Mr.
Osborne controls both Retirement Management and Liberty Self-Stor. Mr. Smith is
also a director of GLB Bancorp, a bank holding company, and a trustee of
Meridian Point Realty Trust 83, a publicly-held real estate investment trust.

JUGAL K. TANEJA had been Chairman of the Board, Chief Executive Officer
and a Director of the Company from October 1991 to November 1998, and continues
to serve as a director. Mr. Taneja is also the Chairman of the Board of
Nutriceuticals.com, Inc. a public company engaged in e-commerce and Dynamic
Health Products, Inc., a manufacturer of non-prescription medications,
nutritional supplements and health products.

BOARD COMMITTEES

Committees are in the process of being established.

OTHER KEY EMPLOYEES

PEGGY A. LOESCH, MBA, RN, BSN age 47, is the Vice President-Operations,
Home Health Division and oversees that Division's clinical operations while
working with the Company Administrators in maintaining appropriate
certifications, accreditations and processes.

21
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning
compensation paid to or earned by the Company's Chief Executive Officer and the
President. No other executive officer of the Company earned salary and bonus in
excess of $100,000 for the fiscal year ended March 31, 1999.

SUMMARY COMPENSATION TABLE

FISCAL OTHER ANNUAL NUMBER OF SHARES
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION UNDERLYING
- --------------------------- ------ ------ ----- ------------ ------------------
OPTIONS
- --------
<S> <C> <C> <C>

Jugal K. Taneja 1999 $131,000 -- $3,500(1) --
Chairman of the Board and 1998 $160,000 -- $44,000(1)(2) --
Chief Executive Officer 1997 $160,000 $17,877 $30,000(1) 640,000(5)

Susan J. Carmichael 1999 $159,000 -- $10,500(4)(6) 200,000
President, CEO, and Director 1998 $130,000 -- $9,000(4)(6) --
1997 $130,000 $16,677 $44,042(3)(4) 350,000(5)
</TABLE>

(1) Represents meal and lodging expenses of $2,000 per month paid to Mr.
Taneja while located in Florida. $18,000 paid during fiscal year 1998
and a monthly automobile allowance of $500. $3,500 paid during fiscal
1999.
(2) Represents moving expenses. $20,000 paid during fiscal year 1998.
(3) Represents accumulated vacation of $38,042 paid during fiscal year
1997.
(4) Represents lodging expenses of $500 per month paid to Ms. Carmichael.
$4,500 paid during fiscal year 1998 and 1999.
(5) Includes 540,000 warrants issued to Mr. Taneja and 270,000 warrants
issued to Ms. Carmichael issued for certain terms of employment
agreement. See details under Employment Agreements.

(6) Represents a monthly automobile allowance of $500 paid to Ms.
Carmichael. $4,500 paid during fiscal year 1998.

No options were granted during the fiscal year ended March 31, 1998.
The following table sets forth information with respect to options granted
during fiscal year ended March 31, 1999 to executive officers named in the
Summary Compensation Table.

OPTIONS GRANTED DURING FISCAL YEAR 1999

NUMBER
OF SECURITIES PERCENT
UNDERLYING TOTAL EXERCISE
OPTIONS OPTIONS PRICE EXPIRATION
GRANTED GRANTED PER SHARE DATE
------- ------- --------- ----
<S> <C> <C> <C>

Susan J. Carmichael 200,000 100% $0.50 no expiration
</TABLE>

The following table sets forth information with respect to the year-end
value of unexercised options held by the executive officers named in the Summary
Compensation Table. There were no stock option exercises by such executive
officers during fiscal 1999, 1998 or 1997 and all unexercised options held at
fiscal year end, excluding options granted in the fiscal year 1999, are
currently exercisable.

22
<PAGE>

YEAR-END OPTION VALUES

NUMBER OF SHARES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED OPTIONS IN-THE MONEY OPTIONS
AT MARCH 31, 1999 AT MARCH 31, 1999
----------------- -----------------
<S> <C> <C>

Jugal K. Taneja 920,000 --
Susan J. Carmichael 660,000 --
</TABLE>

DIRECTOR COMPENSATION

Effective April 18, 1995, each outside director of the Company receives
$500, plus reimbursement for actual travel expenses, for each board meeting and
$100 for each committee meeting attended, if held on the same day as a board
meeting, or $250 for each committee meeting, if held on a day other than the
date of a board meeting. Outside directors receive a minimum of $3,000 annually
if five meetings are attended. Directors who are also employees of the Company
receive no fees for meetings attended. Additionally, outside directors receive
options to purchase Common Stock under the Outside Director and Advisory Board
Member Stock Option Plan, and directors of the Company who are executive
officers have previously received, and may receive in the future additional
options. See "Stock Plans." Directors who are members of the Acquisition
Committee will receive $2,500 in addition to their regular directors' fees.

TERMINATION, NONCOMPETITION AND MUTUAL RELEASE AGREEMENT

As a result of settlement negotiations with Turkey Vulture Fund, on
November 23, 1998, the company and its former Chief Executive Officer, Mr. Jugal
K. Taneja, entered into a Termination, Noncompetition and Mutual Release
Agreement (the "Departure Agreement") pursuant to which Mr. Taneja relinquished
his duties as the Chief Executive Officer and Chairman of the Board and agreed
to accept $250,000 and 744,680 shares of Common Stock of the Company valued at
$350,000 in exchange for releasing NuMED from its contractural obligations under
his prior Employment Agreement. Additionally, the expiration date of all of Mr.
Taneja's options and warrants were extended for a term of three (3) years from
November 23, 1998, and accordingly, will expire on November 23, 2001. Mr. Taneja
remains a member of the Board of Directors. The Departure Agreement also
provided for customary noncompetition and nondisclosure of confidential
information restrictions on Mr. Taneja. Moreover, the Departure Agreement
contained mutual releases whereby NuMED and Mr. Taneja released and forever
discharged each other from all prior causes of action they may have had against
each other as of that date. The company also agreed to indemnify and defend Mr.
Taneja and hold him harmless from and against any and all claims, demands,
losses, costs, expenses, damages and deficiencies that Mr. Taneja might suffer
or incur as a result of his acts or inaction as a director of the company.
Finally, Mr. Taneja was granted demand registration rights for the NuMED Common
Stock he received in connection with the Departure Agreement.

EMPLOYMENT AGREEMENTS

On November 23, 1998, the Company entered into a new employment
agreement with Susan J. Carmichael, pursuant to which Ms. Carmichael was named
President and Chief Executive Officer for a one (1) year term subject to renewal
discussions (the "Employment Agreement"). Ms. Carmichael waived ninety days
accumulated sick time and agreed to assume the additional duties of CEO for an
increase in salary of $25,000. She received options to purchase 200,000 shares
of common stock of the Company at a price of $0.50 per share which represents
the closing price on November 23, 1998. The options are subject to a one (1)
year vesting period which will be accelerated upon a Change in Control.

The Employment Agreement also includes customary noncompetition and
nondisclosure of confidential information restrictions. Moreover, in the event
of a termination of Ms. Carmichael's employment for other than "Cause" (as
defined in the Employment Agreement), the Company must pay Ms. Carmichael one
(1) year's or two (2) year's salary in equal installments over the twelve (12)
month period following the termination determined by the term of the covenant
not to compete in accordance with Company pay policy immediately prior to such
termination. Finally, in certain circumstances

23
<PAGE>

following a Change in Control (as defined in the Employment Agreement) the
Company must pay Ms. Carmichael one (1) year's or two (2) year's salary
(determined by the term of the covenant not to compete) in equal installments
over the twelve (12) month period following the termination in accordance with
Company pay policy immediately prior to such termination.

STOCK PLANS

The Company maintains three stock plans (the "Plans") to attract,
motivate and retain key employees and outside directors of the Company. The
Plans have been adopted by the Company's Board of Directors and were approved by
the shareholders of the Company at the Company's 1994 Annual Meeting of
Stockholders. Prior to the adoption and approval of the Plans, the Company
granted options to purchase in the aggregate 220,000 shares of Common Stock to
certain executive officers and directors of the Company at exercise prices
ranging from $2.188 per share to $5.00 per share. 20,000 options have been
canceled. The following is a brief discussion of each of the Plans. In
connection with the Offering, the Company agreed that it may not grant options
in excess of 15% of the issued and outstanding shares of Common Stock until
February 8, 1996 in the absence of shareholder approval.

1994 EMPLOYEE STOCK OPTION PLAN. The Company's 1994 Employee Stock
Option Plan (the "1994 Plan") provides for the grant of incentive stock options
and non-qualified stock options to purchase up to 750,000 shares of Common
Stock. Each option will have an exercise price equal to the fair market value of
the Common Stock on the date of grant, except for grants of incentive stock
options to beneficial owners of 10% or more of the Common Stock, which will
contain an exercise price equal to 110% of fair market value on the date of
grant. Individuals eligible to participate in the 1994 Plan are employees and
officers of the Company and its subsidiaries. No options were granted in fiscals
1999 and 1998.

