UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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

                          Amendment No. 2 to Form 10-K

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

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

                   For the fiscal year ended February 28, 2004

                        Commission File Number: 003-08955

                    COMPREHENSIVE HEALTHCARE SOLUTIONS, INC.
             (Exact name of registrant as specified in its charter)

     Delaware                                               58-0962699
(State of other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)

              45 Ludlow Street, Suite 602, Yonkers, New York 10705
               (Address of principal executive offices) (Zip Code)

                 (914) 375-7591 (Registrant's telephone number,
                              including area code)

                       (Former Address, since last report)

Securities registered pursuant to Section 12(g) of the Act. Common Stock,
                                                            $.10 par value

Name of each exchange on which registered.   NASD OTC Bulletin Board

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve 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. |X| YES |_| NO

The aggregate market value of the outstanding Common Stock of the registrant
held by non-affiliates of the registrant as of June11, 2004, based on the
average bid and asked price of the Common Stock on the NASD OTC Bulletin Board
on said date was $ 7,633,172.

As of June 14, 2004, the Registrant had outstanding 12,151,328 shares of common
stock.

The Company is filing this amended 10k due to the fact that the financial
statements for this period were not audited by an accountant who was registered
with the Public Company Accounting Oversight Board ("PCAOB"). The accountant has
applied for registration with PCAOB and has not received approval or denial with
regard to its application. In the interim, the Company has engaged an accountant
registered with the PCAOB in the event that the current accountant is not
registered in a timely manner. The Company intends to file an amended 10k with
the audited financial statements as soon as possible.



                           NANTUCKET INDUSTRIES, INC.

                               TABLE OF CONTENTS

                                                                          Page #
                                                                          ------
PART I

Business ...................................................................  1

Properties ................................................................. 18

Legal Proceedings .......................................................... 19

Submission of Matters to a Vote of Security Holders ........................ 19

PART II

Market for registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities........................... 20

Selected Financial Data .................................................... 20

Management's Discussion and Analysis of financial Condition and
Results of Operations ...................................................... 21

Quantitative and Qualitative Disclosures about Market Risk ................. 25

Financial Statements and Supplementary Data ................................ F-1
                                                                            F-19
Changes in Disagreements with Accountants on Accounting and
Financial Disclosure ....................................................... 26

Controls and Procedures .................................................... 26

PART III

Directors and Executive Officers of the Registrant ......................... 27

Executive Compensation ..................................................... 27

Security Ownership of Certain Beneficial Owners and Management ............. 29

Certain Relationships and Related Transaction .............................. 29

Principal Accounting Fees and Services ..................................... 30

PART IV

Exhibits, Financial Statement Schedules and Reports on Form 8-K ............ 30

SIGNATURES ................................................................. 31



ITEM 1. BUSINESS

We are directly, and indirectly through our subsidiaries, Accutone Inc. and
Interstate Hearing Aid Service Inc., in the business of distributing and
dispensing custom hearing aids. Accutone Inc. was formed under the laws of the
State of Pennsylvania in October 1996 for the purpose of engaging in the
manufacture, dispensing, and distribution of hearing aids. In 1998, Accutone
acquired 100% ownership of Interstate, a Pennsylvania corporation and an FDA
licensed hearing aid manufacturer which had been in the hearing aid business for
approximately 35 years. In the Fall of 2000, Accutone discontinued all
manufacturing operations and changed the focus of its marketing to be
concentrated through Interstate Hearing Aid Service, Inc. to include, not only
the individual, self-pay patients, but health care entities and organizations
which could serve as patient referral sources for us.

History

Until the end of October 1999, when we discontinued all prior business
activities, we produced and distributed popular priced branded fashion
undergarments for sale, throughout the United States, to mass merchandisers and
national chains. We produced and sold our men's underwear products primarily
under licensed labels including "Brittania" and "Arrow" and, until March 31,
1998, we also produced women's innerwear under the GUESS? label, for sale to
department and specialty stores. From October 31, 1999 up to and including the
period that we effectuated the reverse acquisition of Accutone and Interstate
Hearing Aid we were a dormant corporation.

Subsequent to the reverse acquisition our only assets and business were those
attributable to the acquired group of corporations. Until the summer of 2000, a
small portion of our business consisted of manufacturing operations. However,
because of changes in the competitive climate of the hearing aid manufacturing
industry and the comparatively small level of our operations, all manufacturing
was discontinued on July 30, 2000. This marked the beginning of an ongoing
change in our revised business plan, which now encompasses concentrating our
marketing to nursing homes, hospitals, out-patient clinics, members of managed
health care providers, such as health maintenance organizations ("HMO's"),
Physician Provider Organizations (physician group practices known as "PPO's"),
union health plans, medicare, and medicaid while considering the expansion of an
advertising campaign aimed at individuals in the non-insured self- pay market.
Since implementing our revised business plan in October 2000, we have entered
into contracts through Interstate Hearing Aid with approximately 65 managed
health care provider organizations, unions, local municipalities and secondary
health care insurance providers and pediatric care organizations in the New York
metropolitan area, including Medicare and Medicaid. We are continually in
negotiations with other such organizations and we anticipate that the number of
such organizations will continue to grow. As a result of our additional
marketing plan, changes and efforts, we have contracted with seven early
intervention agencies. We are currently negotiating to sublease space in the
offices of Early Achievers, Inc., An early intervention agency with whom we have
signed an exclusive contract for audiological early intervention services.

In addition to marketing our services, we anticipate that when and if our
capitalization improves, we will expand our audiological staff and the level of
our operations and the related potential profitability. Our long term goal is to
expand all segments of our operations, both in scope of services and in a wider
geographic area, as well as to change emphasis of services to include a much
larger proportion of private pay patients in an attempt to increase gross
profits. Currently, approximately 80% of our audiology revenues are generated
from third party payors. The reduction in payment levels from Medicaid has
negatively impacted our profit margins.

We are also currently providing in-home fitting and dispensing services in the
State of Pennsylvania, where our customer base is located in a somewhat rural
area, making home visits convenient for our customers. We have four Pennsylvania
Registered Hearing Aid Fitters who are available to us for in-home, as well as
office visits in Pennsylvania. To date because of our financial constraints, we
have been unable to utilize these Hearing Aid Fitters to their fullest capacity.
Through our offices and our in-home services, we offer a full range of
audiological products and services for the hearing impaired. (see subsequent
events)

                                       1


In order to make our services via Interstate Hearing Aid acceptable to managed
care and health insurance companies, we must address their particular concerns.
This will require that we have:

     *    service locations which are conveniently accessible to their members;
     *    an adequate staff of highly qualified audiologists;
     *    a full range of high quality hearing aid products;
     *    competitive pricing; and
     *    adequate product liability and professional malpractice insurance
          coverage.

We are continually endeavoring to put all of these elements into place.
Therefore, our primary goals in the audiological services segment of our
business during the next eighteen months include:

     *    Significant marketing efforts to increase exposure and sales to
          private pay patients to increase much higher profit margins.

     *    A concentration of marketing efforts to nursing home facilities and
          early intervention agencies to provide audiological services;

     *    opening and establishing operations at sales and dispensing offices
          on-site at additional nursing home facilities in the New York
          metropolitan area;

     *    increasing the number of audiologists on our staff to service these
          additional facilities;

     *    hiring a chief financial officer, a chief operations officer and a
          director of marketing.

Upon receipt of the necessary capital as set forth herein, we also intend to
implement an aggressive advertising and marketing campaign aimed at individuals
and managed health care organizations and to utilize the knowledge and
experience of the professional advisory board which consists of 6 individuals
with high levels of experience in hearing health care, gerontology, and early
intervention, accounting, marketing and practice development concepts. We have
also made positive strides and have been successful in identifying potential
acquisition targets in medically related industries (see subsequent events)
which we believe will add a material increase in gross revenues and
profitability.

We estimate that in order to achieve these goals, many of which will involve the
increase and expansion of marketing the "Discount Medical Service Cards" of our
recently acquired, Comprehensive Network Solutions, Inc. as outlined in our
subsequent events discussion. Although there can be no guarantees of
successfully attaining these goals, management will be actively pursuing same.
We will require financing from sources other than cash flow, within the next six
to eighteen months, in an amount ranging from $1,000,000 to $1,500,000. Our
present plan for financing focuses on raising funds through a private placement
of our securities. Although we have had limited success in raising private
placement funds, our efforts have fallen short of our previous expectations.
Although the capital markets have a perceived improvement, we are cautiously
optimistic of our abilities to achieve these goals. Along these lines, we are
continually and actively pursuing potential businesses alliances with privately
held businesses in like and or compatible medically related industries. We
believe that the addition of both sales volume growth and profitability will
greatly assist us in successfully raising additional capital. (see subsequent
events)

                                       2


Overview of the Industry

Hearing Loss

We continue to believe and are reinforced by nationwide statistics that hearing
loss is one of the most prevalent chronic health conditions in the United
States, and that its incidence is on the rise. Hearing loss occurs when there is
damage to the auditory system, possibly caused by heredity, aging, noise
exposure, illness, trauma, and/or some medications. Some hearing loss is
temporary and/or can be corrected with medical or surgical treatment. Other
types of hearing loss can be effectively managed with hearing devices. Although
hearing loss traditionally has been considered an "old person's" condition, in
several reports, the Better Hearing Institute reported that hearing loss is
becoming increasingly common among the "Baby Boomer" 40 to 65 year old segment
of the population. This is widely believed to be the result of extreme noise
exposure, possibly because of a history of excessive exposure to extremely high
decibel rock-and-roll concerts and the widespread use of "walkman" type radios
(which produce a concentrated level of noise in extremely close proximity to the
ear). The degree of hearing loss is often directly related to the amount of
exposure and the intensity of loud noise. However, damaging noise does not
necessarily have to result from extreme situations. Even cumulative exposure to
everyday noises, such as the sounds of daily traffic, construction work, or a
noisy office can contribute to hearing loss.

Hearing loss can have serious implications, leading to communication disorders,
isolation, depression, cognitive dysfunction, and overall decline in quality of
life. While hearing loss has historically been considered an effect of aging,
recently some government agencies, health care organizations and insurance
companies have begun increasing their scope of services and coverage's to
include early interventions for children up to the age of 12. While a great many
people suffering from hearing loss can be helped with the use of hearing aids, a
survey by the National Council on the Aging (NCOA) indicated that older adults
with hearing impairments, who do not wear hearing aids, are more likely to
report sadness and depression, worry and anxiety, paranoia, diminished social
activity, and greater insecurity than those who wear aids. We believe that the
products and technologies currently available are broad and varied and in most
instances can afford to the hearing impaired individual the amplification
necessary to afford them the ability to have improved hearing and enjoy a full
and normal lifestyle. In addition, we believe that these people could also
benefit from the use of other assisted listening devices, such as telephone or
television amplifiers (see "Products", below).

The Future of the Industry

While we recognize that in the past and still today, many members of the public
have been reluctant to use hearing aids, we believe that this industry can be
expected to experience substantial and continuing growth during the coming
decades. Management recognizes our ability to take advantage of these increases
and that we must have required additional capital and infrastructure to be
successful. Although the statistics of the last three years have shown minor
growth, Sergei Kochkin, PhD, an officer and board member of the Better Hearing
Institute and a director of market development at Knowles Electronics, has
written a market research article in which he concluded that, "With modern
estimates of hearing loss ranging from 24 million to 28 million and hearing
instrument penetration at only 21% to 22% historically, it is of interest to
determine the extent to which the more than 20 million hearing- impaired
individuals who do not use hearing instruments are, in fact, current or future
candidates for hearing aids. In the past we have conservatively estimated that
if even 25% of the non-owner market were convinced to purchase hearing aids over
the next five years that the market would double and retailers would realize an
incremental $1 billion a year."

Some of the factors which we believe will contribute to a measured expansion of
hearing aid use and audiological services include the following:

     -    A rapidly aging population (the "graying of America") accompanied by a
          natural, progressive deterioration in hearing acuity;
     -    Wide exposure to excessive noise, pollution among younger segments of
          the population resulting in ever increasing damage to hearing;

                                       3


     -    A growing acceptance among all segments of the population of the use
          of hearing aids;
     -    The availability of smaller and less visible hearing aids;
     -    Advances in hearing aid technology, including computerized digital
          products;
     -    Decreasing prices of hearing aids;
     -    Increasing coverage of hearing aid products by HMO's, PPO's, unions,
          employer-sponsored groups, and Medicare and Medicaid to offset the
          costs to the end user; and
     -    Substantial increase in testing of pediatric patients since the
          medical profession has become aware of hearing losses in infants and
          toddlers.

As a result of the increase in the early intervention area of audiology, many
health care organizations, managed care organizations and health care insurance
companies (including medicaid) have begun to reimburse the costs of implementing
early intervention testing procedures in their reimbursement schedules. We are
currently expanding our marketing efforts in the early intervention segment of
our business, mainly through the efforts of John H. Treglia our president and
CEO.

Our Sales and Dispensing Offices

We are currently operating three hearing aid sales and audiological testing
facilities. These are retail sales and dispensing offices, which are located in
medical arts buildings, independent store-fronts, and, in one case, on-site at a
medical outpatient center. One of our retail offices is located in Yonkers, New
York, one is in Mount Vernon, New York, and one is in Forty Fort, Pennsylvania.
Our Mount Vernon facility is located on-site at The Wartburg Home of The
Evangelical Lutheran Church in its 16,000 square foot outpatient facility.

Our Yonkers office and our Pennsylvania office are open and functioning on a
full time basis. We had expected that another office in Yonkers, which was
recently closed, would provide full time services on an as needed basis.
However, such offices were recently closed since it failed to meet our projected
profitability. Our Wartburg out-patient office is currently open two days per
week and our Wartburg Nursing Home office is currently open an average of four
days per month, on an as-needed basis. Our Ludlow Street Yonkers office is
staffed and supervised by a full-time, licensed and certified audiologist and
one full-time patient care coordinator. Our Pennsylvania office operates on a
full time basis and is staffed by a state licensed hearing aid dispenser, as
required by applicable Pennsylvania law and at least one clerical employee.

Our current New York sales and dispensing offices range from 600 to 1,100 square
feet in size. These include our Yonkers office and our on-site Wartburg
Outpatient Facility office, all of which are fully equipped with:

     *    soundproof testing booths and state-of-the-art testing equipment that
          meets or exceeds all state standards; and

     *    a full range of diagnostic and auditory-vestibular tests that assist
          referring physicians in the treatment of patients with hearing and
          balance disorders.

Our on-site nursing home offices, which do not have their own existing on-site
testing booths and audiological equipment, are equipped with our portable
electronic audiological equipment brought in by the audiologist at each visit.
This equipment meets or exceeds the requirements of all federal and state
agencies as well as all third-party payers. We have found this equipment to be
adequate to serve the needs of almost all patients at these facilities and
continually upgrade all equipment to the latest industry standards.