OUTSIDE DIRECTOR AND ADVISORY BOARD MEMBER STOCK OPTION PLAN. The
Company's Outside Director and Advisory Board Member Stock Option Plan (the "D&A
Plan") provides for an annual grant, subject to anti-dilution provisions, of
12,060 non-qualified stock options to each "eligible" director (directors of the
Company who are not employees) and 710 non-qualified stock options to each
"eligible" advisory board member (professionals representing each medical area
in which the Company provides services). Each option shall have an exercise
price equal to the fair market value of the Common Stock on the date of grant,
and options vest over a period of 3 years with one-third vesting on each
anniversary date of the grant. No options were granted in fiscals 1999 and 1998.

EMPLOYEE STOCK PURCHASE PLAN. The Company's Employee Stock Purchase
Plan (the "ESP Plan") permits employees employed on a regular full-time or
part-time basis (excluding those who work less than 20 hours per week, those who
have not completed a ninety day orientation period and those employees who own
5% or more of the Common Stock) to purchase Common Stock at 85% of the fair
market value of the Common Stock up to a maximum of 15% of his or her total
annual compensation. The number of shares of Common Stock that may be sold
pursuant to the ESP Plan shall not exceed 250,000 shares in any one year.
Additionally, no employee individually may purchase more than $25,000 worth of
Common Stock in any one year. Approximately 29,000 and 23,000 shares were issued
pursuant to the ESP Plan in fiscal 1999 and 1998, respectively.

24
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth certain information regarding the
beneficial ownership of Common Stock as of June 21, 1999 with respect to: (i)
each of the Company's directors and the executive officers named in the Summary
Compensation Table; (ii) all directors and executive officers of the Company as
a group; and (iii) each person known by the Company to own beneficially more
than 5% of the Common Stock. An asterisk indicates beneficial ownership of less
than 1% of the outstanding Common Stock. Except as otherwise indicated, each of
the shareholders listed below has sole voting and investment power over the
shares beneficially owned.

CURRENT SHARES BENEFICIALLY OWNED
---------------------------------
BENEFICIAL OWNER NUMBER PERCENT
---------------- ------ -------
<S> <C> <C>
Susan J. Carmichael (1).................................................495,000 7.8%
5770 Roosevelt Boulevard, Suite 700
Clearwater, Florida 33760

Thomas V. Chema (2)......................................................49,220 *
1100 Huntington Building
925 Euclid Avenue
Cleveland, Ohio 44115

J. Michael Gorman.............................................................0 *
1109 S. Main Street
Landis, North Carolina 28088

Richard M. Osborne (3)..................................................583,500 9.9%
7001 Center Street
Mentor, Ohio 44060

Thomas J. Smith...............................................................0 *
8500 Station Street
Suite 100
Mentor, Ohio 44060

Jugal K. Taneja (4)...................................................2,301,954 34.0%
6950 Bryan Dairy Road
Largo, Florida 33777

Turkey Vulture Fund XIII Limited....................................... 583,500 9.9%
7001 Center Street
Mentor, Ohio 44060

Executive Officers and Directors as a Group (6 People) (5)............3,429,674 46.9%
- ----------
</TABLE>

* Less than one percent.

(1) Includes (i) 190,000 shares issuable under currently exercisable stock
options, and (ii) 270,000 currently exercisable Common Stock Purchase
Warrants. Excludes 200,000 stock options issued under November 23, 1998
employment agreement not yet exercisable.

(2) Includes 32,160 shares issuable under currently exercisable stock
options granted pursuant to the D & A Plan. Excludes 4,020 stock
options issued on July 1, 1996 pursuant to D & A Plan that are not yet
exercisable.

(3) Includes beneficial ownership of 583,500 shares owned by Turkey Vulture
Fund, of which Mr. Osborne is the sole Manager.

25
<PAGE>

(4) Includes beneficial ownership of (i) 182,578 shares of Common Stock
owned by First Delhi Trust, a trust for Mr. Taneja's children over
which he exercises voting rights, (ii) 328,300 shares of Common Stock
and 540,000 currently exercisable Common Stock Purchase Warrants owned
by Twenty-First Century Healthcae Fund, L.L. D., a limited liability
company controlled by Mr. Taneja and his family members, (iii) 380,000
shares issuable under currently exercisable stock options, and (iv) the
744,680 shares Mr. Taneja is not eligible to vote at the meeting which
he received in connection with the entering into of his Termination,
Noncompetition and Mutual Release Agreement. Excludes 209,820 shares
beneficially owned by his wife, Manju Taneja, as to which Mr. Taneja
exercises no voting or disposition rights.

(5) Includes 1,412,160 shares issuable under common stock purchase warrants
and/or stock options that are currently exercisable.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

A lease agreement was entered into by the Company with the Erie
Company, a Corporation which is owned and controlled by a relative of a director
of NuMED. The lease allows for 40% more space at essentially the same price of
the prior space. The lease is at fair market value. This agreement was approved
by the Board of Directors prior to its inception.

All material affiliated transactions will be made or entered into on
terms no less favorable to the Company than those that can be obtained from
unaffiliated third parties, and all material affiliated transactions must be
approved by a majority of the independent outside members of the Board of
Directors of the Company who do not have an interest in the transactions.

26
<PAGE>

PART VI

ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a) EXHIBITS

The following exhibits are filed with this report:

EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------

3.1 Articles of Incorporation of Stowaway, Inc. (n/k/a NuMED Home
Health Care, Inc.) dated October 13, 1987.(1)

3.2 Certificate of Amendment to Articles of Incorporation of NuMED Home
Health Care, Inc. dated February 12, 1993.(2)

3.3 Certificate of Amendment to Articles of Incorporation of NuMED Home
Health Care, Inc. dated April 29, 1994.(3)

3.4 ## Amended and Restated Bylaws of NuMED Home Health Care, Inc.

4.1 Specimen Certificate for Common Stock.(1)

4.2 [Intentionally omitted]

4.3 Specimen Certificate for Warrant.(3)

4.4 Warrant Agreement.(3)

4.5 Underwriter's Unit Purchase Option.(4)

10.1 NuMED Home Health Care, Inc. Outside Director and Advisory Board
Member Stock Option Plan. (Filed as Exhibit No. 99(a) to
registration statement on Form S-8, File No. 33-90966).(4)

10.2 NuMED Home Health Care, Inc. 1994 Employee Stock Option Plan.
(Filed as Exhibit No. 99(b) to registration statement on Form S-8,
File No. 33-90966).(4)

10.3 NuMED Home Health Care, Inc. Employee Stock Purchase Plan.
(Filed as Exhibit No. 99(c) to registration statement on Form S-8,
File No. 33-90966).(4)

10.4 Employment Agreement by and between NuMED Home Health Care, Inc.
and Susan J. Carmichael, dated November 23, 1998 (Filed as Exhibit
10.2 to the Form 8-K, filed December 4, 1998, File No. 001-12992)

10.5 Termination, Noncompetition and Mutual Release Agreement by and
between NuMED Home Health Care, Inc. and Jugal K. Taneja, dated
November 23,1998 (Filed as Exhibit 10.1 to the Form 8-K, filed
December 4, 1998, File No. 002-12992)

27
<PAGE>

21 Subsidiaries of NuMED Home Health Care, Inc.

22 ## Consent of Deloitte & Touche, LLP

23 ## Consent of Ernst & Young LLP.
- ----------
## Filed herewith

(1) Incorporated by reference to the Company's registration statement on
Form S-4, File No. 33-53218

(2) Incorporated by reference to NuMED Surgical, Inc.'s registration
statement on Form 10SB, File No. 0-24362

(3) Incorporated by reference to the Company's registration statement on
Form SB-2, File No. 33-86122.

(4) Incorporated by reference to the Company's registration statement on
Form S-8, File No. 33-90966.

(b) REPORTS ON FORM 8-K.

The Company filed a report Form 8-K dated January 19, 1999 in
connection with its Board of Directors reaching an agreement with Turkey Vulture
Fund XIII, Ltd. To settle all litigation outstanding among the parties. The
following exhibit was filed with the report:

(A) Mediation and Settlement dated January 6, 1999.

28
<PAGE>

SIGNATURES

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

NUMED HOME HEALTH CARE, INC.

DATED: June 25, 1999 BY: /s/ SUSAN J. CARMICHAEL
---------------------
Susan J. Carmichael, Chief Executive
Officer

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

SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>

/s/ SUSAN J. CARMICHAEL President, CEO, and Director June 25, 1999
- -------------------------
SUSAN J. CARMICHAEL

/s/ MARILYN K. MAGINNES Principal Accounting Officer June 25, 1999
- ------------------------- Senior Controller
MARILYN K. MAGINNES

/s/ THOMAS V. CHEMA Chairman of the Board and Director June 25, 1999
- -------------------------
THOMAS V. CHEMA

/s/ J. MICHAEL GORMAN Director June 25, 1999
- -------------------------
J. MICHAEL GORMAN

/s/ RICHARD M. OSBORNE Director June 25, 1999
- -------------------------
RICHARD M. OSBORNE

/s/ THOMAS J. SMITH Director June 25, 1999
- -------------------------
THOMAS J. SMITH

/s/ JUGAL K. TANEJA Director June 25, 1999
- -------------------------
JUGAL K. TANEJA
</TABLE>

29
<PAGE>

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of
NuMED Home Health Care, Inc. and Subsidiaries
Clearwater, Florida

We have audited the consolidated balance sheet of NuMED Home Health Care, Inc.
and Subsidiaries (the Company) as of March 31, 1999, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of the
Company at March 31, 1999 and the consolidated results of their operations and
their cash flows for the year then ended, in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

Tampa, Florida
June 21, 1999

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

To the Stockholders and Board of Directors of
NuMED Home Health Care, Inc. and Subsidiaries
Clearwater, Florida

We have audited the consolidated balance sheet of NuMED Home Health Care, Inc.
and Subsidiaries (the Company) as of March 31, 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of NuMed
Home Health Care, Inc. and subsidiaries at March 31, 1998 and the consolidated
results of their operations and their cash flows for the year then ended, in
conformity with generally accepted accounting principles.

ERNST & YOUNG LLP

Cleveland, Ohio
June 29, 1998

F-2

<PAGE>

NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Balance Sheets

MARCH 31
1999 1998
-------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,830 $ 59,725
Cash deposits securing contractual arrangements 1,176,000 1,275,980
-------------------------------
1,214,830 1,335,705
Accounts receivable, net of allowances for doubtful accounts
of $533,048 in 1999 and $304,796 in 1998 4,160,383 4,343,476
Prepaids, inventories, and other current assets 278,029 335,825
-------------------------------
Total current assets 5,653,242 6,015,006

Property and equipment, net 220,480 382,928
Goodwill, net of accumulated amortization of $1,444,255
in 1999 and $1,098,913 in 1998 3,735,880 4,081,222
Other intangible assets, net of accumulated amortization of
$1,965,289 in 1999 and $1,912,826 in 1998 186,362 242,563
Other assets 18,877 34,185
-------------------------------
TOTAL ASSETS $ 9,814,841 $ 10,755,904
===============================

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 510,718 $ 289,850
Accrued salaries and payroll related 935,662 1,291,419
Accrued expenses 345,141 278,055
Estimated amounts due to third-party payors 919,275 21,345
Borrowings 2,687,073 1,693,477
-------------------------------
Total current liabilities 5,397,869 3,574,146

Long-term borrowings, less current portion 0 917,427
-------------------------------
TOTAL LIABILITIES 5,397,869 4,491,573

Commitments and Contingencies

Stockholders' equity:
Preferred stock, authorized 2,000,000, no shares issued or
outstanding 0 0
Common stock, $.001 par value, authorized 48,000,000 shares,
5,901,500 and 5,010,219, respectively, shares issued and
outstanding 5,902 5,010
Additional paid-in capital 10,963,745 10,653,754
Treasury stock, 34,488 and 43,599 shares of common stock at
cost, respectively (39,096) (87,634)
Accumulated deficit (6,513,579) (4,306,799)
-------------------------------
TOTAL STOCKHOLDERS' EQUITY 4,416,972 6,264,331
-------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 9,814,841 $ 10,755,904
===============================
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-3
<PAGE>

NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Statements of Operations

YEARS ENDED MARCH 31
1999 1998
-------------------------------
<S> <C> <C>
Revenues $ 17,086,163 $ 22,649,516
Direct expenses 12,543,008 17,240,737
--------------------------------
GROSS PROFIT 4,543,155 5,408,779

GENERAL AND ADMINISTRATIVE EXPENSES:
Salaries and benefits 3,018,290 3,543,928
Operating expenses 919,310 865,684
Professional fees 192,592 371,436
Occupancy expenses 826,906 802,754
Insurance 293,781 293,062
Amortization and depreciation 576,514 604,479
Bad debt expense 228,373 103,733
Recovery of contractual settlement (511,841)
--------------------------------
Total general and administrative 5,543,925 6,585,076
--------------------------------
Operating loss (1,000,770) (1,176,297)

OTHER REVENUES (EXPENSES):
Interest income 54,116 112,373
Interest expense (303,972) (215,572)
Other Expense (951,273) (152,759)
--------------------------------
Total other revenues (expenses) (1,201,129) (255,958)
--------------------------------

Loss before income tax expense (2,201,899) (1,432,255)
Income tax expense 4,881 532,223
--------------------------------

NET LOSS $ (2,206,780) $ (1,964,478)
================================

NET LOSS PER SHARE--BASIC AND DILUTED $ (0.41) $ (0.40)
================================

WEIGHTED AVERAGE SHARES OUTSTANDING--BASIC
AND DILUTED 5,360,895 4,950,845

</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-4
<PAGE>

NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity

Common Stock Additional Treasury Stock
------------------ Paid-in Accumulated --------------------
Shares Dollars Capital Deficit Shares Dollars Total
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at April 1, 1997 5,010,219 $ 5,010 $10,679,113 $(2,342,321) (67,075) $(134,821) $ 8,206,981

Net loss (1,964,478) (1,964,478)

Shares issued under employee
stock purchase plan (25,359) 23,476 47,187 21,828
-------------------------------------------------------------------------------------------

Balance at March 31, 1998 5,010,219 5,010 10,653,754 (4,306,799) (43,599) ( 87,634) 6,264,331
===========================================================================================

Net loss (2,206,780) (2,206,780)

Purchase Treasury Shares 19,627 20 9,205 (19,627) (9,225)

Other 126,974 127 127

Shares issued under
Termination, Non-
competition and Mutual 350,000
Release Agreement 744,680 745 349,255

Shares issued under employee
stock purchase plan (48,469) 28,738 57,763 9,294
------------------------------------------------------------------------------------------

BALANCE AT MARCH 31, 1999 5,901,500 $ 5,902 $10,963,745 $(6,513,579) (34,488) $(39,096) $4,416,972
==========================================================================================
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-5
<PAGE>

NuMED Home Health Care, Inc. and Subsidiaries
Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
YEARS ENDED
1999 1998
-------------------------------
<S> <C> <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (2,206,780) $ (1,964,478)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 576,514 604,479
Termination payment in form of common stock 350,000 0
Provision for uncollectible accounts 228,252 103,733
Increase (decrease) in cash due to net changes in operating assets and
liabilities:
Accounts receivable (45,159) (901,427)
Prepaids and other current assets 57,796 (53,732)
Accounts payable and accrued expenses (67,803) (401,512)
Estimated amounts due to third party payors 897,930 0
Other assets 15,308 499,897
-------------------------------
Net cash used in operating activities (193,942) (2,113,040)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (12,523) (129,289)
-------------------------------
Net cash used in investing activities (12,523) (129,289)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings 10,657,901 9,979,258
Payments on borrowings (10,581,732) (9,095,492)
Proceeds from issuance of stock 9,421 21,828
Cash securing letters of credit 99,980 599,020
-------------------------------
Net cash provided by financing activities 185,570 1,504,614
-------------------------------

Decrease in cash and cash equivalents (20,895) (737,715)

Cash and cash equivalents at beginning of year 59,725 797,440
-------------------------------

CASH AND CASH EQUIVALENTS AT END OF YEAR $ 38,830 $ 59,725
===============================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid during the year $ 303,972 $ 197,105
===============================

Income taxes paid during the year $ 4,881 $ 0
===============================
</TABLE>

SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

F-6

<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 1999 and 1998

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The consolidated financial statements include the accounts of NuMED Home Health
Care, Inc. (NuMED or the Company) and its wholly-owned subsidiaries: Whole
Person Home Health Care of Ohio, Inc. (Whole Person in OH), Whole Person Home
Health Care, Inc. (Whole Person in PA), Pennsylvania Medical Concepts, Inc. (PA
Medical Concepts), Whole Person Home Health Care of Florida, Inc. dba Total
Professional Health Care (Total Professional), Silver Moves, Inc. dba Florida
Nursing Services (Florida Nursing), Countryside Health Services, Inc.
(Countryside), Parke Home Health Care, Inc. (Parke) and NuMED Rehabilitation
(NuMED Rehab). Intercompany transactions between NuMED and its subsidiaries have
been eliminated in the consolidated financial statements.