On-Site Offices

The Wartburg Adult Care Community Outpatient Clinic and The Wartburg Nursing
Home

                                       4


We have entered into lease and service agreements with The Wartburg Adult Care
Community Outpatient Clinic and the Wartburg Nursing Home. These facilities are
part of the Wartburg Adult Care Community which is located in a 36-acre campus
in the town of Mount Vernon in Westchester County, New York. The Wartburg is a
comprehensive senior health care complex which includes residential assisted
living, nursing home, and critical care facilities as well as a 16,000 square
foot Outpatient Health Services complex serving area residents as well as
persons residing within the Wartburg facilities. Our contracts with the
outpatient clinic and the nursing home provide for our:


     *    Operating an on-site dispensing and testing office in the Wartburg
          Diagnostic and Treatment Center (outpatient center). Under the terms
          of the contract, our office has use, at no cost, of a common reception
          and waiting room and reception personnel in the Wartburg, who will
          schedule and coordinate patient appointments. This facility is fully
          equipped, including a sound- proof booth, and all required electronic
          testing equipment as well as all other peripheral equipment necessary
          for appropriate audiological testing and the fitting and dispensing of
          hearing aids. This office is used for the treatment of both
          non-resident outpatients and Wartburg assisted living facility
          residents. We are currently in the process of expanding the patient
          base to include early intervention (pediatric testing and evaluation)
          as well as dispensing of hearing aids when deemed appropriate and
          necessary.

     *    Operating a separate on-site dispensing and testing facility in
          Wartburg nursing home (The Wartburg Home of the Evangelical Lutheran
          Church, Inc.). Wartburg provides treatment and waiting room areas
          within the nursing home to be used as an audiological testing,
          fitting, and dispensing facility for its nursing home patients,
          utilizing portable and mobile, state of the art, testing and fitting
          equipment.

Presently, the Wartburg outpatient facility handles six hundred patient visits
per month. We had anticipated that during the past six months, we would devote a
total of approximately two to three days per week to patients at the Wartburg
facilities, but we fell short of our expectations. The Wartburg Diagnostic and
Treatment Center had advised us that it intended to actively promote its
outpatient services but financial constraints have prohibited them from doing
so. We will continue to expand our own marketing program as soon as the
financial resources are available to us. We intend to coordinate such a
marketing program with the Wartburg so as to maximize promotion of our Wartburg
outpatient facility, as well as our other facilities. Because of financial
constraints, the Wartburg was unable to fully implement its projected marketing
program. This has continued to negatively impact our projected growth of our
audiological services and hearing aid sales. It is our belief that our continued
coordinated marketing efforts and the physical presence of our facility on-site,
will increase patient awareness of our services. To date, we have not been as
successful in our business operations as our original projections had lead us to
believe. With anticipated increases in capital and fording, we continue to
believe these goals of additional revenues and/profitability can be attained. In
response to the expected growth in pediatric and early intervention services
which are to be added to those services we already provide, the Wartburg is in
the process of constructing 2 separate waiting rooms for its patients. It is
intended that one room will be for seniors and one will be for pediatric
patients. This construction is not being undertaken solely to accommodate our
patients but also for the Wartburg's expected entrance into pediatric medical,
psychiatric and physical rehabilitation services. As a result, we intend to
increase our personnel and operating hours at the Wartburg Out-Patient Clinic in
order to adequately service the non-resident outpatients that will be added, as
well as the full time residents/patients of the facility.

Existing Contracts with Nursing Home Facilities

We have presently entered into contracts with approximately fifty eight nursing
homes for the establishment of on-site offices and our appointment as sole
provider of audiological services and products during the terms of the
contracts. The following sets forth the nursing home facilities that we have
entered into such contracts:

                                       5


Daughters of Jacob Nursing & Rehabilitation Center         Bronx
Daughters of Jacob Adult Care                              Bronx
Schervier Nursing Care Center                              Bronx
Judith Lynn Adult Home                                     Bronx
Hebrew Hospital Home                                       Bronx
Laconia Nursing Home                                       Bronx
Hebrew Hospital Home                                       Greenburgh
Saint Joseph's Hospital Nursing Home                       Yonkers
New Sans Souci Nursing Home                                Yonkers
The Wartburg                                               Mount Vernon
Outpatient Health Services @ The Wartburg                  Mount Vernon
Shalom Nursing Home                                        Mount Vernon
ICF                                                        Mount Vernon
Dumont Masonic Home                                        New Rochelle
Bethel Nursing & Rehabilitation Center
Croton-on-Hudson
Bethel Nursing Home, Inc.                                  Ossining
Cortlandt Manor Nursing Care Center                        Cortlandt Manor
Northern Manor Geriatric Care Center                       Nanuet
Northern Metropolitan RHCF                                 Monsey
Northern Riverview Nursing & Rehabilitation Center         Haverstraw
Wingate at Duchess                                         Fishkill
Wingate at St. Francis                                     Beacon
Wingate at Ulster                                          Highland
The Fountains at RiverVue                                  Tuckahoe
Eden Park Nursing Home                                     Poughkeepsie
Eden Park Health Care Center                               E. Greenbush
(Rensselaer Co.)
Oakwood Care Center                                        Oakdale
(Suffolk Co.)
Florence Nightingale Rehabilitation & Nursing Center       Manhattan
Somers Manor Nursing Home, Inc.                            Somers
Laconia Nursing Home                                       Bronx
Schervier Nursing Home                                     Bronx
New San Souci Health Care                                  Yonkers
Fieldston Lodge                                            Bronx
Throgs Neck Extended Care*                                 Bronx
Pelham Parkway Nursing Home*                               Bronx
Concourse Rehabilitation & Nursing Center                  Bronx
Waterview Hills Nursing Home                               Purdys
Northwoods Facilities (3 facilities)                       Albany
Victory Lake Nursing Home                                  Hyde Park

In the past we have aggressively pursued contracts with new nursing home
facilities (especially those that have been made available to us pursuant to the
needs of our association with Park Avenue Medical Associates, PC as set forth
herein). However, we have currently curtailed these efforts due to capital
constraints which prevent us from adding to our professional staff of
audiologists and therefore adding to the number of nursing home and senior care
facilities we are currently unable to service.

We are also in process of renegotiating existing contracts with these facilities
to add additional revenues to make up for the cuts in Medicaid and Medicare
reimbursement rate.

Contract With Park Avenue Health Care Management Inc.

On February 15, 2002, we executed an Agreement with Park Avenue Health Care
Management Inc. and its affiliate, Park Avenue Medical Associates, P.C.
(referred to herein, collectively, as "Park Avenue") which closed on February
28, 2002. Pursuant to this Agreement, Park Avenue contributed its entire
Audiology business in consideration for the issuance of 1,200,000 of our shares
to Park Avenue. Park Avenue is a health care management organization which
services nursing homes, hospitals, assisted living facilities, adult day care
centers, adult homes, and senior outpatient clinics. Park Avenue directly
employs medical professional personnel, including physicians in both general and
specialty practices and other health care professionals such as podiatrists,
audiologists, and optometrists.

                                       6


Nursing homes contract with Park Avenue for the services of its medical
professionals, on a pre-determined schedule or on an as-needed basis. Park
Avenue presently provides staff to approximately seventy-two nursing homes. We
anticipate that with additional operating capital we will be able to service a
majority of these nursing homes and senior care facilities.

Our Services

We provide all of our patients at our retail, nursing home, and out-patient
clinic sales and dispensing offices with comprehensive hearing care services
consisting of the following:

     -    an interview with one of our audiologists or patient care coordinators
          respecting the hearing problems and all factors which may contribute
          to or cause such problems;
     -    an internal and external examination of the patient's ear performed by
          one of our audiologists;
     -    an initial hearing screening to establish a permanent base-line
          hearing acuity and to determine whether the patient has a hearing
          problem;
     -    if the initial screening indicates that there is a hearing problem,
          the audiologist will then perform additional testing and do a complete
          audiological evaluation, including:

                  *        air conduction;
                  *        bone conduction;
                  *        speech recognition thresholds;
                  *        most comfortable hearing level;
                  *        uncomfortable hearing level;
                  *        site of lesion tests, if required;
                  *        tymponometry;
                  *        acoustic reflex testing; and
                  *        acoustic reflex decay.

The patient is then counseled with respect to the results of the audiological
testing and evaluation, the nature and extent of any hearing defects found, the
possible effects of such hearing aids on the patient's lifestyle, and the
options for treatment with a hearing aid; and if it is determined that a hearing
aid would be of benefit to the patient, an appropriate aid will be prescribed
and fitted; the fitting process will include taking impressions of the affected
ear or ears.

All hearing aids that we prescribe are custom made for the individual patient.
Delivery is usually made within one week to ten days. When the patient receives
the hearing aid, the audiologist explains the properties and capabilities of the
hearing aid, and demonstrates proper insertion, removal, maintenance techniques,
and the operation of all the features of the hearing aid. The patient is then
re-tested wearing the hearing aid to enable the audiologist to determine whether
the hearing aid is performing to prescribed standards and to evaluate the
benefit to the patient. After one week, the patient care coordinator will
contact the patient by telephone to discuss any problems or questions and to
schedule a follow-up appointment if the patient or the patient care coordinator
feels it is needed.

We provide follow-up services including, where necessary, additional personal
contacts with the patient and/or the patient's family, for the purpose of
monitoring and guiding the patient's progress in successfully utilizing the
hearing aid and making all adjustments required to insure a successful outcome.
We also have a family hearing counseling program to help the patient and his or
her family understand the proper use of their hearing products and the nature of
their disability. These services are provided on an as needed basis as
determined by the licensed audiologists.

                                       7


In addition to all of the foregoing services, at the Wartburg Nursing Home, and
at all on-site offices which we may establish at other nursing homes in the
future:

     *    We continually coordinate with these facilities for the payments which
          have not been reimbursed by the various third party payors and are to
          be paid to us by the facilities or the patients (this does not include
          Medicaid beneficiaries).

     *    we work directly with the director of the facility and nursing staff
          to insure that all residents and patients are provided any required
          audiological assistance on a timely basis.

     *    patient's appointments are scheduled by the nursing home personnel at
          intervals of approximately one-half hour to forty-five minutes;

     *    all patients are seen at the direction and referral of his or her ear
          nose and throat specialist or primary care physician;

     *    we provide base-line hearing screening for all new admissions
          including residents and short-term rehab patients; and

     *    results of all procedures are reported to the attending physician and
          become a part of the patient's permanent medical records.

Early Intervention Services

While hearing loss has historically been considered an effect of aging,
recently health care professionals as well as some government agencies, health
care organizations and insurance companies have begun to increase their scope of
services and coverage's to include early interventions for infants and children
up to the age of 16. The reason for the rise in early intervention is due to
the fact that many organizations now believe that pediatric hearing impairment
may be the cause, or part of the reason, for such disorders as Attention Deficit
Disorder, Dyslexia, disciplinary problems, educational underachievement and
disfunctional behavior with a family setting, especially with siblings.
Unfortunately, many of these problems have been deemed to be caused by alcohol
and drug abuse by the child's mother or other prenatal problems which were not
previously brought to light. We currently have referral contracts with and
provide audiological services to the following agencies:

                           -First Step Services, Inc.
                           -Los Ninos Community Services
                           -Speech and Communications Professionals
                           -Project Rainbow
                           -Secundino Services, Inc
                           -Early Achievers Services, Inc.
                           -Paxxon Healthcare Services, LLC

As a result of our providing such services for these companies, we are
continually approached by similar organizations and we believe that we can
attain substantial growth in this new source of revenues to our company if our
operating capital improves.

We were in negotiations to enter into a business combination with Paxxon
Healthcare Services, Inc. However, we have ceased negotiations with Paxxon and
we do not currently anticipate that we will enter into any form of business
combination with Paxxon.

Our Products

A hearing aid is an electronic, battery-operated device that amplifies and
transforms sound to allow for improved communications. All hearing aids consist
of three components: the microphone, the amplifier, and the loudspeaker. Sound
is received through the microphone, which vibrates in response to sound waves
and converts the sound waves to electrical signals. The amplifier enhances the
intensity of these signals before transmitting them to the loudspeaker where
they are converted back to sound waves for broadcast in the ear.

                                       8


All hearing aids that we prescribe are custom made for the individual patient.
We have selected a variety of major worldwide manufacturers' products, to make
available through our offices, in order to provide the best possible hearing aid
products for our patients. These include the latest digital technology available
from Magnatone, Siemens, Phonak, Sonotome, Lori/Unitron, United Hearing Systems,
and others. We are also able to make available, by special order, a large
selection of other hearing enhancement devices including telephone and
television amplifiers, telecaptioners and decoders, pocket talkers, specially
adapted telephones, alarm clocks, doorbells and fire alarms.

Customers

To date, we have continued to expand our patient referral base by securing our
appointment as the potential sole providers of hearing aids and audiological
services to nursing homes, out-patient facilities, and adult group homes with
whom we have contractual arrangements. We have also established relationships
and have signed contacts with other types of health care organizations, such as
HMO's and PPO's. Our affiliations with these types of health care organizations
and facilities have grown rapidly to the extent that our current capital
structure has allowed. Our customers include:

     *    word of mouth generated by our existing patient base;
     *    patients who are participating members of health care organizations,
          who come to us as a result of contractual (or in some cases,
          non-contractual) arrangements with such organizations, appointing us
          as an approved, preferred, or sole, provider of audiological care to
          their members. As a provider, we are listed in the organization's
          provider manual as a source for audiological services and products;
     *    patients who are referred to us by out-patient health care clinics and
          hospitals;
     *    patients who are referred to us, on an out-patient basis, by nursing
          homes and senior care facilities at which they reside;
     *    patients who are referred to us by area physicians with whom we have
          established relationships;
     *    patients who are treated on an in-patient basis in nursing homes or
          senior care facilities; and
     *    pediatric patients referred to us by local school districts, pediatric
          managed care organizations and local pediatric physicians.