SERVICES

NuMED is a holding company that provides home health care services and temporary
staffing of nursing personnel as well as contractual staffing of physical,
occupational and speech therapists to various health care facilities through its
eight subsidiaries. NuMed has two reportable segments: home health services and
contractual therapy staffing (rehabilitation services). Home health services are
provided in certain markets of Florida, Ohio and Pennsylvania. Rehabilitation
services are provided in certain markets of Ohio and Pennsylvania.

USE OF 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.
Estimates also affect the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.

REVENUES

Revenues for home health care services are recorded at established rates less
contractual allowances. Revenues are recorded as services are performed. The
Company has arrangements with certain third-party payors under which the Company
is paid a prospectively determined price for services provided. Contractual
adjustments under reimbursement agreements with third-party payors, including
retroactive adjustments, are

F-7
<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

estimated and accrued in the period which services were rendered. Estimates are
adjusted, if necessary, in the period final settlements are determined.

Revenues from third-party payors for the years ended March 31, 1999 and 1998
were approximately $9,932,000 and $12,785,000, respectively. Certain of these
revenues (primarily Medicare) are subject to cost reimbursement principles and
are subject to audit and retroactive adjustment by the respective third-party
fiscal intermediaries. Allowances are provided, as necessary, to reflect the
excess of the established rates over rates based on third-party arrangements.

Approximately 32% and 34% of 1999 and 1998 revenues, respectively, were derived
from the Medicare program. Laws and regulations governing the Medicare program
are complex and subject to interpretation. The Company believes that it is in
compliance with all applicable laws and regulations and is not aware of any
pending or threatened investigations involving allegations of potential
wrongdoing. While no such regulatory inquires have been made, compliance with
such laws and regulations can be subject to future government review and
interpretation as well as significant regulatory penalties.

CONCENTRATION OF CREDIT RISK

The Company's concentration of credit risk relating to accounts receivable is
limited due to the diversity of patients and payors. Accounts receivable
primarily consist of amounts due from government programs, commercial insurance
companies, private pay patients, hospitals, long-term care facilities and other
group insurance programs. Excluding governmental programs, no one payor source
represents more than 10% of the Company's accounts receivable or revenues for
1999 or 1998. The Company maintains an allowance for uncollectible accounts
based on the expected collectibility of accounts receivable.

CASH AND CASH EQUIVALENTS

Cash equivalents represent highly liquid investments with original maturities of
less than 90 days. Cash and cash equivalents excludes cash deposits used to
secure contractual obligations. Cash deposits securing contractual agreements
are classified as current because such borrowings are short term.

INVENTORIES

Inventories are carried at the lower of cost (first-in, first-out (FIFO) method)
or net realizable value. Inventories consist of disposable medical supplies.

F-8

<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated on the
straight-line basis over their estimated useful lives for financial and tax
reporting purposes. Repairs and maintenance costs are expensed as incurred.
Additions, betterments, and major renewals are capitalized. The carrying value
of property and equipment is reviewed at each balance sheet date to determine
whether property and equipment has been impaired. If this review indicates that
the carrying value of property and equipment, as determined based on the
undiscounted cash flows of the entity over the remaining depreciation period,
the Company's carrying value of the property and equipment would be reduced
based on the estimated shortfall of discounted cash flows at such time an
impairment in value of property and equipment has occurred. Based on the
Company's review as of March 31, 1999 and 1998, no impairment of property and
equipment was evident.

GOODWILL

Goodwill, representing the excess of the cost over the net assets of acquired
businesses, after allocation to other identifiable intangible assets, is
amortized on the straight-line basis over fifteen years. The carrying value of
goodwill is reviewed at each balance sheet date to determine whether goodwill
has been impaired. If this review indicates that goodwill will not be
recoverable, as determined based on the undiscounted cash flows of the entity
acquired over the remaining amortization period, the Company's carrying value of
the goodwill would be reduced based on the estimated shortfall of discounted
cash flows at such time an impairment in value of goodwill has occurred. Based
on the Company's review as of March 31, 1999 and 1998, no impairment of goodwill
was evident.

OTHER INTANGIBLE ASSETS

Other intangible assets consist of customer lists, covenants not to compete and
various leaseholds and are amortized over their estimated useful life up to a
maximum of 10 years.

FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, cash deposits securing
contractual arrangements, accounts receivable, and accounts payable, and
borrowing are reasonable estimates of their fair value due to the short-term
nature of these financial instruments.

F-9

<PAGE>
NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

EARNINGS PER SHARE

In 1998, the Company adopted Statement of Financial Accounting Standards No.
128, "Earning Per Share" (SFAS 128). Accordingly, basic net loss per share was
computed based on the weighted average number of common shares outstanding
during the fiscal year. Dilutive net loss per share was computed based on the
weighted average number of common shares outstanding plus the shares that would
be outstanding assuming exercise of dilutive securities. For the years ended
March 31, 1999 and 1998, basic net loss per share equaled dilutive net loss per
share because of the Company's net loss.

STOCK-BASED COMPENSATION

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APBO No. 25), and related
interpretations, in accounting for its employee stock options and warrants
because, as discussed below, the alternative fair value accounting provided for
under Statement of Financial Accounting Standards No. 123 "Accounting for Stock
Based Compensation" (SFAS No. 123), requires use of highly subjective
assumptions in option valuation models. Under APBO No. 25, because the exercise
price of the Company's employee stock options and warrants is not less than fair
market price of the shares at the date of the grant, no compensation expense is
recognized in the financial statements. Pro forma information regarding net
income and earnings per share, determined as if the Company had accounted for
its employee stock options and warrants under the fair value method of SFAS No.
123, is presented in footnote E.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 establishes
standards for the way that public business enterprises report information about
operating segments in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial reports. It also establishes standards for related disclosures about
products and services, geographic areas, and major customers. SFAS No. 131 is
effective for financial statements for fiscal years beginning after December 15,
1997; therefore, the Company adopted the new requirements retroactively in
fiscal 1999. The company has two reportable segments: home health services and
rehabilitation services.

F-10

<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--CONTINUED

RECLASSIFICATIONS

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

B. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

MARCH 31
1999 1998
------------------------------------

Equipment $ 582,251 $ 568,113
Furniture and fixtures 123,639 121,210
Leaseholds 86,098 77,562
------------------------------------
791,988 766,885
Less accumulated depreciation 571,508 383,957
------------------------------------

$ 220,480 $ 382,928
====================================

F-11
<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

C. BORROWINGS

Borrowings consist of the following:

<TABLE>
<CAPTION>
MARCH 31
1999 1998
------------------------------------
<S> <C> <C>
$1,250,000 line of credit with interest payable monthly at 175 basis points
above the 90 day certificate of deposit rates (6.72% and 7.06% at March 31,
1999). This agreement is collateralized by two
certificates of deposits. Expires May 15, 1999 ............................ $ 901,000 $ 901,000

36 month term note payable in monthly principal and interest installments of
$1,389 through March 15, 2000 at an annual rate of
10%. This note is unsecured ............................................... 15,808 28,990

30 month term note payable in monthly principal installments of
$11,987 through October 1, 1998 at an annual rate of 8% ................... 0 71,922

30 month term note payable in monthly principal installments of $833
through October 1, 1998 at an annual rate of 8% ........................... 0 5,000

$275,000 line of credit with interest payable monthly at 200 basis points above
the 90 day certificate of deposit rate (6.75% at March 31, 1999). This
agreement is collateralized by a
certificate of deposit ..................................................... 275,000 0

$3,000,000 line of credit with interest payable monthly at 2% above the prime
rate as designated by Fleet National Bank (9.75% at March 31, 1999). This
line of credit is collateralized by accounts receivable and cash balances of
NuMED, NuMED Rehabilitation, Florida Nursing, Countryside, PA Medical
Concepts, Whole Person Health Care of Ohio, and Parke. Expires August 14,
1999

1,495,265 1,596,424

Other ......................................................................... 0 7,568
--------------------------
2,687,073 2,610,904
Less current portion of short-term and
long term borrowings .......................................................... 2,687,073 1,693,477
--------------------------

Long term borrowings, less current portion .................................... $ 0 $ 917,427
==========================
</TABLE>

F-12
<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

C. BORROWINGS--CONTINUED

The Company also has a $2,000,000 credit facility, collateralized by accounts
receivable and cash balances of NuMED and Total Professional. Advances under the
line are limited to the aggregate accounts receivable balances of qualified
accounts under 120 days old. This line bears interest at 2% above the prime rate
as designated by Fleet National Bank of Connecticut, N.A. (9.75% at March 31,
1999). There were no borrowings under the $2,000,000 credit facility at March
31, 1999 and 1998.

In connection with certain above borrowings, the company has pledged
certificates of deposit, totaling $1,176,000 and $1,275,980, respectively, at
March 31, 1999 and 1998.

As of March 31, 1999, NuMed has approximately $3,854,000 available out of a
total of $6,525,000 on existing lines of credit.

D. STOCKHOLDERS' EQUITY

During the year ended March 31, 1999, the Company reconciled the number of
shares of stock issued and outstanding with the registrar's detail shareholder
listing report. The process resulted in the recording of 126,974 additional
shares. During 1999 NuMED purchased 19,627 treasury shares at $0.47 per share.
No treasury shares were purchased in fiscal 1998.

On November 23, 1998, 744,680 shares of common stock at $0.47 (average closing
price for the previous five trading days) were issued to Jugal Taneja, former
Chief Executive Officer, as partial consideration for his Termination,
Noncompetition and Mutual Release Agreement. See Note I.

F-13
<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

E. STOCK AND BENEFIT PLANS

A summary of the Company's stock option activity, and related information for
the years ended March 31, 1999 and 1998 is shown in the following table in
accordance with SFAS No. 123:

<TABLE>
<CAPTION>
1999 1998
----------------------------------------------------------
WEIGHTED- WEIGHTED-
AVERAGE AVERAGE
OPTIONED EXERCISE OPTIONED EXERCISE
SHARES PRICE SHARES PRICE
----------------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding beginning of year 2,168,040 $ 3.06 2,168,040 $ 3.06
Granted--Market price equals exercise price 200,000 0.50
Granted--Market price is less than exercise -- --
price
Exercised -- --
Canceled (587,220) 4.33
==========================================================

Outstanding at end of year 1,780,820 $ 2.36 2,168,040 $ 3.06
==========================================================

Exercisable at end of year 1,563,320 $ 2.59 2,091,184 $ 3.07
==========================================================

Weighted--average fair value of options granted during year:
Market price equals exercise price $ 100,000 --
Market price is less than exercise -- --
price

Reserved for future grants 340,000 340,000
</TABLE>

Exercise prices for optioned shares outstanding as of March 31, 1999 ranged from
$0.50 to $5.00. A summary of these options by range of exercise prices is shown
as follows:

Outstanding Exercisable
------------------------------------ ----------------------------------- Weighted-
Weighted- Weighted- Average
Average Average Remaining
Range of Optioned Exercise Optioned Exercise Contractual
Exercise Prices Shares Price Shares Price Life (years)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
greater than $2.00 436,260 $ 0.92 236,260 $ 1.27 1.03
$2.00--$2.99 1,144,000 2.63 1,144,000 2.63 2.36
$3.00--$3.99 120,560 3.28 103,060 3.31 1.52
$4.00--$4.99 - - - - -
less than $4.99 80,000 5.00 80,000 5.00 *
------------------------------------------------------------------------------------------

1,780,820 $ 2.36 1,563,320 $ 2.59 2.10
==========================================================================================
</TABLE>

* no expiration

F-14
<PAGE>
NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

E. STOCK AND BENEFIT PLANS--CONTINUED

PRE-PLAN STOCK OPTIONS

During fiscal 1992 and 1993, the Board of Directors reserved 300,000 shares of
common stock for the formation of a stock plan for executives. 220,000 shares
were granted based at the average bid price which ranged from $2.19 to $5.00. As
of March 31, 1999 no options have been exercised.

1994 EMPLOYEE STOCK OPTION PLAN

Effective April 6, 1995, this plan provides for the grant of incentive stock
options and non-qualified stock options to purchase up to 750,000 shares of
common stock. Each option will have an exercise price equal to the fair market
value of the common stock on the date of the grant, except for the grants of
incentive stock options to beneficial owners of 10% or more of the common stock,
which will contain an exercise price equal to 110% of fair market value on the
date of grant. Employees and officers of NuMED and its subsidiaries are eligible
to participate in the 1994 Plan.

The options are exercisable after a six month holding period. Under the 1994
Employee Stock Option Plan, 20,000 options were exercised in the fiscal year
ended March 31, 1998 and no options were exercised in the fiscal year ended
March 31, 1999.

On November 23, 1998, 200,000 options were granted to one officer of the Company
at $0.50. The options have a one year vesting period accelerated upon a Change
in Control of the Company or termination of the officer other than for Cause as
defined in the Officer's Employment Agreement.

EMPLOYEE STOCK PURCHASE PLAN

Effective April 6, 1995, regular full-time or part-time employees (excluding
those who work less than 20 hours per week, those who have not completed a
ninety day orientation period and those employees who own 5% or more of the
common stock) are permitted to purchase common stock at 85% of the fair market
value up to a maximum of 15% of his or her total annual compensation. The plan
limits total employee purchases to a maximum of 250,000 shares and individual
employee purchases to $25,000 annually. Payroll deductions commenced in May
1995.

F-15

<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

E. STOCK AND BENEFIT PLANS--CONTINUED

OUTSIDE DIRECTOR AND ADVISORY BOARD MEMBER STOCK OPTION PLAN

This plan provides for an annual grant of non-qualified stock options to each
outside director of NuMED who is not an employee and to each Advisory Board
Member who is a professional representing each medical area in which NuMED
provides services. Each option has an exercise price equal to the fair market
value of the common stock on the date of grant, and options vest over a three
year period with one third vesting on each anniversary date of the grant.
Currently, NuMED has approximately 28 advisory board members and 5 outside
directors. Advisory Board Members who refer clients to NuMED are not permitted
to participate in the plan. The first date of grant was July 1, 1994 and options
to purchase 48,240 shares of common stock were granted to outside directors and
19,880 options were granted for eligible Advisory Board Members in fiscal 1996
and 1995. On July 1, 1996, 60,300 options to purchase were granted to outside
directors and 18,460 options were granted to Advisory Board Members. As of March
31, 1999, 81,140 options have vested.

401(K) PLAN

NuMED sponsors a 401(k) plan. Regular full-time or part-time employees
(excluding those who have not completed a ninety day orientation period and
those who work less than 500 hours per year) are eligible to participate in the
plan. NuMED may contribute to the plan on a discretionary basis. There is a
one-year service requirement for participation in the employer discretionary
matching contribution and a two-year cliff vesting requirement for each
discretionary employer contribution. NuMED did not contribute to the plan during
fiscal 1999 or 1998.

WARRANTS

During fiscal 1999 and 1998, no warrants were granted or cancelled.

The fair value for the above options and warrants was estimated at the date of
grant using a Black Scholes option pricing model with the following
weighted-average assumptions for all options granted in 1999:

Risk-free interest rate 4.98%
Expected life of option 3 years
Expected dividend yield of stock 0.00%
Expected volatility of stock 148%

F-16

<PAGE>

NuMed Home Health Care, Inc and Subsidiaries
Notes to Consolidated Financial Statements--Continued

E. STOCK AND BENEFIT PLANS--CONTINUED

The Black-Scholes option pricing model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. Because the Company's employee stock options and warrants have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, it is management's opinion that existing models do not
necessarily provide a reliable single measure of the fair value of its employee
stock options.

The amounts below represent the pro forma information calculated through the use
of the Black-Scholes model. For purposes of pro forma disclosures, the estimated
fair value of the options and warrants is amortized to expense over the options'
vesting period.

1999 1998
--------------------------------------

Pro forma net loss $ (2,288,227) $ (1,964,478)

Pro forma net loss per share $ (.43) $ (.40)

F. COMMITMENTS AND CONTINGENCIES

LEGAL PROCEEDINGS

The Company is involved in certain litigation and claims as a defendant or
plaintiff arising in the ordinary course of operations. Management, after the
advice of legal counsel, believes that the range of potential liabilities will
not materially affect the financial position of the Company.

PROFESSIONAL LIABILITY INSURANCE

NuMED carries professional liability insurance for $1,000,000 per occurrence and
aggregate claims up to $3,000,000 per year for its Home Health division and
$2,000,000 per occurrence and aggregate claims up to $4,000,000 per year for its
Rehabilitation division. The Company has no pending malpractice claims.

EMPLOYEE GROUP INSURANCE

NuMED is partially self-insured for its employee health insurance. The Company
has accrued its best estimate of self-insured liabilities, including incurred
but not reported claims. NuMED is responsible for individual employee claims up
to $35,000 and aggregate claims up to a certain pre-determined amount annually
based upon plan participation.