Existing Contracts With Health Care Providers and Third-Party Payers

To date we have entered into contracts for the provision of audiological
services with an excess of sixty health care provider organizations, as well as
third-party payers such as Medicare and New York State Medicaid. We expect these
additional contracts to continue to grow as we progress. We believe that we
currently have sufficient staff and facilities which are geographically
accessible for all participants in organizations which we have contracted with.
Some of these groups and organizations include:

Medicare Federal Health Care Program, Parts A and B;
New York State Medical Assistance (Title XIX) Program/Medicaid;
Independent Health Association;
Magnacare Health Care;
Empire Blue Cross Blue Shield Health P.P.O.;
Corvel Corporation;
Oxford Health Plans (New York, Inc.);
Health Insurance Plan of Greater New York and Group;
Community Choice Health Plan, Inc.;
Better Health Advantage, Inc.;
Fidelis Health Care, Inc.
Health Source Westchester Pre-Paid Health Services Plan, Inc.;
Workers Compensation Agreement;
Preferred Choice Management Systems;
Speech and Communications Professionals;

                                       9


Los Ninos Services, Inc.
Genesis Health Care, Inc.
Pomco
National Ear Care Plan, Inc.
Paxxon Health Care Services
Visiting Nurse Services of Bronx/Westchester Counties
United Health Care
Local 1199
Blue Cross Senior Plans
Aetna US Health Care
Blue Cross Senior Plan
GHI (General Health Insurance)
AARP (Secondary Pay)
American Postal
Workers Union
 United America Insurance
Mutual of Omaha
Cigna
City of Yonkers
First United (Secondary Payer)
Westchester Community Health Plan
Local 32 E
 Health Source
Fidellis
Oxford
Genesis Health Care

Generally, our agreements with health insurance or managed care organizations
provide for services to be offered on four different bases, including:

     (1)  fee for service basis based on a contractual rate which we offer to
          provider's members (all paid for by the patient); and

     (2)  an encounter basis where we are paid a fixed fee by the insurance or
          managed care organization for each hearing aid sold (with the balance
          paid to us by the individual member).

     (3)  a special Medicare/Medicaid encounter basis where we are paid a fixed
          fee by Medicare and/or Medicaid for particular audiological services,
          at a price preestablished by Medicare or Medicaid (other than the
          "deductible" amount, which is paid either by the patient or other
          third-party payers).

     (4)  For those services not covered by a third party payor to be paid
          either by the facility or the patients family members.

Requirement for Renewal of Agreements with Health Insurance and Managed Care
Organizations

The terms of most agreements with health insurance and managed care
organizations are subject to renegotiation annually. Moreover, most of these
agreements may be terminated, at any time, by either party on 90-days notice.
Even if we are successful in expanding our base of contracts with such
organizations and institutions, the early termination or failure to renew such
agreements could adversely affect our results of operations. To date, we have
not been terminated and, in some instances, new and updated contracts have been
signed.

Nursing Homes

Approximately fourteen nursing homes, assisted living facilities and adult day
care centers currently provide out-patient referrals and transportation of
their residents to our Ludlow Street office. We also provide limited on-site
testing and evaluations within these nursing homes for residents who are
disabled or infirm. These nursing homes include:

                                       10


Kings Terrace/Terrace Health Care                    Bronx
Manhattanville Nursing Home                          Bronx
Methodist Church Home                                Riverdale
Riverdale Nursing Home                               Bronx
Tarrytown Hall Care Center                           Tarrytown
Classic Residence by Hyatt                           Yonkers
St. Joseph's Nursing Home                            Yonkers
Saint Joseph Geriday Care                            Yonkers
Sutton Park Adult Care                               Yonkers
Varian Woods Assisted Living                         Riverdale
Sprain Brook Manor                                   Yonkers
Saint Michaels/Nursing Home                          Westchester
Mary The Queen/Retired Nuns                          Bronx
Saint Joseph's Long Term Care                        Yonkers

Existing Referral Arrangements With Out-Patient Facilities

We have established relationships with four local out-patient facilities and
these referrals continue to steadily increase. We believe that patient referrals
from these sources will continue to grow based upon the positive feedback we
receive from these out-patient facilities.

On-Site Offices

We have established an on-site office at The Wartburg Adult Care Community
Outpatient Clinic, where our location makes us the sole on-site audiological
services provider to patients being treated at the clinic. We have also
established an on-site office at The Wartburg Nursing Home where we are the
exclusive provider of audiological services to all residents at the Nursing
Home. Our audiologist visits the out-patient clinic two half-days per week and
the nursing home four half-days per month. On average, our audiologist sees
approximately six to eight patients, per half-day, at each of these facilities.
We had expected that the amount of time our audiologists would spend at the
out-patient clinic would increase to at least two full days per week. The
current financials constraints taking place at this facility have negatively
impacted this anticipated growth.

Area Hospitals

We have established relationships with five area hospitals who have been
referring patients to our Ludlow Street office. We believe that if we receive
the necessary infusion of additional capital, the growth in the number of our
sales offices will put our services within the geographical reach of an
increased number of the patients of these and other hospitals. We therefore,
expect that these relationships will have a continuing impact on the volume of
our out-patient referrals. The hospitals with which we have established patient
referral relationships are:

         1.       Saint Josephs Medical Center South Yonkers, NY
         2.       Yonkers General Hospital South Yonkers, NY
         3.       Montefiore Medical Center Northeast Bronx, NY
         4.       Westchester Medical Center White Plains, NY
         5.       Saint Johns Medical Center

Physician Referrals

Referrals from physicians are generally based upon personal contacts and
established patient and physician satisfaction. We endeavor to maintain our
relationships with referring physicians by using a timely comprehensive medical
reporting system which provides each referring physician with a full
audiological report on each of their patients that visit our offices.

                                       11


Payments for Services

Our customer base includes self-pay patients, patients whose costs are covered
by medicare or medicaid, patients whose costs are covered by private health care
organizations; and patients whose costs are covered as union benefits). Treating
Medicare and Medicaid patients involves payment lag issues which are currently
problematic for us because of our current capital constraints. Current Medicare
and Medicaid payments for audiological services and hearing aids can take as
long as 120 to 180 days after approved services are provided and hearing aids
are dispensed. In order to assist us with the cash flow lag, we have been
successful in obtaining from some of our suppliers an extension of their normal
payment term. We are hopeful that if the current domestic economic conditions
improve in the near future, we will be able to put bank financing arrangements
into place which will provide us with a credit line for working capital.
Beginning in February 2002, we began billing Medicare directly on-line. We
anticipate that this will continue to accelerate our collection time. Medicaid
does not currently have an on-line billing system for audiological services or
the billing for hearing aids dispersed, and we therefore continue to encounter
the long payment lag from time of service to actual payments.

Sales and Marketing

Recognizing the vast untapped market of hearing impaired individuals we intend
to continue to expand our marketing efforts to include, on a more highly
concentrated basis self-pay patients who had previously not been our principal
customer base, to include:

               -    physicians in private or group practices;
               -    providers of group health care;
               -    unions;
               -    nursing homes;
               -    senior care facilities;
               -    out-patient health care clinics;
               -    hospitals;
               -    speech pathology groups;
               -    nursing home managed
               -    health care organizations; and
               -    third party payers, including Medicare and New York State
                    Medicaid.

Marketing to these organizations and entities has consisted and for the near
forseable future solely of personal contacts by our president, John H. Treglia,
with all of the types of entities and organizations listed above.

Proposed and Existing Advertising and Marketing Program

We intend to continue to try to bring our company and our services and products
to the attention of managed care providers, which can promote our products and
services to the hearing impaired, and to their participating members. In
connection with this, we began a proposed, but somewhat limited, joint
advertising campaign with the Wartburg Out-Patient Clinic. The combined capital
constraints of the Wartburg and our company have continued to cause all current
advertising to be discontinued. We also intend to increase our marketing efforts
to the self-pay, (uninsured patient) market when sufficient operating capital is
made available. Our marketing plan contemplates implementing an aggressive
advertising and marketing program focused on both of these markets, highlighting
the quality of our services and products, as well as competitive pricing. In
addition, to address the substantial growth in the number of assisted living
facilities and nursing homes, we intend, when financial resources are available,
to retain a director of senior care and nursing home marketing to promote and
develop relationships with such establishments. At present, all marketing to
health care organizations is done by our CEO, Mr. Treglia. Our marketing and
advertising efforts have been continually hindered by our capital constraints
which have adversely effected our originally projected higher gross profit
percentages.

It is our goal to establish ourselves as a provider of highly professional
services, quality products, and comprehensive post-sale consumer education. Our
marketing campaign, although currently limited, will emphasize company-operated,
free seminars on hearing and hearing loss, as well as direct consumer
advertising in local radio, newspaper, and, eventually, television media.

                                       12


In April of 2002 we entered into a binding letter of intent with United Hearing
Systems, Inc. to purchase all of their assets. Although our management devoted a
substantial amount of time and resources into this potential acquisition during
the 2002 year we ultimately determined that the purchase of these assets would
not have the original perceived positive impact on our potential profitability.

Business Strategy - Audiological Services

Our business plan recognizes that increasing the number of our sales offices
will make our services conveniently accessible to a greater number of
participating members of health care organizations and other entities with which
we have relationships or may establish relationships. Our plan is therefore to
couple such an increase in offices with an expansion of our patient referral
base. We expect this two-pronged approach to enable us to substantially increase
the volume and profitability of our business by further concentrations on the
private pay population. We believe that our success will be largely dependent
upon our ability to raise capital and then use such funds to:

     *    expand and emphasize our marketing efforts to include the growing
          adult assisted living community nursing home and adult day care
          population;
     *    expand our existing operations, first in the New York metropolitan
          area and then on a regional basis;
     *    distinguish our company from its competitors as a provider of hearing
          healthcare services to not only the affluent private pay population;
     *    effectively market our products and services to service the growing
          pediatric patient base.

We believe that, in addition, the hearing aid industry, as a whole, must use
customer satisfaction, advertising, and educational programs to strengthen
consumer confidence in the industry and to educate the hearing impaired
population with respect to:

     *    the importance of professional hearing testing;

     *    the availability, ease of use, and effectiveness of the newest hearing
          aid technologies; and

     *    the ability to arrange financing for hearing aids through an
          arrangement with several emerging lease financing organizations which
          arrange for lease-purchase financing of hearing aids on reasonable
          terms, especially directed to the senior citizen marketplace and other
          hearing impaired persons on fixed incomes.

Proposed Financing Plans

In order for us to implement our business plan, we will require financing in a
minimum amount of $500,000 during the next twelve months. We intend to use our
best efforts to generate between $500,000 and $1,000,000 in equity or
convertible debt financing from a private placement of our securities within six
to eighteen months. To date, we have received limited financing which we believe
is in part attributable because of the current years market conditions. At this
time, we are unable to state what the terms of the anticipated private placement
will be or the amount of shareholder dilution which will result from the
intended financing.

If we are unable to raise these funds through a private placement, we
will endeavor to raise the required financing from other sources such as lease
financing for major equipment purchases and loans from banks or institutional
lenders. We cannot be certain that we will be able to raise the required
financing from any of the foregoing sources.

If we fail to do so, our growth will continue to be curtailed and we will
concentrate on increasing the volume and profitability of our existing outlets,
using any surplus cash flow from operations to expand our business as quickly as
such resources will support.

                                       13


Dependence on Outside Manufacturers of Hearing Aids

We currently make available to our customers hearing aids supplied by
approximately five major manufacturers, as well as hearing enhancement devices
manufactured by other companies. There are currently approximately 40
manufacturers of these products world wide and few manufacturers offer dramatic
product differentiation. We are therefore confident that, in the event of any
disruption of supply from any of our current sources, we could obtain comparable
products from other manufacturers on comparable terms. We have not experienced
any significant disruptions in supply in the past.

Dependence on Qualified and Licensed Audiological Personnel

We employ New York State licensed, ASHA certified audiologists in our New York
offices. In our Pennsylvania office and in-home services, Registered Hearing Aid
Fitters provide primary services, with licensed audiologists available on a
consulting basis. In our New York area operations, we currently have two
full-time, and one part-time, New York State audiologist. In our Pennsylvania
operation, we have four available Registered Hearing Aid Fitters in
Pennsylvania, who are employed by us, on a part-time basis, as independent
contractors, and two Pennsylvania licensed audiologists available on a
consulting basis for special needs.

Should we be unable to attract and retain qualified audiologists or Registered
Hearing Aid Fitters, either as employees or independent contractors, it could
limit our ability to compete effectively against competing hearing aid retailers
and thus adversely affect our business. There are currently 6,000 audiologists
in the United States and approximately 200 educational institutions in the
United States which offer audiology degree/certification programs. There is
therefore no current or potential shortage of qualified personnel. However,
while we have not encountered any problems attracting and retaining sufficient
audiological staff, it is possible that we could find ourselves at a competitive
disadvantage against larger, better financed, and more well established hearing
aid providers for the services of qualified personnel.

Government Regulation

Federal

The practice of audiology and the dispensing of hearing aids are not presently
regulated on the Federal level. The United States Food and Drug Administration
("FDA") is responsible for monitoring the hearing care industry. Currently there
are only two regulations affecting the sale of hearing aids:

(i)  A physician's review. While the FDA requires first time hearing aid
     purchasers to receive medical clearance from a physician prior to purchase,
     patients may sign a waiver in lieu of a physician's examination. A majority
     of our patients and targeted market are members of the managed care or
     institutional providers with whom we have contracts, or whom we expect to
     enter into contracts with, to provide hearing care. Some of these
     organizations require a physician referral. Consequently, even if any new
     federal or state physician referrals are mandated in the future, they
     should not be expected to have an adverse impact on our operations.

(ii) A return policy. The FDA requires states to adopt a return policy for
     consumers offering them the right to return their products, generally
     within three to forty five-days. In Pennsylvania, where the state mandated
     return period is three days, we offer our customers a full thirty-day
     return policy. In New York, the state requires a forty-five day return
     period, which we comply with. Moreover, if our audiologist determines that
     an individual patient requires additional time to become acclimated to
     using a hearing aid, we will extend the return period to accommodate such
     special needs.

In addition, because we accept Medicare and Medicaid patients, each of our sales
and dispensing offices must maintain their eligibility as Medicare/Medicaid
providers and must comply with related federal anti-fraud, anti-kickback and
other applicable regulations. Federal laws prohibit the payment of remuneration
("kickbacks") in return for a physician referring a Medicare or Medicaid
patient, and those laws limit physicians from referring patients to providers in
which they have a financial interest. We believe that none of our managed care
or other provider contracts or our relationships with referring physicians are
violative of the anti-kickback statute.

                                       14


We are unable to predict the effect of future changes in federal laws, or the
impact that changes in existing laws or in the interpretation of those laws
might have on our business. We believe we are in material compliance with all
existing federal regulatory requirements.

State

Generally, state regulations, where they exist, are concerned primarily with the
formal licensure of audiologists and of those who dispense hearing aids and with
practices and procedures involving the fitting and dispensing of hearing aids.
In Pennsylvania and New York, where we currently operate, and in New Jersey and
Connecticut, which are part of our currently targeted markets, such regulations
do exist. We believe we are in compliance with all applicable regulations in
Pennsylvania and New York and we intend to format all of our programs in
Connecticut and New Jersey so that they are in full compliance with the
regulations of those states. While we believe it is unlikely, there can be no
assurance that regulations will not be promulgated in states in which we
operate, or plan to operate, which could have a material adverse effect upon us.
Such regulations could include stricter licensure requirements for dispensers of
hearing aids, inspections of centers for the dispensing of hearing aids and the
regulation of advertising by dispensers of hearing aids. We know of no current
or proposed state regulations with which we, as we currently operate, could not
comply.