F-17

<PAGE>

NuMed Home Health Care, Inc and Subsidiaries
Notes to Consolidated Financial Statements--Continued

F. COMMITMENTS AND CONTINGENCIES--CONTINUED

LEASE COMMITMENTS

The Company leases its office space and certain office equipment under various
operating leases. Rent expense for the years ended March 31, 1999 and 1998 was
approximately $490,000 and $470,000, respectively. Future lease commitments are
as follows:

2000 $372,536
2001 273,290
2002 43,903
2003 23,052
2004 2582
Thereafter 0

G. RELATED PARTY TRANSACTIONS

A lease agreement was entered into by the Company commencing February 1, 1999
and terminating February 1, 2001 with the Erie Company, a Corporation which is
owned and controlled by a relative of a director of NuMED. The lease allows for
40% more space at essentially the same price of the prior space. The lease is at
fair market value. This agreement was approved by the Board of Directors prior
to its inception. The annual rental of $22,800 is payable in equal installments
of $1,900 monthly. $3,400 was expensed in fiscal year 1999.

H. RECOVERY OF CONTRACTUAL SETTLEMENT

The Rehabilitation division's largest customer in 1997 underwent a routine
Medicare audit of its cost report. The customer's fiscal intermediary, in its
interpretation of the Medicare prudent buyer guidelines, concluded that the cost
of certain professional contract therapy services provided by the Company
exceeded these guidelines. Management believes that the fiscal intermediary
conducting this audit applied an overreaching and erroneous interpretation of
applicable reimbursement guidelines.

The Company was contractually obligated to repay this customer the amount of
Medicare disallowed costs of $899,000. The entire amount paid was expensed in
1997. In fiscal 1999, the Company was successful in recovering $512,000 of the
disallowed cost in 1999. Another appeal for a portion of $190,000 of the balance
is set for December 1999.

F-18

<PAGE>

NuMed Home Health Care, Inc and Subsidiaries
Notes to Consolidated Financial Statements--Continued

I. OTHER EXPENSE

The Company signed a definitive agreement with Banyan Healthcare Services, Inc.,
a company formed to acquire health care related companies to consolidate and
provide full services. In June, 1998 the Company terminated its discussions. A
merger agreement was signed August 19, 1998 with Mednu Acquisition Corporation
("Mednu") and then it was terminated on October 14, 1998. In connection thereto,
the Company incurred professional fees of approximately $118,000 and $130,000
during the years ended March 31, 1999 and 1998, respectively, associated with
the transaction.

In November, 1998 the Company and Turkey Vulture Fund XIII, Ltd. ("Turkey
Vulture Fund"), a signficant shareholder of the company, were involved in a
proxy battle. On January 6, 1999, the Company and its Board of Directors reached
an agreement with Turkey Vulture Fund to settle all outstanding litigation and
present to NuMED's stockholders a combined slate of nominees to the Board of
Directors for this Meeting. Pursuant to the settlement agreement, Turkey Vulture
Fund agreed to cause the Committee to withdraw its proxy statement that had been
filed in opposition to the Board of Directors' proxy statement. The parties to
the settlement agreement agreed to take all appropriate steps pursuant to
applicable law necessary to allow the Turkey Vulture Fund to enter into a stock
purchase agreement for 744,680 shares of common stock directly from the company,
from its currently authorized but unissued stock for $350,000 in cash. The
settlement agreement provided that the closing was to occur within two days of
the shareholders' approval. However, Stockholder approval was not required under
Nevada law, and accordingly, no such approval was sought. As of June 21, 1999
the Stock Purchase Agreement with the Turkey Vulture Fund has not been
consummated. The costs attributed to this proxy battle was approximately
$212,000 during the year ended March 31, 1999.

As a result of the proxy settlement negotiations, on November 23, 1998 the
Company entered into a Termination, Noncompetition and Mutual Release Agreement
with Jugal K. Taneja, the former Chief Executive Officer. For the consideration
of $250,000 cash and 744,680 shares of common stock with a market value of
$350,000 the then Chief Executive Officer resigned and released the Company from
the obligations set forth in his employment agreement. Although the payment
related to both termination and non-competition, the Company determined that
there was no significant value to ascribe to the non-competition; therefore, the
entire payment was expensed.

F-19
<PAGE>

NuMed Home Health Care, Inc and Subsidiaries
Notes to Consolidated Financial Statements--Continued

J. SEGMENT REPORTING

The following schedule presents information about the Company's continuing
operations for different industry segments:

FISCAL YEAR ENDED
MARCH 31, 1999
<TABLE>
<CAPTION>

HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
----------- ----------- -------------- ---------
<S> <C> <C> <C> <C>
Revenue $17,086,163 $12,073,001 $5,013,162
Direct Expenses 12,543,008 8,334,516 4,208,492
Gross Profit 4,543,155 3,738,485 804,670
Depreciation and Amortization 576,514 274,023 302,491
Operating Loss Prior To Recovery
of Contractual Settlement (1,512,611) (443,540) (1,069,071)
Recovery of Contractual
Settlement (511,841) (511,841)
Operating Loss (1,000,770) (443,540) (557,230)
Interest Income 54,116 36,799 17,317
Interest Expense 303,972 206,701 97,271
Termination Payment and Proxy
Battle Costs 812,000 552,160 259,840
Other Expense 139,273 94,706 44,567
------- ------ ------
Total Other Expense 951,273 646,866 304,407
------- ------- -------
Loss Before Income Tax Expense (2,201,899) (1,260,308) (941,591)
Identifiable Assets 9,814,841 4,371,084 4,042,285 $1,401,472
Capital Expenditures 12,523 7,646 - 4,877

</TABLE>

F-20
<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

SEGMENT REPORTING--CONTINUED

FISCAL YEAR ENDED
MARCH 31, 1998
<TABLE>
<CAPTION>
HOME HEALTH REHABILITATION
TOTAL SERVICES SERVICES CORPORATE
----- -------- -------- ---------
<S> <C> <C> <C> <C>
Revenue $22,649,516 $15,164,754 $7,484,762
Direct Expenses 17,240,737 10,909,426 6,331,311
Gross Profit 5,408,779 4,255,328 1,153,451
Depreciation and Amortization 604,479 315,713 288,766
Operating Loss (1,176,297) (531,000) (645,297)
Interest Income 112,373 79,897 32,476
Interest Expense 215,572 153,272 62,300
Other Expense 152,759 108,612 44,147
Loss Before Income Tax Expense (1,432,255) (712,986) (719,269)
Identifiable Assets 10,755,904 4,092,622 5,206,176 $1,457,106
Capital Expenditures 129,289 56,627 16,326 56,336
</TABLE>

K. INCOME TAXES

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

1999 1998
--------------------------
Federal:
Current $ 0 $(184,211)
Deferred 0 679,034
------------------------
0 494,823
State and local 4,881 37,400
------------------------

Total $ 4,881 $ 532,223
========================

Deferred taxes reflect the impact of temporary differences between the financial
statements and tax bases of assets and liabilities, primarily relating to
accrued expenses and valuation allowances.

F-21

<PAGE>

NuMed Home Health Care, Inc. and Subsidiaries
Notes to Consolidated Financial Statements--Continued

K. INCOME TAXES--CONTINUED

The components of deferred tax assets and liabilities are as follows:

1999 1998
------------------------------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 1,822,872 $ 949,142
Accounts receivable reserves 200,426 113,870
Accrued expenses 84,387 43,388
Depreciation and amortization 17,637 8,127
Other 3,494 3,100
------------------------------------
2,128,816 1,117,627
Valuation allowances (2,128,816) (1,117,627)
Deferred tax liabilities 0 0
------------------------------------

NET DEFERRED TAX ASSETS $ 0 $ 0
====================================
</TABLE>

A reconciliation to the effective income tax rate to the Federal statutory rate
follows:
<TABLE>
<CAPTION>
1999 1998
--------------------------------
<S> <C> <C>
Tax at statutory rate (38)% (34)%
Amortization of excess purchase price 2 3
Other, net 4 2
State and local taxes (2) (2)
Net operating loss 27 26
Current year valuation reserve 6 42
--------------------------------

(1)% 37%
================================
</TABLE>

At March 31, 1999, the Company has federal net operating loss carryforwards, net
of carrybacks, of approximately $4,850,000 which will be available to offset
future taxable income through fiscal 2018. For financial reporting purposes,
valuation allowances have been recognized to offset the deferred tax assets
related to the net operating loss carryforwards due to the uncertainty as to
future realization.

F-22
<PAGE>

INDEX TO EXHIBITS

EXHIBIT NUMBER DESCRIPTION OF DOCUMENT
- -------------- -----------------------

3.4 Amended and Restated Bylaws of NuMED Home Health Care, Inc.

22 Consent of Deloitte & Touche, LLP

23 Consent of Ernst & Young LLP.

AMENDED AND RESTATED BYLAWS
OF
NUMED HOME HEALTH CARE, INC.