Product and Professional Liability

In the ordinary course of our business, we may be subject to product and
professional liability claims alleging the failure of, or adverse effects
claimed to have been caused by, products sold or services which we have
provided. We maintain insurance at a level which we believe to be adequate. Each
of our licensed audiologists is also required by state law to carry appropriate
malpractice liability insurance. All of our audiologists have furnished us, as
well as all nursing homes, assisted living, adult day care, senior care, HMO's,
PPO's and other managed care organizations with whom we have contractual or
other relationships with copies of their insurance coverage certificates. As a
part of this process we also keep records of all license and insurance
anniversary and/or effective dates to attempt to insure compliance. We believe
that they are all in compliance with applicable federal and state requirements.
Also included as a part of compliance with the credentialing requirements,
copies of all educational degrees, certificates and licensing are appropriately
maintained. While we believe that it would be highly unlikely that a successful
claim would be in excess of the limits of our insurance policies, if such an
event should occur, it could conceivably adversely affect our business.
Moreover, because we distribute products manufactured by others, we believe we
will have recourse against the manufacturer in the event of a product liability
claim. It should be noted however that we could be unsuccessful in a recourse
claim against a manufacturer or, that even if we were successful, such
manufacturer might not have adequate insurance or other resources to make good
on our claim.

Competition

The hearing care industry is highly fragmented with approximately 11,000
practitioners providing testing and dispensing products and services.
Approximately 2,500 of these practitioners are audiologists working for
hospitals or physicians, 2,500 of the practitioners are licensed audiologists in
private practice, and the remaining 6,000 are hearing aid specialists. Industry
surveys estimate that approximately 5% of all hearing aids are sold in
physicians' offices, 60% are dispensed by qualified audiologists in private
practice, and the remaining 35% are sold by hearing aid specialists.

Because there are no federal, state or local regulatory or oversight agencies in
the hearing care industry, it is not possible to determine the precise number of
competitors in every market which we are operating in or which we intend to
enter. Our present plan is to continue to focus our efforts primarily on urban,
high density population areas, since we believe these areas will best implement
our current business plan and potential growth with a minimal amount of impact
on our current capital structure.

                                       15


Most competitors are small retailers generally focusing on the sale of hearing
aids without providing comprehensive audiometric testing and other professional
services. However, some of our chief competitors offer comprehensive services
and have large distribution networks and brand recognition. Principal among
these are: (1) Bausch & Lomb, a hearing aid manufacturer whose distribution
system is through a national network of over 1,000 franchised "Miracle Ear"
stores including 400 located in Sears Roebuck & Co. stores; (2) Beltone
Electronics Corp., a hearing aid manufacturer that distributes its products
primarily through its network of approximately 1,000 "authorized" distributors;
and (3) HEARx LTD., a hearing aid distributor whose dispensing and distribution
system is through a network of approximately 79 company owned centers located in
Florida, New York, New Jersey, and California.

To the best of our knowledge, except for HearX, most national networks primarily
offer hearing aids only and do not provide the comprehensive diagnostic
services, use of audiologist services or other ancillary products offered by us.
More importantly, they do not use the services of audiologists in the majority
of their centers. However, these networks are owned by companies having greater
resources than are available to us, and there can be no assurance that one or
more of these competitors will not expand and/or change their operations to
capture the market targeted by us. Nor can there be any assurance that the
largely fragmented hearing care market cannot be successfully consolidated by
the establishment of co-operatives, alliances, confederations or the like which
would then compete more effectively with us in our intended market areas.

Employees

As of June 1, 2004, in our New York area operations, we had a total of four
full-time, and two part-time employees. Full-time employees include, our
president and CEO, John H. Treglia, two New York State licensed audiologists,
and one receptionist - patient care coordinator. In our Pennsylvania operations,
we employ two full-time employees. Our part-time employees consist of three
Pennsylvania Registered Hearing Aid Fitters, who work for us, on an as needed
basis (part- time), and two Pennsylvania licensed audiologists who consult with
us on an as needed basis.

The loss of the services of Mr. Treglia would adversely affect the conduct and
operation of our business. To date we have not purchased a "key man" insurance
policy on Mr. Treglia's life. However, we intend to purchase such a policy in
the amount from $1M to $3M, at such time as we have the financial resources
to do so.

                      COMPREHENSIVE NETWORK SOLUTIONS, INC.

Section A Mission & Purpose

The hearing aid industry was changing at a rapid pace and management decided to
identify additional opportunities to position Nantucket as a major provider of
health care delivery systems.

The first successful result of this search was the acquisition of 100% of the
stock of Comprehensive Network Solutions, Inc. (CNS) an Austin, Texas based
company in the business of disease management through the development of
healthcare networks with common purposes. Nantucket management believes this is
the foundation for a premier medical savings card in the rapidly expanding
market place. CNS's discount medical savings card can be customized to serve
both retail and commercial markets with a broad menu of health care service
options. CNS's early entry into the market should enable CNS to capture a large
market share in a short period of time.

Background:

Significant market changes have occurred over the past two years that creates an
advantageous environment for new health care financing initiatives in all three
major commercial markets - Employee Benefits, Individual Health Benefits and
Workers' Compensation. These changes present the opportunity for traditional and
complimentary medicine to increase their collaboration coupled with innovative
consumer choice and defined contribution products which are the foundation of
Comprehensive Network Solutions business strategy and plans.

                                       16


Change 1: As the cost of health care has begun to increase in double digits
again, employers, health insurers and the uninsured are all searching for
alternatives to traditional health insurance, health plans and HMO's. Initial
efforts in the market have focused on medical savings plans and defined
contribution alternatives. This is leading to the logical consumer focused
alternative of limited indemnity reimbursement plans coupled with discounted
networks of preferred providers. Historically consumers, employers and health
issuers focused on choosing the insurance plan that met their anticipated
financial needs and then concerned themselves with what health care providers
they could access. The move toward consumer choice requires the benefit
purchaser, now the individual with either their own or their employers fixed
dollar amount to spend, to choose the health care providers they want to access
and then choose the financing arrangement that best meets their individual
needs. For all segments of the benefit market, this shift of purchase priority
means that consumers are demanding a broad array of health care providers
including complimentary and alternative care.

CNS, Inc. Business planning includes products, administration and product
distribution to exploit this market change in a defined geographic market
initially, and then broadening to more markets with improved products. The
initial packaged products include six levels of providers networks and one
limited indemnity medical insurance plan. These products have been trademarked
as CNS Select, CNS Advantage, CNS Optima and CNS 500 Plan which will be marketed
to individuals utilizing the chiropractic networks either owned or under the
control of CNS, Inc. Summaries of these products are attached to this business
plan of reference. These products will be marketed to employers, unions, trade
associations and municipalities.

Change 2: Traditional employee benefit plans and workers' compensation plans
have begun incorporating disease management processes and services into their
operations. Disease management programs are based on the principle that there
are a few diagnosis that generate most of the cost of a health plan and that
these diagnosis can be managed cost effectively through the introduction of a
closed network of health care providers who agree to follow evidence based, best
practice diagnostic and treatment guidelines for patients with these specific
diagnoses. Seminal work on this cost management and patient outcomes strategy
began over 15 years ago and has progressed for diseases such as diabetes, heart
disease, stroke, arthritis and others. Diseases and conditions of the back, neck
and upper extremities were primarily ignored until recently. These conditions
are now a focus of disease management as their costs increase compared to the
costs of other diseases which have been reduced comparatively. Until the early
1990s, back conditions were not in the top 15 diagnoses by costs. Today, these
conditions rank in the top 10 for cost with the least positive patient outcomes.

CNS, Inc. Began in 2002 with a mission to develop disease management treatment
guidelines that would address back, neck and upper extremity musculoskeletal
conditions specifically for workers' compensation. During the past year, these
have been codified and copyrighted. Through an affiliation with the Health
Partners, the strategy is to develop Exclusive Provider Organizations (EPO) in
markets where state regulation enables workers' compensation plans to direct
injured workers to specific health care providers. The CNS' EPO's will be
marketed to workers' compensation and employee benefit plans on the basis access
fees, case management fees and shared savings of future medical costs versus
historic medical costs and patient outcomes. The longer term strategy will be
implemented based on actual performance of CNS disease management outcomes over
a period of one or more years' data.

Mission: Provide high quality consumer choice and defined contribution health
care benefits for employees and uninsured and underinsured individuals while
continuing development of evidence based disease management program for
musculoskeletal conditions of the back, neck and upper extremity.

Purpose: Focus on those marketing health care benefits that will meet the real
perceived health care needs of consumers, enabling these prospective clients to
choose appropriate providers and financial arrangements that best meet their
individuals needs. Complete development and market implementation of a high
quality musculoskeletal disease management program for target markets with
directed care of workers' compensation cases.

                                       17


ITEM 2. PROPERTIES

Corporate Headquarters

Our corporate headquarters is located in Suite 602, The Ludlow Street Medical
Building, located at 45 Ludlow Street, Yonkers, New York. This office consisted
of 850 square feet. We recently leased an additional 800 square feet to
accommodate additional sales and administrative personnel hired by us pursuant
to the acquisition of Comprehensive Network Solutions, Inc. (see subsequent
event).

We occupy these premises pursuant to a five year lease with Diamond Properties,
Inc. which expires in February 2006. With the additional space, our lease calls
for monthly rental payments of $2,100 fully inclusive of all utilities, taxes,
and other charges. The building in which these offices are located is of a newly
renovated, seven story building which houses the private offices of
approximately twenty physicians, dentists, and other medical professionals, with
adequate, free, or off street parking available. It is located off of a main
street and is around the corner from Saint Joseph's Medical Center, a major area
health care facility.

Ludlow Street Sales and hearing Aid Dispensing Office

We have a retail sales and dispensing office located on the first floor lobby of
the Ludlow Street Medical Building in a retail space adjacent to the elevators.
We occupy this space pursuant to a five-year lease with Diamond Properties Inc,
which will expire in February 2006. The lease calls for monthly rental payments
of $1,087, fully inclusive of all utilities, taxes and other charges.

This facility comprises approximately 800 square feet and has a glass enclosed,
visible waiting and reception area and a private fully equipped testing and
dispensing office. This office is fully equipped as an audiological and hearing
aid dispensing facility; equipment includes: (i) a full spectrum hearing suite,
consisting of a wheel chair accessible sound-proof testing booth, of
approximately 10 feet x 12 feet, designed to accommodate the needs of pediatric
patients as well as handicapped adults; (ii) an electronic audiometer; (iii) an
electronic tympanometer; (iv) a computerized hearing aid programmer; and (iv)
other required peripheral testing, fitting and repair equipment. This equipment
was purchased, used, from Saint Joseph's Hospital, which has discontinued its
audiological services department. The equipment purchased from Saint Joseph's
included, in addition to the equipment listed above, a second full spectrum
hearing suite, which we are presently keeping in storage. All of the equipment
which we purchased from Saint Joseph's, and which we are currently using, is
modern and has been totally refurbished and recalibrated. Saint Joseph's
original cost for this equipment was approximately $54,000 and its replacement
cost would be approximately $78,000. We were able to purchase, relocate,
refurbish and recalibrate the equipment for a total cost of $19,000. This
equipment enables us to fully service all patients whom we see at this facility,
including the nursing home patients who are brought to us on an out-patient
basis as well as pediatric patients.

The Wartburg Diagnostic and Treatment Center On-Site Facility

On April 1, 2001, we began operations at our dispensing and testing office
located on-site at the Wartburg Adult Care Community, Outpatient Clinic. This
office is approximately 500 square feet and is located in the Outpatient Health
Services Building on the Wartburg Mount Vernon Campus. We are permitted the use
of common reception and waiting room facilities. The Wartburg also makes
available to us, without additional charge, a large meeting room in which can
run our hearing health care fairs in conjunction with the Wartburg. We occupy
this office pursuant to a lease between our subsidiary, Interstate Hearing Aid
Service and The Wartburg Diagnostic and Treatment Center. This lease is for an
unspecified term beginning on March 12, 2001. The lease calls for monthly rental
payments of $375, fully inclusive of all utilities, taxes, and other charges.
The lease amount is subject to review upon written request by either party on
the March 12th anniversary date of the lease. This dispensing office is
outfitted and equipped with: (i) a standard size wheel-chair accessible
sound-proof booth, (ii) an electronic audiometer; (iii) an electronic
tympanometer; (iv) a computerized hearing aid programmer; and (iv) other
required peripheral testing, fitting and repair equipment.

                                       18


Under the terms of the lease, we are required to maintain certain medical and
administrative practice policies and procedures of the Outpatient Facility. We
are also obligated to provide specified levels of audiological services at
specified times, to maintain professional liability insurance, and to indemnify
the Outpatient Clinic.

The Wartburg Home of the Evangelical Lutheran Church On-Site Facility

We operate a dispensing and testing facility at The Wartburg Home of the
Evangelical Lutheran Church, a nursing home. This facility is approximately 150
square feet and is located on the third floor of the building housing, The
Wartburg Skilled Nursing Facility on the Wartburg Mount Vernon Campus. We occupy
this facility pursuant to a lease between our subsidiary, Interstate Hearing Aid
Service and The Wartburg Home of the Evangelical

Lutheran Church. This lease is for an unspecified term beginning on March 15,
2001. The lease calls for monthly rental payments of $200, fully inclusive of
housekeeping, security services, all utilities (excluding telephone charges),
taxes, and other charges. The lease amount is subject to review upon written
request by either party on the March 15th anniversary date of the lease. The
equipment used in this office consists of portable audiological equipment,
specifically designed to be in compliance with all federal and state
requirements as well as those with all third-party payers, and brought in by the
audiologist at each visit. This equipment is also used for bed-side testing
when required for the treatment of infirm patients. Under the terms of the
lease, we are required to maintain certain medical and administrative practice
policies and procedures of the Outpatient Facility. We are also obligated to
provide specified levels of audiological services at specified times, to
maintain professional liability insurance, and to indemnify the nursing home.

Pennsylvania Forty-Fort Office

We currently lease an 800 square foot, street level office at 142 Wells Street,
Forty-Fort, Pennsylvania. This facility is located in the main business district
of Forty-Fort and the space is utilized for administrative, sales, dispensing,
and telemarketing activities. The facility is divided among offices, waiting
rooms, a sound deadened testing area, a dispensing area, and small telemarketing
area. This facility is also used as a coordination center for our
Pennsylvania licensed hearing aid fitters, who test and dispense hearing aids on
an in-home basis, the most common method of dispensing hearing aid products in
rural areas.

ITEM 3. LEGAL PROCEEDINGS

We are unaware of any pending or threatened legal proceedings to which we are a
party or of which any of our assets is the subject. No director, officer, or
affiliate, or any associate of any of them, is a party to or has a material
interest in any proceeding adverse to us.

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

During the year ended February 28, 2004, we did not submit any matters to a vote
of our shareholders.

                                       19


                                     PART II

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

Our common stock, $.10 par value, was traded on the American Stock Exchange
under the symbol "NAN" until April 17, 1998. Because we had fallen below
American Stock Exchange guidelines for continued listing, effective April 17,
1998, our common stock was delisted. It is currently traded in the
over-the-counter market and quoted on the OTC Electronic Bulletin Board
maintained by the National Association of Securities Dealers, Inc. (the "OTC
Bulletin Board"). The stock was quoted on the OTC Bulletin Board under the
symbol NANK until March 3, 2000, when we filed a Voluntary Petition under
Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York. After that date, our OTC Bulletin Board Symbol was changed
to, NANKQ. On January 25, 2002, when the "Reverse Acquisition" was made on a
stock-for-stock-basis pursuant to the terms of our Chapter 11 reorganization,
the symbol was changed to NTKI. The following table sets forth representative
high and low bid prices by calendar quarters during the period from (March 1,
2000 through February 28, 2004) and the subsequent periods. The level of trading
in our common stock has been sporadic and limited and the bid prices reported
may not be indicative of the value of our common stock or the existence of an
active market. The OTC market quotations reflect inter-dealer prices without
retail markup, markdown, or other fees or commissions, and may not necessarily
represent actual transactions.



                                                              Bid Prices
Period                                                        Common Stock

                                                                Low               High
                                                                ---               ----

Fiscal Year Ended February 28, 2002
                                                                           
May 31, 2001                                                   $0.01             $0.05
August 31, 2001                                                 0.01              0.07
November 30, 2001                                               0.01              0.50
February 28, 2002                                               0.15              0.80

Fiscal Year Ended February 28, 2003

May 31, 2002                                                   $0.75             $1.75
August 31, 2002                                                 0.40              0.95
November 30, 2002                                               0.08              0.65
February 28, 2003                                               0.10              0.23

Fiscal Year Ended February 28, 2004

May 31, 2003                                                   $0.75             $1.75
August 31, 2003                                                 0.60              0.17
November 30, 2003                                               0.62              0.81
February 28, 2004                                               0.55              1.37


We have never paid any cash dividends on our common stock, and have no present
intention of doing so in the foreseeable future.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth our selected consolidated financial information
for the three fiscal years ended February 28, 2003.

The information set forth below should be read in conjunction with "Management's
Discussion and Analysis of Financial Condition and Results of Operation" and in
conjunction with our Consolidated Financial Statements and notes appearing
elsewhere in this report.

                                       20


                              For Fiscal Year Ended
                              ---------------------
                    (In thousands, except per share amounts)



                                     Feb. 28      Feb. 28       Feb. 28
                                        2004         2003          2002

Summary Statements of Operations
--------------------------------

                                                        
Net sales                         $      409      $   406        $   38
Gross profit                              88           83             9
Net (loss) gain sale of asset                          --            --
Net gain sale of asset                                 --            --
Net income (loss)                        307         (169)        1,370
Net earnings (loss)
per share-basic
and diluted                             (.03)        (.02)         (.38)
Average shares
outstanding                                         8,440         3,620

Summary Balance Sheet Data

Total assets                           1,408          828           254
Working capital                          437           40           147

Long-term debt (exclusive
of current maturities)                    30           --            --
Convertible subordinated
debt                                                   --            --
Stockholders' equity                   1,232          642           931


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

The following is management's discussion and analysis of significant factors
which have affected our financial position and operations during the fiscal
years ended February 28, 2004 and February 28, 2003. This discussion also
includes events which occurred subsequent to the end of the fiscal year ended
February 28, 2004, and contains both historical and forward- looking statements.
When used in this discussion, the words "expect(s)", "feel(s)", "believe(s)",
"will", "may", "anticipate(s)" "intend(s)" and similar expressions are intended
to identify forward-looking statements. Such statements are subject to certain
risks and uncertainties, which could cause actual results to differ materially
from those projected. Factors that might cause or contribute to such differences
include, but are not limited to, those discussed in "Risk Factors". Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. Readers are also urged to carefully review and
consider the various disclosures elsewhere in this Report which discuss factors
which affect the Company's business, including the discussion at the end of this
Management's Discussion and Analysis. This discussion should be read in
conjunction with the Company's Consolidated Financial Statements, respective
notes and Selected Consolidated Financial Data included elsewhere in this
Report.

The Reorganized Company

Pursuant to the terms of our Chapter 11 Plan of Reorganization, we effected a
"Reverse Acquisition" by which we acquired all the issued and outstanding
capital stock of Accuntone, Inc., a Pennsylvania corporation.

As a result of the above-described acquisition, Accutone Inc. (together with
Accutone's wholly-owned subsidiary, Interstate Hearing Aid Service, Inc.) is now
our wholly owned subsidiary. Through February 28, 2004, we had no business or
assets other than those which we acquired through our acquisition of Accutone.
(see subsequent event for disclosure of business acquired after February 28,
2004). With respect to our current business, history, and prospects, Accutone is
the predecessor of Nantucket.

                                       21


We are directly, and indirectly through our subsidiaries, Accutone Inc. and
Interstate Hearing Aid Service Inc., in the business of distributing and
dispensing custom hearing aids. Our predecessor, Accutone Inc. was formed under
the laws of the State of Pennsylvania in October 1996 for the purpose of
engaging in the manufacture, dispensing, and distribution of hearing aids. In
1998, Accutone acquired 100% ownership of Interstate, a Pennsylvania corporation
and an FDA licensed hearing aid manufacturer which has been in the hearing aid
business for approximately 35 years. In the Fall of 2000, Accutone discontinued
all manufacturing operations and changed the focus of its marketing to include,
not only the individual, self-pay patient, but health care entities and
organizations which could serve as patient referral sources for us.

Until the summer of 2000, a small portion of our business consisted of
manufacturing operations. However, because of changes in the competitive climate
of the hearing aid manufacturing industry and the comparatively small level of
our operations, we discontinued all manufacturing on July 30, 2000. This marked
the beginning of a significant change in our then effective business plan, which
now encompasses concentrating our marketing to nursing homes, hospitals,
out-patient clinics, members of managed health care providers, such as health
maintenance organizations ("HMO's"), Physician Provider Organizations (physician
group practices known as "PPO's"), union health plans, medicare, and medicaid
while expanding an advertising campaign aimed at individuals in the non-insured
self- pay market. The geographic emphasis on this business has been and will
continue to be focused in the New York metropolitan area. Since implementing
this business plan, we have entered into contracts with approximately 63 managed
health care provider organizations, unions, local municipalities and secondary
health care insurance providers and pediatric care organizations in the New York
metropolitan area, including Medicare and Medicaid. We are continually in
negotiations with other such organizations.

In addition to marketing our services, we are continuing to attempt to expand
our audiological staff and the level of operations and profitability at our
existing offices as well as operations at new retail sales and dispensing
offices in the New York Metropolitan area. Our long term goal in the
audiological field is to expand our operations in this concentrated geographic
area.. To date such expansion has been curtailed by our failure to obtain
significant financing.

We also provide in-home fitting and dispensing services in the State of
Pennsylvania, where our customer base is located in a somewhat rural area,
making home visits convenient for our customers. We have four Pennsylvania
Registered Hearing Aid Fitters who are available to us for in-home, as well as
office visits in Pennsylvania. Through our offices and our in-home services, we
offer a full range of audiological products and services for the hearing
impaired. We have been unable to provide these services to our expectation level
based on our need for capital infusion.

In order to make our services acceptable to managed care and health insurance
companies, we must address their particular concerns. This will require that we
have:

     *    service locations which are conveniently accessible to their members;
     *    an adequate staff of highly qualified audiologists;
     *    a full range of high quality hearing aid products;
     *    competitive pricing; and
     *    adequate product liability and professional malpractice insurance
          coverage.

We have been endeavoring to put all of these elements into place but have been
unable to do so due to budgetary constraints. Therefore our primary goals during
the next eighteen months, if we receive adequate financing, will include:

     *    opening and establishing operations at additional fully equipped
          offices accessible to residents of all five boroughs of New York City.
     *    opening and establishing operations at sales and dispensing offices
          on-site at additional nursing homes in the New York metropolitan area.
     *    increasing the number of audiologists on our staff to service these
          additional facilities; and
     *    hiring a chief financial officer and a chief operations officer.

                                       22


We intended to implement an aggressive advertising and marketing campaign aimed
at individuals and managed health care organizations. In order to undertake
these initiatives we have established a professional advisory board of 6
individuals with high levels of experience and expertise in hearing health care,
gerontology, accounting, marketing and various other medical practices.

We were in negotiations to enter into a business combination with Paxxon
Healthcare Services, Inc. However, we have ceased negotiations with Paxxon and
we do not currently anticipate that we will enter into any form of business
combination with Paxxon.

Subsequent Events

On March 1, 2004 pursuant to a Stock Purchase Agreement, we acquired one hundred
percent (100%) of the issued and outstanding shares of common stock of
Comprehensive Network Solutions, Inc. based in Austin, Texas, from the
Comprehensive Shareholders in consideration for the issuance of a total of
250,000 restricted shares of our common stock to the Comprehensive shareholders.
Pursuant to the Agreement, Comprehensive became our wholly owned subsidiary.
Additional consideration of $60,000 was also paid to Comprehensive to be used as
working capital and we assumed a liability of $25,000 for marketing services
performed by an individual. Such liability was satisfied through the issuance of
25,000 shares of our restricted common stock to such individual. All shares
issued in this transaction have a holding period of two years.

The acquisition will allow us to utilize the resources of both companies to
enter the health benefit market with consumer choice products for individuals,
employers, associations, unions and political subdivisions. Comprehensive's
business plan focuses on marketing health care benefits that enable the
prospective clients to choose appropriate providers and financial arrangements
that best meet their individual needs. The business plan also includes the
complete development and market implementation of a high quality musculoskeletal
disease management program for target markets with directed care of workers'
compensation cases.

Comprehensive was organized in June 2002 with headquarters in Austin, Texas. The
company has been focused on specialty health benefits products, including three
levels of provider networks and one limited indemnity medical insurance plan.
These products have been trademarked as ChiroCare Select, ChiroCare Advantage,
ChiroCare Optima and CNS 500 Plan. The company is currently working on expanding
its product with additional benefits and alternative benefit funding options.
These new expanded products will be offered through a captive retail sales
operation to individuals and small employers; and customized private label
versions of the products through its broker and consultant relationships to
associations, unions political subdivisions and large employers. The offerings
are alternative cost and quality benefit solutions to prospects and clients who
are uninsured or underinsured through existing traditional defined benefit
health plans.

Comprehensive's goals include a plan to develop disease management treatment
guidelines that would address back, neck and upper extremity musculoskeletal
conditions specifically for workers' compensation. During the past year, these
guidelines have been codified and copyrighted. Through an affiliation with
Health Partners, the strategy is to develop exclusive provider organizations
(EPO) in markets where state regulation enables workers' compensation plans to
direct injured workers to specific health care providers. Comprehensive's EPOs
will be marketed to workers' compensation and employee benefit plans on the
basis access fees, case management fees and shared savings of future medical
costs versus historic medical costs and patient outcomes.

The Company will continue to refine and improve its predictive model of evidence
based on treatment guidelines and disease management for musculoskeletal
injuries and illnesses. The quality and cost effective management of these
conditions will continue to be a primary focus for the company's medical and
network development staff in preparation for additional market introductions.

                                       23


Our goal is to implement the Comprehensive business model initially in the
NorthEast and then expand nationwide. In order to implement these goals, we are
interviewing potential qualified candidates to fill various positions of sales,
marketing and administration. To date, we have already met with and presented
our various discount health care products and services. We estimate that in
order to achieve these goals, we will require financing from sources other than
cash flow, within the next eighteen months, in an amount ranging from $750,000
to $1,000,000. Since the acquisition, we have been successful in raising
approximately $200,000 through private equity offerings. Although we have
previously been unsuccessful in raising significant capital, our management
believes that the current financial market upturn as well as the benefits of the
acquisition of Comprehensive will assist us in potentially raising additional
capital. Management believes that the acquisition of Comprehensive will add
significant revenues and profitably during the upcoming year to the consolidated
Nantucket family of businesses.

Results of Operations

Sales

Sales for the year ended February 28, 2004 were $409,040 compared to $406,134
for the year ended February 27, 2003. Our failure to materially increase sales
was due in combination of failure to raise additional working capital on a
timely basis and the decrease in Medicaid reimbursement rates.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $337,881 in 2004 as compared
to $194,887 in fiscal 2003. This increase was due for the most part to increased
consulting fees which were substantially paid for by the issuance of our
restricted common stock.

Liquidity and Capital Resources

We incurred significant operating losses in recent years which resulted in
severe cash flow problems that negatively impacted our ability to conduct our
business as structured and ultimately caused us to become and remain insolvent.
The reorganized Nantucket, utilizing the increasing sales and projected
potential profitability of Accutone and its subsidiary Interstate Hearing Aid,
should generate working capital to finance its current operations, but not
enough to expand its scope of business activities.

We estimate that in order for us to achieve our goals to open equipment and
staff additional offices, add another 40 nursing homes to those we currently
service, increase our volume of sales and profitability, we will require capital
investments and expenditures in the amount of $500,000 to $1,000,000. All of
these funds will have to be obtained from sources other than cash flow. As noted
above, under "Proposed Financing Plans", it is our intention to make a private
placement of our equity or convertible debt securities in an amount of at least
$500,000. We do not have any established bank credit lines or relationships in
place at this time. However, we are optimistic that if we are able to raise a
minimum of $500,000 through the sales of our securities, we will be able to
establish credit lines that will further enhance our ability to finance the
expansion of our business. There can be no assurance that we will be able to
obtain outside financing on a debt or equity basis on favorable terms, if at
all. In the event that there is a failure in any of the finance-related
contingencies described above, the funds available to us may not be sufficient
to cover the costs of our operations, capital expenditures and anticipated
growth during the next twelve months. However, we believe that, even if we are
unable to raise the required outside financing we can curtail our growth to such
a degree so as to maintain increased operations.

                                       24


Although the capital markets have a perceived improvement, we are cautiously
optimistic of our abilities to achieve these goals. Along these lines we are
actively pursuing potential businesses alliances with privately held businesses
in like and or compatible industries. We believe that the addition of both sales
volume growth and profitability will greatly assist us in successfully raising
additional capital.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk represents the risk of loss that may impact our financial position,
results of operations or cash flows due to adverse changes in market prices and
rates. We are exposed to market risk because of changes in foreign currency
exchange rates as measured against the U.S. dollar. We do not anticipate that
near-term changes in exchange rates will have a material impact on our future
earnings, fair values or cash flows. However, there can be no assurance that a
sudden and significant decline in the value of European currencies would not
have a material adverse effect on our financial conditions and results of
operations.