ARTICLE I

IDENTIFICATION

Section 1.01. NAME. The name of the corporation is NuMED Home
Health Care, Inc.

Section 1.02. REGISTERED OFFICE AND RESIDENT AGENT. The address of
the registered office of the corporation is One East First Street, Reno, Nevada
89501; and the name of the resident agent at this address is The Corporation
Trust Company of Nevada.

Section 1.03. FISCAL YEAR. The fiscal year of the corporation shall
begin on the 1st day of April in each year and end on the 31st day of March next
following.

ARTICLE II

STOCK

Section 2.01. ISSUANCE OF SHARES. Shares of stock may be issued for
labor, services, personal property, real estate or leases thereof or for money
from time to time by the Board of Directors. Treasury shares may be disposed of
by the corporation for such consideration as aforesaid from time to time by the
Board of Directors.

Section 2.02. PAYMENT OF SHARES. The consideration for the issuance
of shares may be paid, in whole or in part, in money, in other property, as
aforesaid, or in labor or services actually performed for the corporation. When
payment of the consideration for which shares are to be issued shall have been
received by the corporation, such shares shall be deemed to be fully paid and
nonassessable. Future services shall not constitute payment or part payment for
shares of the corporation. In the absence of fraud in the transaction, the
judgment of the Board of Directors as to the value of the consideration received
for shares shall be conclusive. No certificate shall be issued for any share
until the share is fully paid.

Section 2.03. CERTIFICATES REPRESENTING SHARES. Each holder of the
shares of stock of the corporation shall be entitled to a certificate signed by
the President or a Vice President and the Secretary or an Assistant Secretary of
the corporation, certifying the number of shares owned in the corporation.

Section 2.04. TRANSFER OF STOCK. The corporation shall register a
transfer of a stock certificate presented to it for transfer if:

(a) ENDORSEMENT. The certificate is properly endorsed by the
registered holder or by such holder's duly authorized attorney;

<PAGE>

(a) WITNESSING. The endorsement or endorsements are witnessed by
one witness unless this requirement is waived by the Secretary of the
corporation;

(c) ADVERSE CLAIMS. The corporation has no notice of any adverse
claims or has discharged any duty to inquire into any such claims;

(d) COLLECTION OF TAXES. There has been compliance with any
applicable law relating to the collection of taxes.

ARTICLE III

THE SHAREHOLDERS

Section 3.01. PLACE OF MEETINGS. Meetings of the Shareholders of
the corporation shall be held at any place within or without the State of Nevada
as may be designated in the notice thereof.

Section 3.02. ANNUAL MEETINGS. The annual meeting of the
stockholders shall be held as soon as practicable following the close of the
fiscal year, at a date and time to be specified by the Board of Directors. Said
meeting shall be for the purpose of electing directors for the ensuing year and
for the transaction of such other business as may come before the meeting. If
the election of directors shall not be held on the day designated for the annual
meeting of the stockholders, or at any adjournment thereof, then the Board of
Directors shall cause the election to be held at a special meeting of the
stockholders as soon thereafter as possible. Failure to hold the annual meeting
at the designated time shall not work a forfeiture or dissolution of the
corporation.

Section 3.03. SPECIAL MEETINGS. Special meetings of the
Shareholders may be called by the President, the Board of Directors, or by the
Secretary, and will be called by the President, Board of Directors or Secretary
at the written request (stating the purpose or purposes for which the meeting is
called) of the holders of not less than one-tenth of all the shares entitled to
vote at the meeting.

Section 3.04. NOTICE OF MEETINGS; WAIVER. Written notice stating
the place, day, and hour of the meeting and, in case of a special meeting the
purpose or purposes for which the meeting is called, shall be delivered not less
than ten (10) nor more than sixty (60) days before the date of the meeting,
either personally or by mail, by or at the direction of the President, the
Secretary, or the officer or persons calling the meeting, to each registered
holder entitled to vote at such meeting. If mailed, such notice shall be deemed
to be delivered when deposited in the United States mail addressed to the
registered holder at such holder's address as it appears on the stock transfer
books of the corporation, with postage on it prepaid. Waiver by a Shareholder in
writing of notice of a Shareholders' meeting shall constitute a waiver of notice
of the meeting, whether executed and/or delivered before or after such meeting.

Section 3.05. QUORUM. A majority of the shares entitled to vote,
represented in person or by proxy, shall constitute a quorum at a meeting of the
Shareholders. The Shareholders

2
<PAGE>

present at a duly organized meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough Shareholders to leave less
than a quorum. The act of a majority of the shares entitled to vote at a meeting
at which a quorum is present shall be the act of the Shareholders, unless a
greater number is required by applicable law.

Section 3.06. PROXIES. A Shareholder may vote either in person or
by proxy executed in writing by the Shareholder or by such Shareholder's duly
authorized attorney-in-fact. No proxy shall be valid after six months from the
date of its creation, unless the Shareholder provides for a longer period, not
exceeding seven years, in the proxy.

Section 3.07. ACTION WITHOUT A MEETING. Any action that may be
taken at a meeting of the Shareholders, or of a committee, may be taken without
a meeting if a consent in writing, setting forth the actions taken, shall be
signed by the Shareholders, or the members of the committee, holding at least a
majority of the voting power, unless a greater proportion of voting power is
required for such an action at a meeting, as the case may be.

Section 3.08. CONTROL SHARES ACT. The corporation shall not be
subject to the provisions of Nevada's Control Shares Act, NRS 78.378-78.3793, or
any substantially similar successor act.

ARTICLE IV

THE BOARD OF DIRECTORS

Section 4.01. NUMBER AND QUALIFICATIONS. The business and affairs
of the corporation shall be managed by a Board of six (6) Directors. The number
of Directors may be increased or decreased from time to time and at any time by
the Shareholders, or by the affirmative vote of a majority of the Board of
Directors holding office, but in no event shall be less than three (3) nor more
than nine (9).

Section 4.02. ELECTION. Members of the Board of Directors shall
hold office until the next annual meeting of Shareholders and until their
successors are duly elected and qualified or until such Director's earlier
resignation or removal. Notwithstanding anything herein to the contrary, any
Director may be removed from office at any time by the vote or written consent
of Shareholders representing not less than two-thirds of the issued and
outstanding stock entitled to vote.

Section 4.03. VACANCIES. Any vacancy occurring in the Board of
Directors may be filled by the affirmative vote of the majority of the remaining
Directors though less than a quorum of the Board of Directors. A Director
elected to fill a vacancy shall be elected for the unexpired term of such
Director's predecessor in office, subject to removal as aforesaid.

Section 4.04. PLACE OF MEETING. The Board of Directors, annual,
regular or special meetings, may be held either within or without the State of
Nevada.

<PAGE>
Section 4.05. ANNUAL MEETINGS. Immediately after the annual meeting
of the Shareholders, the Board of Directors may meet each year for the purpose
of organization, election of officers, and consideration of any other business
that may properly be brought before the meeting. No notice of any kind to either
old or new members of the Board of Directors for this annual meeting shall be
necessary.

Section 4.06. OTHER MEETINGS. Other meetings of the Board of
Directors may be held upon notice by letter, facsimile, cable, or electronic
mail, received not later than 5:00 p.m. two days before the day for the meeting,
or by word of mouth, telephone, or radiophone received not later than 5:00 p.m.
two days before the day for the meeting, upon the call of the President or
Secretary of the corporation at any place within or without the State of Nevada.
Notice of any meeting of the Board of Directors may be waived in writing signed
by the person or persons entitled to the notice, whether before or after the
time of the meeting. Neither the business to be transacted at, nor the purpose
of, any meeting of the Board of Directors need be specified in the notice or
waiver of notice of the meeting.

Section 4.07. QUORUM. A majority of the number of Directors holding
office shall constitute a quorum for the transaction of business. The act of the
majority of the Directors present at a meeting at which a quorum has been
achieved shall be the act of the Board of Directors unless the act of a greater
number is required by applicable law or these Bylaws.

Section 4.08. ACTION WITHOUT A MEETING. Any action that may be
taken at a meeting of the Directors, or of a committee, may be taken without a
meeting if a consent in writing, setting forth the actions taken, shall be
signed by all of the Directors, or all of the members of the committee, as the
case may be.

Section 4.09. LOANS. The Board of Directors shall have the
following power with respect to the lending of funds:

(a) Loan of Funds, Generally. To lend money in furtherance
of any of the purposes of the corporation; to invest the funds of the
corporation from time to time; and to take and hold any property as security for
the payment of funds so loaned or invested.

(b) Loan to Employees. To lend money to its employees, other
than its officers and Directors, and to otherwise assist its employees,
officers, and Directors.