Our short-term bank debt bears interest at variable rates; therefore our results
of operations would only be affected by interest rate changes to the short-term
bank debt outstanding. An immediate 10 percent change in interest rates would
not have a material effect on our results of operations over the next fiscal
year.


                                       25



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                                                      Nantucket Industries, Inc.
                                                                and Subsidiaries




                                                    Audited Financial Statements
                                                  Years Ended February 29, 2004,
                                                           February 28, 2003 and
                                                               February 28, 2002






                                                      Nantucket Industries, Inc.


                                                                   Contents

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

Independent auditors' report                                                   2


Financial statements:

Consolidated balance sheets                                                    3

   Consolidated statements of operations                                       4

   Consolidated statement of stockholders' equity                              5

   Consolidated statements of cash flows                                       6

   Notes to consolidated financial statements                               7-19



                                                                             F-1




The Company is filing this amended 10k due to the fact that the financial
statements for this period were not audited by an accountant who was registered
with the Public Company Accounting Oversight Board ("PCAOB"). The accountant has
applied for registration with PCAOB and has not received approval or denial with
regard to its application. In the interim, the Company has engaged an accountant
registered with the PCAOB in the event that the current accountant is not
registered in a timely manner. The Company intends to file an amended 10k with
the audited financial statements as soon as possible.







                                                                                        Nantucket Industries, Inc.
                                                                                                  and Subsidiaries


                                                                                       Consolidated Balance Sheets
=================================================================================================================================

                                                                                 February 29
February 28,                                                                            2004              2003              2002

                                                                                   Unaudited            Audited           Audited

------------------------------------------------------------------------- ------------------- ----------------- -----------------
Assets
                                                                                                          
   Cash and cash equivalents                                                    $    172,429     $         550     $       6,266
   Accounts receivable (Note 2)                                                      147,954           132,324           120,214
   Inventories (Notes 2)                                                               3,870             5,365             5,125
   Prepaid expenses (Note 10)                                                         73,067             8,067           120,000
   Stock subscription receivable                                                     160,800            25,000                 -
   Other current assets                                                                5,000             5,000             2,225
------------------------------------------------------------------------- ------------------- ----------------- -----------------
              Total current assets                                                   563,120           176,306           253,830
------------------------------------------------------------------------- ------------------- ----------------- -----------------
Property, plant and equipment, net (Notes 2 and 5)                                    61,027            66,340            81,458
Other assets, net
   Covenant not to compete (Notes 2 and 4)                                           300,000           300,000           300,000
   Customer list (Notes 2 and 4)                                                     260,000           285,706           311,984
   Prepaid expenses (Note 10)                                                        223,750                 -           110,000
------------------------------------------------------------------------- ------------------- ----------------- -----------------
                                                                                $  1,407,897     $     828,352     $   1,057,272
========================================================================= =================== ================= =================
Liabilities and Stockholders' Equity
   Accounts payable                                                             $    106,768     $      77,766           102,635
   Loans payable                                                                      15,000            55,000                 -
   Pre-petition taxes (Note 1)                                                         3,964             3,964             3,964
------------------------------------------------------------------------- ------------------- ----------------- -----------------
              Total current liabilities                                              125,732           136,730           106,599
Line of credit (Note 6)                                                               30,000            30,000                 -
Pre-petition taxes, net of current portion (Note 1)                                   19,821            19,821            19,821
------------------------------------------------------------------------- ------------------- ----------------- -----------------
              Total liabilities                                                      175,553           186,551           126,420
------------------------------------------------------------------------- ------------------- ----------------- -----------------
Stockholders' equity (Notes 1,9 and 10)
   Common stock, $.10 par value; authorized 20,000,000 shares;                     1,166,730           859,052           903,600
    issued 11,667,309
   Additional paid-in capital                                                     13,534,031        13,079,309        13,180,261
   Common stock subscribed                                                           160,800            25,000                 -
   Accumulated equity (deficit)                                                  (13,629,217)      (13,321,560)      (13,153,009)
------------------------------------------------------------------------- ------------------- ----------------- -----------------
              Total stockholders' equity                                           1,232,344           641,801           930,852
------------------------------------------------------------------------- ------------------- ----------------- -----------------
                                                                                $  1,407,897     $     828,352     $   1,057,272
========================================================================= =================== ================= =================

                                                                                 See accompanying notes to financial statements.

                                                                                                                             F-3








                                                                                        Nantucket Industries, Inc.
                                                                                                  and Subsidiaries


                                                                             Consolidated Statements of Operations
=================================================================================================================================

                                                                                February 29,
Years ended February 28,                                                            2004             2003               2002

                                                                                  Unaudited         Audited           Audited

---------------------------------------------------------------------------------------------------------------------------------
                                                                                                          
Net sales                                                                       $    409,040     $     406,134     $      38,443
Cost of sales                                                                        321,462           324,569            29,731
---------------------------------------------------------------------------------------------------------------------------------
              Gross profit                                                            87,578            81,565             8,712
Selling, general and administrative expenses                                         337,881           194,887           257,276
---------------------------------------------------------------------------------------------------------------------------------
              (Loss) from operations                                                (250,303)         (113,322)         (248,564)
Other expense:
   Interest expense                                                                   10,305             9,437                21
   Depreciation and amortization                                                      47,049            45,792             1,762
---------------------------------------------------------------------------------------------------------------------------------
              Total other expense                                                     57,354            55,229             1,783
---------------------------------------------------------------------------------------------------------------------------------
              Earnings (loss) before income taxes and                               (307,657)         (168,551)         (250,347)
              extraordinary item
Income taxes (Note 8)                                                                   -                 -                 -
---------------------------------------------------------------------------------------------------------------------------------
Loss before extraordinary item                                                      (307,657)         (168,551)         (250,347)

Extraordinary item-gain on debt discharge                                               -                 -            1,621,162
---------------------------------------------------------------------------------------------------------------------------------

Net income (loss)                                                                   (307,657)         (168,551)        1,370,815
Net earnings (loss) per share - basic and diluted                               $       (.03)    $        (.02)    $         .38

---------------------------------------------------------------------------------------------------------------------------------
Weighted average common shares outstanding                                         9,834,258         8,440,251         3,620,168
=================================================================================================================================


                                                                               See accompanying notes to financial statements.

                                                                                                                             F-4







                                                                                      Nantucket Industries, Inc.
                                                                                                and Subsidiaries


                                                        Consolidated Statement of Stockholders' Equity (Deficit)
=================================================================================================================================

                                         Preferred stock
                                          designated as
                                       non-voting convertible          Common stock
                                       ------------------------ ------------------------------
                                                                                                              Additional
                                                                                                                paid-in
                                              Shares            Amount         Shares           Amount          capital
--------------------------------------    ------------       -----------    ------------     ------------     ------------
                                                                                               
Balance at March 1, 2001                         5,000              500        3,241,848          324,185       12,539,503
Cancellation of stock                           (5,000)            (500)      (3,241,848)        (324,185)         299,748
Plan of reorganization                                                           720,443           72,044          (32,418)
Reverse merger-Accutone                                                        5,285,160          528,516         (301,032)
Consultant agreement                                                           1,200,000          120,000          120,000
Executive compensation                                                           630,397           63,040           74,460
Acquisition of audiology practice                                              1,200,000          120,000          480,000
Net earnings
                                          ------------     ------------     ------------     ------------     ------------
Balance at February 28, 2002                                                   9,036,000          903,600       13,180,261
Cancellation of consultant                                                    (1,200,000)        (120,000)        (120,000)
Private placement sales                                                          337,857           33,785           35,715
Executive compensation                                                           416,667           41,667          (16,667)
Net (loss)
                                          ------------     ------------     ------------     ------------     ------------
Balance at February 28, 2003                                                   8,590,524          859,052       13,079,309
Consultant agreement                                                           1,250,000          125,000          200,000
Private placement sales                                                          899,642           89,964          132,436
Executive compensation                                                           357,143           35,714          (10,714)
Convertible debt                                                                 570,000           57,000          133,000
Net (loss)
--------------------------------------    ------------     ------------     ------------     ------------     ------------
Balance at February 29, 2004                                                  11,667,309     $  1,166,730     $ 13,534,031
======================================    ============     ============     ============     ============     ============






                                                                                   Treasury stock
                                                                            -----------------------------
                                          Common Stock      Accumulated
                                           Subscribed        deficit           Shares           Amount           Total
--------------------------------------    ------------     ------------     ------------     ------------     ------------
                                                                                               
Balance at March 1, 2001                            --      (14,523,824)           3,052          (19,937)      (1,644,217)
Cancellation of stock                                                             (3,052)          19,937               --
Plan of reorganization
Reverse merger-Accutone
Consultant agreement
Executive compensation
Acquisition of audiology practice
Net earnings                                                  1,370,815
--------------------------------------    ------------     ------------     ------------     ------------     ------------
Balance at February 28, 2002                        --      (13,153,009)                                           930,852
Cancellation of consultant
Private placement sales
Executive compensation
Net (loss)                                                     (168,551)
--------------------------------------    ------------     ------------     ------------     ------------     ------------
Balance at February 28, 2003                    25,000     $(13,321,560)                                           641,801
Consultant agreement
Private placement sales
Executive compensation
Convertible debt
Net (loss)                                                     (307,657)
--------------------------------------    ------------     ------------     ------------     ------------     ------------
Balance at February 29, 2004              $    160,800     $(13,629,217)                                      $  1,232,344
======================================    ============     ============     ============     ============     ============

                                                                            See accompanying notes to financial statements



                                                                                                                        F-5






                                                                                        Nantucket Industries, Inc.
                                                                                                  and Subsidiaries


                                                                             Consolidated Statements of Cash Flows

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

                                                                                 February 29,
  Years ended February 28,                                                          2004               2003            2002

                                                                                  Unaudited           Audited         Audited

  -----------------------------------------------------------------------------------------------------------------------------
  Cash flows from operating activities:
                                                                                                          
     Net earnings (loss)                                                        $   (307,657)    $    (168,551)    $   1,370,815
     Adjustments to reconcile net earnings (loss) to
        net cash used by operating activities:
          Depreciation and amortization                                               47,049            45,792             1,762
          Decrease (increase) in assets:
             Accounts receivable                                                     (15,630)          (12,110)         (120,214)
             Inventories                                                               1,495             ( 240)           (5,125)
             Prepaid expenses                                                        (65,000)          111,933          (120,000)
             Other current assets                                                       -               (2,775)           18,106
          (Decrease) increase in liabilities:
             Accounts payable                                                         29,002           (24,869)         (142,129)
             Accrued expenses and other liabilities                                     -                 -           (1,432,807)
  -------------------------------------------------------------------------------------------------------------------------------
                Net cash used by operating activities                               (310,741)          (50,820)         (429,592)
  -------------------------------------------------------------------------------------------------------------------------------
  Cash flows from investing activities:
     Additions to property, plant and equipment                                      (16,030)           (4,396)          (83,220)
     (Increase) decrease in other assets                                            (223,750)          110,000          (721,984)
  -------------------------------------------------------------------------------------------------------------------------------
                Net cash provided (used) by investing activities                    (239,780)          105,604          (805,204)
  -------------------------------------------------------------------------------------------------------------------------------
  Cash flows from financing activities:
     Issue of stock for reorganization, acquisitions and operations,  net            762,400          (145,500)        1,239,610
     Repayment of loans                                                              (40,000)             -                 -
     Proceeds from loans and line of credit                                             -               85,000              -
  -------------------------------------------------------------------------------------------------------------------------------
                Net cash (used) provided by financing activities                     722,400           (60,500)        1,239,610
  -------------------------------------------------------------------------------------------------------------------------------
  Net increase (decrease) in cash and cash equivalents                               171,879            (5,716)            4,814
  Cash and cash equivalents, beginning of year                                           550             6,266             1,452
  -------------------------------------------------------------------------------------------------------------------------------
  Cash and cash equivalents, end of year                                        $    172,429     $         550     $       6,266
=================================================================================================================================
  Supplemental Disclosure of Cash Flow Information:
     Cash paid during the year for:
        Interest                                                                $     10,305     $       9,437     $          21
        Income taxes                                                            $       -        $        -        $        -


                                                                                 See accompanying notes to financial statements.

                                                                                                                              F-6






                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

1. Reorganization   The Company filed for Chapter 11 bankruptcy protection in
                    March 2000. Management began its search for a viable merger
                    candidate since if it were not successful the Company would
                    cease to exist. The Company had been totally inactive since
                    November of 1999.

                    On January 25, 2002, Nantucket Industries Inc., effected a
                    "reverse acquisition" pursuant to which Nantucket acquired
                    all of the issued and outstanding capital stock of Accutone,
                    Inc., a Pennsylvania corporation. The acquisition was made
                    on a stock-for-stock basis pursuant to the terms of
                    Nantucket's Chapter 11 Plan of Reorganization. The Plan of
                    Reorganization, which was accepted by the creditors of
                    Nantucket and approved by the Bankruptcy Court on December
                    10, 2001 and became effective on January 25, 2002.

                    DESCRIPTION OF THE PLAN
                    -----------------------

                    The Plan provided for the cancellation of all outstanding
                    shares of stock in the Company and the re-issuance of new
                    shares of stock by the reorganized Company. All stock of
                    existing Subsidiaries was cancelled.

                    All holders of allowed claims and stock interests in the
                    Debtor would receive ratable distribution of the new shares
                    of stock in accordance with the formulas set forth below.

                    The Plan of Reorganization, was predicated upon the
                    acquisition of the Accutone business and its business
                    prospects in exchange for a distribution of 5,285,160 common
                    shares in the reorganized Company to the current equity
                    holders of Accutone. The resulting combined entity issued
                    new shares of its stock to all parties in interest in a
                    manner that reflected the respective liquidation preferences
                    of the classes of claims and interests.

                    ADMINISTRATIVE DEBT
                    -------------------

                    The costs and expenses of the administrative claim of
                    Nantucket in course of the reorganization had priority of
                    distribution pursuant to 11 U.S.C. ss.503 and would either
                    be paid in full upon confirmation, or other terms agreed
                    upon by the holders of such claims.

                    The expenses of administration consisted primarily of the
                    fees of professional persons retained by Nantucket in the
                    course of this reorganization and their fees were ultimately
                    subject to allowance and approval by the Bankruptcy Court.


                                                                             F-7



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    PRIORITY TAX DEBT
                    -----------------

                    Priority tax debt consisted of governmental taxing
                    authorities whose claims would be entitled to priority of
                    payment pursuant to Section 507 (a)(8) of the Bankruptcy
                    Code. There are no taxes due to government agencies other
                    than personal property tax due to Bartow County, Georgia,
                    for which a claim has been settled in the amount of $23,130.
                    In addition, the Internal Revenue Service filed a priority
                    claim in the approximate amount of $745 and the claim was
                    settled for such amount. The allowed amount of these
                    priority claims, will be paid in full by the reorganized
                    Company in the manner permitted by Section 1129(a)(9)(C) by
                    payment, on account of such claims, of deferred cash
                    payments over a period of six years after the earlier of the
                    date of assessment of such claim or the Effective Date of
                    the Plan, together with interest at the rate provided for in
                    the United States Tax Code as of the date of such payments.
                    The Effective Date is defined in the Plan as the date upon
                    which the order confirming the Plan is final and no longer
                    subject to an appeal.

                    SECURED DEBT
                    ------------

                    Secured debt consisted of the secured claim of NAN
                    Investors, LP, the entity that loaned the Pre-Chapter 11
                    Company through a private placement the original amount of
                    $3,500,000, of which, $2,760,000 was memorialized in two
                    12.5% convertible debentures. NAN was still owed, as of the
                    filing date, the approximate sum of $800,000.00. The claim
                    was secured by the assets of the Pre-Chapter 11 Company,
                    pursuant to the blanket security interest granted NAN in
                    1998 to assure payment of the debt. In October, 1999 all of
                    the assets of the Pre-Chapter 11 Company were surrendered to
                    NAN in lieu of foreclosure and according to the Pre-Chapter
                    11 Company's management there were no assets remaining in
                    the Company. The unsecured portion of the NAN debt, was
                    determined to be $830,337.00 and was treated as general
                    unsecured claim.

                    GENERAL UNSECURED DEBT
                    ----------------------

                    Unsecured Debt consisted of the holders of general unsecured
                    claims against Nantucket arising from the operations of its
                    business. There were general unsecured claims totaling
                    $1,731,321 including the NAN investors unsecured debt
                    (above). Holders of allowed general unsecured claims
                    received in full settlement and satisfaction of their
                    respective claims, receive 346,263 shares of common stock in
                    the reorganized Company, one (1) share of stock in the
                    reorganized Company per $5.00 of claim.

                                                                             F-8



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    PREFERRED STOCK
                    ---------------

                    The Samberg Group were holders of 5,000 shares of preferred
                    stock issued by the Company in 1995. The preferred stock had
                    a liquidation preference of $200 pre share, for a total of
                    $1,000,000 based upon the election of redemption rights
                    approved in 1997. The preferred stock was issued in exchange
                    for the investment of additional capital of $1,000,000 by
                    the Samberg Group in 1994. The Samberg Group is comprised of
                    Stephen M. Samberg, the former President and Chairman of the
                    Board (1994 through 1998), Steven Sussman, Raymond Wathen,
                    Robert R. Polen and the wife of Ronald Hoffman, all of whom
                    are former officers of the Pre-Chapter 11 Company and/or
                    members of its board.

                    The Plan provided that the holder of the stock issued and
                    outstanding shares of preferred stock in the Pre-Chapter 11
                    Company would receive, in full settlement and satisfaction
                    their liquidation preference and all other rights
                    appurtenant to such shares, one (1) share of stock in the
                    reorganized Company per $20.00 of liquidation preference
                    they held. As a result, the Samberg Group received a total
                    of 50,000 shares of common stock in the reorganized Company
                    in full settlement and satisfaction of the redemption claims
                    and all other claims based upon the preferred shares. The
                    outstanding shares of preferred stock would be deemed null
                    and void and shall be canceled of record.

                    COMMON STOCKHOLDERS
                    -------------------

                    Consists of the holders of shares of common stock in the
                    Company which were issued and outstanding. There were
                    3,241,848 shares of stock issued and outstanding and held by
                    approximately 1,100 holders. The Plan provided for the
                    preservation of their participation in the reorganized
                    Company by issuing them new shares of stock in the
                    reorganized Company at the rate of one (1) new share of
                    stock in the reorganized Company per ten (10) shares of the
                    currently issued stock held a total of 324,184. The current
                    shares of stock would be deemed null and void and the
                    shareholders are to turn in their present shares for
                    cancellation.

                    In addition, all outstanding warrants and options to
                    purchase stock and to convert debt to stock would be deemed
                    null and void and canceled of record. These rights canceled
                    included those rights granted to NAN Investors in
                    conjunction with the private placement of 1996 of $3,500,000
                    by which NAN had the right to purchase Nantucket common
                    stock at fixed prices.

                                                                             F-9




                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                     EXTRAORDINARY GAIN ON DISCHARGE OF DEBT
                     ---------------------------------------

                    The value of securities to be distributed under the Plan was
                    less than the value of the allowed claims on and interests
                    in the Company: Accordingly, the Company recorded an
                    extraordinary gain of $1,621,162related to the discharge of
                    pre-petition liabilities. Distributions associated with
                    pre-petition claims and obligations and provisions for
                    settlements are reflected in the February 28, 2002 balance
                    sheet. The consolidated financial statements at February 28,
                    2002 give effect to the issuance of all common stock and any
                    surviving liabilities in accordance with the Plan.


                    The extraordinary gain recorded by the Company was
                    determined as follows:


                                                                              
                    Liabilities subject to compromise at the effective           $   1,731,321
                    date

                    Less:

                    Assumption of pre-petition liabilities                              23,175

                    Liabilities in excess of recorded amounts                           30,575

                    Assets offset against pre-petition liabilities                      21,783

                    Value of common stock issued                                        34,626
                    ------------------------------------------------------------ ---------------
                    Extraordinary Gain on Debt Discharge                         $   1,621,162
                    ============================================================ ===============


2.   Summary of
     Significant
     Accounting Policies

                    a.   The Company

                    Nantucket Industries, Inc. and its wholly owned subsidiaries
                    (the "Company") were inactive from October 1999 until
                    January 26, 1992. At that date a reverse merger with
                    Accutone Inc. and Subsidiary occurred. (See note 1) Accutone
                    Inc. is engaged in the business of selling and distributing
                    hearing aids and providing the related audiological
                    services.

                                                                            F-10




                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    b.   Principles of Consolidation

                    The consolidated financial statements include the accounts
                    of Nantucket Industries, Inc. and its wholly owned
                    subsidiaries. All significant intercompany balances and
                    transactions have been eliminated. As a result of the above
                    described acquisition, Nantucket Industries, Inc. (together
                    with Accutone's wholly-owned subsidiary) has no business or
                    assets other than those which it acquired through its
                    acquisition of Accutone.

                    c.   Accounts Receivable

                    An allowance for doubtful accounts is provided based upon
                    historical bad debt experience and periodic evaluations of
                    the aging of the accounts. No allowance was considered
                    necessary since to date there has been no bad debt
                    expense.

                    d.   Property, Plant and Equipment

                    Property and equipment are stated at cost. Depreciation is
                    computed for financial statement purposes, using the
                    straight-line method over the estimated useful life. For
                    income tax purposes, depreciation is computed using
                    statutory rates.

                    e.   Inventories

                    Inventories are stated at the lower of costs (first-in,
                    first-out method) or market.

                    f.   Intangible Assets

                    Intangible assets include customer lists, which are stated
                    at cost. Amortization is computed for financial statement
                    and tax purposes using the straight-line method over 15
                    years.

                    g.   Income Taxes

                    The Company and its wholly owned subsidiaries file a
                    consolidated federal income tax return. Deferred income
                    taxes arise as a result of differences between financial
                    statement and income tax reporting

                                                                            F-11



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    h.   Earnings (Loss) Per Common Share

                    In fiscal year 1998, the Company adopted Statement of
                    Financial Accounting Standards No. 128 (SFAS No. 128),
                    Earnings Per Share, which requires public companies to
                    present earnings per share and, if applicable, diluted
                    earnings per share. All comparative periods must be restated
                    as of February 28, 1998 in accordance with SFAS No. 128.
                    Basic earnings per share are based on the weighted average
                    number of common shares outstanding without consideration of
                    potential common share equivalents. Diluted earnings per
                    share are based on the weighted average number of common and
                    potential common shares outstanding. The calculation takes
                    into account the shares that may be issued upon exercise of
                    stock options, if any, reduced by the shares that may be
                    repurchased with the funds received from the exercise, based
                    on the average price during the year.

                    i.   Reporting Comprehensive Income

                    In June 1997, the Financial Accounting Standards Board
                    (FASB) issued Statement of Financial Accounting Standards
                    No. 130 (SFAS No. 130), Reporting Comprehensive Income,
                    which is effective for the Company's year ending February
                    27, 1999. SFAS No. 130 addresses the reporting and
                    displaying of comprehensive income and its components.
                    Earnings (loss) per share will only be reported for net
                    earnings (loss), and not for comprehensive income. Adoption
                    of SFAS No. 130 relates to disclosure within the financial
                    statements and is not expected to have a material effect on
                    the Company's financial statements.

                    j.   Segment Information

                    In June 1997, the FASB also issued Statement of Financial
                    Accounting Standards No. 131 (SFAS No. 131), Disclosure
                    About Segments of an Enterprise and Related Information,
                    which is effective for the Company's year ending February
                    27, 1999. SFAS No. 131 changes the way public companies
                    report information about segments of their business in their
                    financial statements and requires them to report selected
                    segment information in their quarterly reports. Adoption of
                    SFAS No. 131 relates to disclosure within the financial
                    statements and is not expected to have a material effect on
                    the Company's financial statements.

                    k.   Fiscal Year

                    The Company's fiscal year ends February 28.


                                                                            F-12



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    l.   Reclassification

                    Certain prior year amounts have been reclassified in order
                    to conform to the current year's presentation.

                    m.   Use of Estimates

                    In preparing the Company's financial statements, management
                    is required to make estimates and assumptions that affect
                    the reported amounts of assets and liabilities and the
                    disclosure of contingent assets and liabilities at the date
                    of the financial statements, and the reported amounts of
                    revenues and expenses during the reporting period. Actual
                    results could differ from those estimates.

                    n.   Impairment of Long-Lived Assets

                    The Company applies Statement of Financial Accounting
                    Standards No. 121, Accounting for the Impairment of
                    Long-Lived Assets and for Long-Lived Assets to be Disposed
                    of. Accordingly, when indicators of impairment are present,
                    the Company periodically evaluates the carrying value of
                    property, plant and equipment and intangibles in relation to
                    the operating performance and future undiscounted cash flows
                    of the underlying business. The Company adjusts carrying
                    amount of the respective assets if the expected future
                    undiscounted cash flows are less than their book values. No
                    impairment loss was required in fiscal year 2003.

                    o.   Fair Value of Financial Instruments

                    Based on borrowing rates currently available to the Company
                    for debt with similar terms and maturities, the fair value
                    of the company's long-term debt approximate the carrying
                    value. The carrying value of all other financial instruments
                    potentially subject to valuation risk, principally cash,
                    accounts receivable and accounts payable, also approximate
                    fair value.

                    p.   Advertising Costs

                    Costs for newspaper and other media advertising are expensed
                    as incurred and were $20,255, $18,147 and $1,686 in 2004,
                    2003 and 2002, respectively.

                    q.   Sales return policy

                    The Company provides to all patients purchasing hearing aids
                    a specific return period, a minimum of 45 days, if the
                    patient is dissatisfied with the product. The Company does
                    not provide an allowance in accrued expenses for returns
                    since actual returns for this fiscal year were less than 2%.
                    The return period can be extended an additional 15 days at
                    the discretion of the dispensing audiologist. All the
                    manufacturers that supply the Company accept all returns
                    back for full credit within these return periods.


                                                                            F-13



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

3.   Concentration  Currently approximately 70% of the reorganized
     of Risk        Company's business is based on contracts with The New York
                    State Medical Assistance Program (Medicaid) and Empire
                    Medicare Service (Medicare).

4.   Acquisition of On February 28, 2002 the Company executed a
     Audiology      contract with Park Avenue Medical Practice Associates, P.C.
                    and Park Avenue Health Care Management, Inc. The Park Avenue
                    Group directly employs medical professional personnel,
                    including physicians in both general and specialty practices
                    and other health care professionals such as podiatrists,
                    audiologists, psychologists and psychotherapists.

                    Nursing homes and long term care facilities contract with
                    Park Avenue for the services of Park Avenue's medical
                    professionals, on a pre-determined schedule or on an
                    as-needed basis. Pursuant to the terms of the agreement Park
                    Avenue contributed its entire audiology practice to the
                    Company. The contract also calls for Brad I. Markowitz, the
                    president of Park Avenue Management to join the Company's
                    Board of Directors. Mr. Markowitz is a banker by trade and
                    has been with Park Avenue since 1995. At that time Park
                    Avenue was servicing approximately seven nursing homes.
                    Under his tutelage Park Avenue has grown to service over
                    seventy long term care facilities. In addition, Mr.
                    Markowitz serves on the Board of Trustees of several private
                    companies.

                    The Company issued 1,200,000 shares of restricted common
                    stock to acquire the audiology practice of Park Avenue
                    Medical Associates P.C. Under the agreement the Company
                    gains access to approximately 70 nursing homes to provide
                    complete audiology services. As of February 29, 2004 the
                    Company has entered into contracts with approximately 59 of
                    these nursing homes. In addition, Park Avenue will continue
                    to provide additional access to any new nursing homes they
                    have contact with.

5.   Property,      Property, plant and equipment are summarized as follows:
     Plant and
     Equipment



                                                           February 29,   February 28,   February 28,
                                                                 2004          2003         2002
                    --------------------------------------------------------------------------------
                                                                               
                    Leasehold improvements                  $    25,000   $    25,000   $   25,000
                    Machinery  and equipment                    120,296       104,266       99,870
                    Furniture and fixtures                        6,200         6,200        6,200
                    --------------------------------------------------------------------------------
                                                                151,496       135,466      131,070
                    Less accumulated depreciation                90,469        69,126       49,612
                    --------------------------------------------------------------------------------
                                                            $    61,027   $    66,340   $   81,458
                    ================================================================================


                                                                            F-14





                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================


6.   Line of        The Company has a revolving line of credit with Park Avenue
     Credit         for up to $30,000. The interest rate on any amount of the
                    line utilized is at prime plus 2%. The agreement expires and
                    on August 1, 2005 with a provisions for a renewal of this
                    agreement.