ARTICLE V

THE OFFICERS

Section 5.01. OFFICERS. The officers of the corporation shall
consist of a President, Secretary and Treasurer, and may also include a
Chairperson of the Board, one or more Vice Presidents, Assistant Secretaries,
Assistant Treasurers, or such other officers or assistant officers or agents as
may be provided herein, or otherwise deemed necessary, from time to time by the
Board of Directors. Officers need not be Directors of the corporation. Each
officer so elected shall hold office until such officer's successor is elected
and qualified, but

<PAGE>

shall be subject to removal at any time by the vote or written consent of a
majority of the Directors. Any Officer may resign at any time upon written
notice to the Secretary of the corporation.

Section 5.02. VACANCIES. Whenever any vacancies shall occur in any
office by death, resignation, increase in the number of offices of the
corporation, or otherwise, the same shall be filled by the Board of Directors,
and the officer so elected shall hold office until such officer's successor is
elected and qualified, subject to removal as aforesaid.

Section 5.03. THE CHAIRPERSON OF THE BOARD OF DIRECTORS. The
Chairperson of the Board of Directors shall preside at all meetings of the
Directors, discharge all duties incumbent upon the presiding officer, and
perform such other duties as the Board of Directors may prescribe.

Section 5.04. THE PRESIDENT. The President shall have active
executive management of the operations of the corporation, subject, however, to
the control of the Board of Directors. The President shall preside at all
meetings of Shareholders, discharge all the duties incumbent upon a presiding
officer, and perform such other duties as these Bylaws provide or the Board of
Directors may prescribe. The President shall have full authority to execute
proxies in behalf of the corporation, to vote stock owned by it in any other
corporation, and to execute powers of attorney appointing other corporations,
partnerships, or individuals the agent of the corporation.

Section 5.05. THE VICE PRESIDENT. The Vice President shall perform
all duties incumbent upon the President during the absence or disability of the
President, and shall perform such other duties as these Bylaws may provide or
the Board of Directors may prescribe.

Section 5.06. THE SECRETARY. The Secretary shall attend all
meetings of the Shareholders and of the Board of Directors, and shall keep a
true and complete record of the proceedings of these meetings. The Secretary
shall be custodian of the records of the corporation. The Secretary shall attend
to the giving of all notices and shall perform such other duties as these Bylaws
may provide or the Board of Directors may prescribe.

Section 5.07. THE TREASURER. The Treasurer shall keep correct and
complete records of account, showing accurately at all times the financial
condition of the corporation. The Treasurer shall be the legal custodian of all
moneys, notes, securities, and other valuables that may from time to time come
into the possession of the corporation. The Treasurer shall immediately deposit
all funds of the corporation coming into the Treasurer's hands in some reliable
bank or other depositary to be designated by the Board of Directors, and shall
keep this bank account in the name of the corporation. The Treasurer shall
furnish at meetings of the Board of Directors, or whenever requested, a
statement of the financial condition of the corporation, and shall perform such
other duties as these Bylaws may provide or the Board of Directors may
prescribe. The Treasurer may be required to furnish bond in such amount as shall
be determined by the Board of Directors.

<PAGE>
Section 5.08. TRANSFER OF AUTHORITY. In case of the absence of any
officer of the corporation, or for any other reason that the Board of Directors
may deem sufficient, the Board of Directors may transfer the powers or duties of
that officer to any other officer or to any Director or employee of the
corporation, provided a majority of the full Board of Directors concurs.

ARTICLE VI

NEGOTIABLE INSTRUMENTS, DEEDS, AND CONTRACTS

All checks, drafts, notes, bonds, bills of exchange, and orders for
the payment of money of the corporation; all deeds, mortgages, and other written
contracts and agreements to which the corporation shall be a party; and all
assignments or endorsements of stock certificates, registered bonds, or other
securities owned by the corporation shall, unless otherwise required by law, or
otherwise authorized by the Board of Directors as hereinafter set forth, be
signed by the President or by anyone of the following officers: Vice President,
Secretary, or Treasurer. The Board of Directors may designate one or more
persons, officers or employees of the corporation, who may, in the name of the
corporation and in lieu of, or in addition to, those persons hereinabove named,
sign such instruments; and may authorize the use of facsimile signatures of any
of such persons. Any shares of stock issued by any other corporation and owned
or controlled by the corporation may be voted at any Shareholders' meeting of
the other corporation by the President of the corporation, if the President be
present; or, in the President's absence, by the Secretary of the corporation
and, in the event both the President and Secretary shall be absent, then by such
person as the President of the corporation shall, by duly executed proxy,
designate to represent the corporation at such Shareholders' meeting.

ARTICLE VII

INDEMNIFICATION OF OFFICERS, DIRECTORS,

EMPLOYEES AND AGENTS; INSURANCE

Section 7.01. INDEMNITY FOR CLAIMS NOT IN NAME OF CORPORATION. The
corporation must indemnify, to the maximum extent permitted by the law, 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, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the corporation, by reason of the fact that such person is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such action, suit or proceeding if such person acted in good faith and in a
manner which such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such

<PAGE>

person's conduct was unlawful. The termination of any action, suit or proceeding
by judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the corporation, and that, with
respect to any criminal action or proceeding, such person had reasonable cause
to believe that such person's conduct was unlawful.

Section 7.02. INDEMNITY FOR CLAIMS IN NAME OF CORPORATION. The
corporation must indemnify, to the maximum extent permitted by the law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against expenses, including attorneys' fees, actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests of
the corporation, but no indemnification shall be made in respect of any claim,
issue or matter as to which such person has been adjudged to be liable for
misconduct in the performance of such person's duty to the corporation unless
and only to the extent that the court in which such action or suit was brought
determines upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.

Section 7.03. SUCCESS ON MERITS. To the extent that a director,
officer, employee or agent of the corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding referred to in
sections 7.01 and 7.02, or in defense of any claim, issue or matter therein,
such person shall be indemnified by the corporation against expenses, including
attorneys' fees, actually and reasonably incurred by such person in connection
therewith.

Section 7.04. EXPENSES. Expenses incurred in defending a civil,
criminal, administrative or investigative action, suit or proceeding may be paid
by the corporation in advance of the final disposition of such action, suit or
proceeding as authorized by the board of directors in the specific case upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it is ultimately determined that such person
is entitled to be indemnified by the corporation as authorized in this section.

Section 7.05. OTHER SOURCES OF INDEMNITY. The indemnification
provided by this section:

(a) Does not exclude any other rights to which a person
seeking indemnification may be entitled under any article of incorporation,
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in such person's official capacity and as to action in another
capacity while holding such office; and

<PAGE>

(b) Shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.

Section 7.06. INSURANCE. The corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or as serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
such person and incurred by such person in any such capacity, or arising out of
such person's status as such, whether or not the corporation would have the
power to indemnify such person against such liability under the provisions of
this section.

ARTICLE VIII

AMENDMENTS

The power to alter, amend, or repeal these Bylaws, or adopt new
Bylaws, is vested in the Board of Directors, but the affirmative vote of a
majority of the Board of Directors holding office shall be necessary to effect
any such action.

EXHIBIT 22

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-90966) pertaining to the NuMED Home Health Care, Inc. Outside
Director and Advisory Board Member Stock Option Plan, the NuMED Home Health
Care, Inc. 1994 Employee Stock Option Plan and the NuMED Home Health Care, Inc.
Employee Stock Purchase Plan and (Form S-8 No. 33-96570) pertaining to the NuMED
Home Health Care, Inc. Retirement Profit Sharing 401(k) Plan of our report dated
June 21, 1999 with respect to the consolidated financial statements of NuMED
Home Health Care, Inc. included in its Annual Report (Form 10-KSB) for the year
ended March 31, 1999.

DELOITTE & TOUCHE LLP

Tampa, Florida
June 28, 1999

EXHIBIT 23

Consent of Independent Auditors

We consent to the incorporation by reference in the Registration Statements
(Form S-8 No. 33-90966) pertaining to the NuMED Home Health Care, Inc. Outside
Director and Advisory Board Member Stock Option Plan, the NuMED Home Health
Care, Inc. 1994 Employee Stock Option Plan and the NuMED Home Health Care, Inc.
Employee Stock Purchase Plan and (Form S-8 No. 33-96570) pertaining to the NuMED
Home Health Care, Inc. Retirement Profit Sharing 401(k) Plan of our report dated
June 29, 1998 with respect to the consolidated financial statements of NuMED
Home Health Care, Inc. for the year ended March 31, 1998 included in its Annual
Report (Form 10-KSB) for the year ended March 31, 1999.

ERNST & YOUNG LLP

Cleveland, Ohio
June 28, 1999