7.   Net Earnings   The following table sets forth the computation of basic and
     (Loss) Per     diluted loss per share:
     Common Share



                                                                  February 29,     February 28,     February 28,
                                                                         2004              2003             2002
                    ---------------------------------------------------------------------------------------------
                                                                                             
                    Net earnings (loss)  attributable to common      $ (307,657)     $ (168,815)      $1,370,815
                        stockholders
                    Accrued dividends on preference shares                    -               -                -
                    ---------------------------------------------------------------------------------------------
                    Denominator   for  basic  and  diluted  net
                        earnings  (loss)  per  common  share  -
                        weighted average shares outstanding           9,834,528       8,440,251        3,620,168
                    ---------------------------------------------------------------------------------------------
                    Basic and diluted net  earnings  (loss) per      $     (.03)     $     (.02)      $      .38
                        share
                    ---------------------------------------------------------------------------------------------



8.   Income Taxes   Deferred income taxes reflect the net effect of temporary
                    differences between the carrying amounts of assets and
                    liabilities for financial reporting purposes and the amount
                    used for income tax purposes. Deferred tax assets and
                    liabilities are measured using enacted tax rates.
                    Significant components of the Company's deferred taxes at
                    February 29, 2004, February 28, 2003 and February 28, 2002
                    are as follows:


                                                                 February 29,  February 28, 2003  February 28,
                                                                         2004                            2002
                    ---------------------------------------------------------------------------------------------
                    Deferred tax assets
                                                                                             
                    Net operating loss carryforward                  $  291,900      $   96,950       $   96,950
                    Deferred tax liabilities
                    Difference between the book and tax
                           basis   of   property,    plant   and
                           equipment                                          -               -                -
                    ---------------------------------------------------------------------------------------------
                       Net deferred tax asset                           291,900          96,950           96,950
                       Valuation allowance                              291,900          96,950           96,950
                    ---------------------------------------------------------------------------------------------
                       Net deferred taxes                            $        -      $        -       $        -
                    ---------------------------------------------------------------------------------------------


                                                                            F-15



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    The Company anticipates utilizing its deferred tax assets
                    only to the extent of its deferred tax liabilities.
                    Accordingly, the Company has fully reserved all remaining
                    deferred tax assets, which it cannot presently utilize.

                    For tax purposes at February 28, 2004, the Company's net
                    operating loss carryforward was $834,000, which, if unused,
                    will expire from 2017 to 2021. Certain tax regulations
                    relating to the change in ownership may limit the Company's
                    ability to utilize its net operating loss carryforward if
                    the ownership change, as computed under each regulation,
                    exceeds 50%.

                    There was no income tax provision (benefit) for the fiscal
                    years 2004, 2003 and 2002.

                    The following is a reconciliation of the normal expected
                    statutory federal income tax rate to the effective rate
                    reported in the financial statements.



                                                                 February 29,    February 28,    February 28,
                                                                         2004            2003            2002
                    ------------------------------------------------------------------------------------------
                       Computed "expected" provision for:
                                                                                             
                           Federal income taxes                       (35.0)%         (35.0)%         (35.0)%
                            Valuation allowance                          35.0            35.0            35.0
                    ------------------------------------------------------------------------------------------
                       Actual provision for income taxes                 -  %            -  %              0%
                    ------------------------------------------------------------------------------------------


9.   Stockholders'  a.  Issuance of Preferred Stock
     Equity
                    On March 22, 1994, the Company sold to its management group
                    5,000 shares of non-voting convertible preferred stock for
                    $1,000,000. These shares were convertible into 200,000
                    shares of common stock at the rate of $5.00 per share. These
                    shares provided for cumulative dividends at a floating rate
                    equal to the prime rate. Such dividends were convertible
                    into common stock at the rate of $5.00 per share. The
                    conversion rights were waived in May 1998. These shares were
                    redeemable, at the option of the Company, on or after
                    February 27, 1999 and had a liquidation preference of $200
                    per share. As of February 28, 2001, February 27, 2000
                    dividends in arrears were $570,134, and $489,484,
                    respectively. The liquidation preference of $200 per share
                    as well as any dividends in areas at that time were settled
                    in full, pursuant to the approved plan of reorganization.
                    (See Note 1).


                                                                            F-16



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    In connection with the Company's refinancing on March 22,
                    1994, the Company entered into a $2,000,000 term loan
                    agreement with a financial institution. Pursuant to the
                    agreement, the Company issued to the bank 10,000 treasury
                    common shares related to mandatory prepayments, which were
                    not made. The treasury stock was retired in conjunction with
                    the plan of reorganization.

               c.   Grant of Warrants

                    Warrants have been granted to NAN Investors LP to purchase
                    16,500,000 shares of the Company's Common Stock for $.10 per
                    share, with a five-year term effective May 21, 1998. All
                    warrants were canceled in conjunction with the plan of
                    reorganization.

               d.   Private Placements

                    At various dates during the current fiscal year the Company
                    closed on private placements for 899,642 shares of common
                    stock for an aggregate sales price of $222,400. The offers
                    and sales were made only to "accredited investors" as
                    defined in Rule 501(a) of Regulation D and the Company
                    relied on Regulation D and Section 4(2) of the Securities
                    act of 1933 to issue the securities without registration.

               e.   Stock plans

                    The Company currently has no stock plans in effect.


10.  Commitments,
     Contingencies
     and Related
     Party
     Transactions

               a.   Agreement with Principal Stockholders

                    On March 1, 1994, in connection with the restructuring
                    described in Note 4, the Company entered into agreements
                    with its two principal stockholders and a group of employees
                    (the "Management Group"). The agreements provide, among
                    other things, for:

                    The reimbursement of the principal stockholders, limited to
                    $1.50 per share to the extent that the gross proceeds per
                    share from the sale of common stock by the stockholders
                    during the two-year period beginning September 1, 1994 were
                    less than $5.00 per share. Such guaranty was applicable to a
                    maximum of 150,000 shares sold by such stockholders, subject
                    to reductions under certain circumstances. The principal
                    stockholders sold 157,875 shares including 88,400 at prices
                    below $5.00 per share; 37,125 shares in the fiscal year
                    ended March 1, 1997 and 51,275 shares in the year ended
                    March 2, 1996 which resulted in a charge to operating
                    results of $12,000 and $35,000, respectively.


                                                                            F-17



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

                    Warrants to purchase up to 157,875 shares of common stock
                    equal to the number of shares sold by the principal
                    stockholders. The exercise price per share of such warrants
                    would equal the gross proceeds per share from the
                    corresponding sale by the principal stockholders. Such
                    warrants expired on February 28, 2000. All agreement with
                    the principal stockholder was canceled in conjunction with
                    the plan of reorganization.

               b.   Executive compensation

                    In accordance with employment agreement between the Company
                    and John H. Treglia The Company's President dated, April 3,
                    2000, Mr. Treglia was entitled to cash compensation of
                    $150,000 per year, all such cash compensation was waived by
                    Mr. Treglia. In accordance with Paragraph 6 of this
                    employment agreement, Mr. Treglia may receive common stock
                    of the Company valued at the average market price on a
                    monthly basis. In accordance with the agreement on November
                    15, 2002, Mr. Treglia was issued 416,667 shares of
                    restricted common stock of the Company. Compensation for the
                    period March 1, 2002 and ending on February 28, 2003 such
                    shares equating to approximately $25,000 in salary.
                    Compensation for the period March 1, 2003 and ending on
                    February 29, 2004 was $62,060 of which $25,000 was paid in
                    common stock.

               c.   Consulting agreement

                    The Company terminated its consulting agreement with
                    Westminster Holdings Ltd. and rescinded the 1,200,000 shares
                    of common stock of Nantucket Industries, Inc. as of June 21,
                    2002.

                    During this fiscal year the Company entered into two
                    consulting agreements and issued 1,250,000 shares of
                    restricted common stock of Nantucket Industries, Inc.

               d.   Major Suppliers

                    During this fiscal year United Hearing Systems ("UHS")
                    became a major supplier of the Company. This occurred in the
                    course of negotiating to purchase UHS. These negotiations
                    were terminated in December 2002. Although there are a
                    limited number of manufactures of hearing aids, management
                    shifted its purchasing to include three other manufacturers
                    who provide similar hearing aids on comparable terms. In the
                    event of a disruption of supply from any one manufacture the
                    Company could obtain comparable products from other
                    manufacturers. Few manufacturers offer dramatic product
                    differentiation. The Company has not experienced any
                    significant disruptions in supply in the past.

                                                                            F-18



                                                     Nantucket Industries, Inc.
                                                               and Subsidiaries


                                     Notes to Consolidated Financial Statements
================================================================================

               e.   Lease obligation

                    The Company leases office under any agreement that expires
                    on February 2006. As of February 29, 2004 the future minimum
                    lease payments are as follows:


                     February 28
               ------------------------------------------------------------
                     2005                                          27,627
                     2006                                          28,456
               ------------------------------------------------------------
                                                                 $ 56,083
               ============================================================

11.  Subsequent a.  Acquisition
     Events
                    Effective March 1, 2004 the Company will issued 453,200
                    shares of common stock and $60,000 for working capital to
                    acquire all the common stock of Comprehensive Network
                    Solutions, Inc. a company providing non-insurance membership
                    cards, which allow the members to receive a discount for
                    certain medical services. As part of the acquisition the
                    line of credit of Comprehensive Network Solutions Inc. was
                    repaid by the certain stockholder.


                                                                            F-19



ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

None in the last two years.

ITEM 9A.  CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our principal executive officer and principal financial officer evaluated our
disclosure controls and procedures (as defined in rule 13a-14(c) and 15d-14(c)
under the Securities Exchange Act of 1934, as amended) as of a date within 90
days before the filing of this annual report (the Evaluation Date). Based on
that evaluation, our principal executive officer and principal financial officer
concluded that, as of the Evaluation Date, the disclosure controls and
procedures in place were adequate to ensure that information required to be
disclosed by us, including our consolidated subsidiaries, in reports that we
file or submit under the Exchange Act, is recorded, processed, summarized and
reported on a timely basis in accordance with applicable rules and regulations.
Although our principal executive officer and principal financial officer
believes our existing disclosure controls and procedures are adequate to enable
us to comply with our disclosure obligations, we intend to formalize and
document the procedures already in place and establish a disclosure committee.

Changes in internal controls

We have not made any significant changes to our internal controls subsequent to
the Evaluation Date. We have not identified any significant deficiencies or
material weaknesses or other factors that could significantly affect these
controls, and therefore, no corrective action was taken.


                                       26


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

Directors, Executive Officers and Significant Employees

The following sets forth, as of June 10, 2004, the names and ages of our
directors, executive officers, and other significant employees; the date when
each director was appointed; and all positions and offices held by each. Each
director will hold office until the next annual meeting of shareholders and
until his or her successor has been elected and qualified:

                                                               Date
                                      Positions                Appointed
Name                        Age       Held                     Director
----------------------      ---       ---------------          -------------
John H. Treglia             61        Director, President,     January 18, 2000
                                      and, CEO and CFO

Dr. Frank Castanaro         53        Secretary and Director   February 17, 2000

Set forth below is information regarding the principal occupations of each
current director during the past five years or more. None of the directors or
principal executive officers holds the position of director in any other public
company.

John H. Treglia is a graduate of Iona College, from which he received a BBA in
Accounting in 1964. Since January 18, 2000, he has served as our president,
secretary, and a director, devoting such time to our business and affairs as is
required for the performance of his duties. From 1964 until 1971, Mr. Treglia
was employed as an accountant by Ernst & Ernst. Thereafter, he founded and
operated several businesses in various areas. From 1994 through 1998, Mr.
Treglia served as a consultant to several companies which were in Chapter 11.
These included J.R.B. Contracting, Inc., Laguardia Contracting, and
Melli-Borrelli Associates. In 1996, Mr. Treglia founded Accutone Inc., a company
engaged in the business of manufacturing and distributing hearing aids. He has
served as its president and CEO since such time.

Dr. Frank Castanaro received a Bachelor of Science degree from the University of
Scranton in 1974. In 1978, he graduated from Georgetown University School of
Dentistry and has been in private practice as a dentist since such time. Dr.
Castanaro was appointed as our director on February 17, 2000. Dr. Castanaro has
assisted two large ophthalmology practices to introduce and expand their
activities in Laser therapy, including, but not limited to, Lasik procedures.
Dr. Castanaro presently practices dentistry in partnership with Dr.'s Joseph C.
Fontana and John B. Fontana in Peekskill, New York, and has a solo practice in
Yonkers, New York. Dr. Castanaro is a member of the American Dental Association,
the Dental Society of the State of New York, the Ninth District Dental Society,
and the Peekskill-Yorktown Dental Society.

Code of Ethics. The company has adopted a Code of Ethics applicable to its Chief
Executive Officer and Chief Financial Officer. This Code of Ethics is filed
herewith as an exhibit.

ITEM 11. EXECUTIVE COMPENSATION

Compensation of Directors

Until June of 2000, when our board of directors eliminated compensation for
directors other than those employed by us, such persons were paid $5,000
annually and an additional $500 for each Board or committee meeting attended in
person. No payments have been made during the fiscal year ended February 28,
2004.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee was disbanded in May 1998. As of the date hereof, the
Board of Directors has not established a new Compensation Committee and it has
no plans to do so until such time as our financial position and prospects
improve significantly.


                                       27


SUMMARY COMPENSATION TABLE

The Summary Compensation Table shows compensation information for each of the
fiscal years ended February 28, 2004 February 28, 2003 and February 28, 2002 for
all persons who served as our chief executive officer. No other executive
officers received compensation in excess of $100,000 during the fiscal year
ended February 28, 2004.


                               ANNUAL COMPENSATION

Name and Principal
and Position                           Year    Salary        Other Compensation
------------                           ----    ------        ------------------

John H. Treglia                        2004   $37,060         357,142 shares
President, Chief Executive             2003        -0-        357,142 shares
Officer, Secretary and Director        2002        -0-        630,397 shares

Dr. Frank Castanaro                    2004   $    -0-              0
Secretary and Director                 2003        -0-              0
                                       2002        -0-              0

Pursuant to his employment agreement, John H. Treglia is to receive a total of
$150,000 per year. For the fiscal year end February 28, 2004, Mr. Treglia
received $37,060 in salary and $25,000 worth of our restricted common stock. Mr.
Treglia agreed to waive his rights to the balance of $87,940 owed to him under
his employment agreement.

ITEM NO. 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Certain Beneficial Owners

The following table sets forth information as of June 10, 2004, with respect to
the persons known to us to be the beneficial owners of more than 5% of our
common stock, $.10 par value.

                             PRINCIPAL SHAREHOLDERS

We know of no person, other than those listed in the Management's Shareholdings
Table, below, who owns more than 5% of our common stock. The following table
sets forth information as of June 10, 2004, with respect to the beneficial
ownership of our common stock, $.10 par value, of each of our executive officers
and directors and all executive officers and directors as a group:

                          PRINCIPAL SHAREHOLDERS TABLE

Title                 Name and
of                    Address of                   Amount and
Beneficial            Beneficial                   Nature of         Percent of
Owner                 Ownership                    Class                 Class
---------             ----------                   --------            ---------


Common                Carlyn A. Barr (1)            2,837,026            23.35%
                      13-44 Henrietta Court
                      Fair Lawn, NJ 07410

Common                Park Avenue Health Care       1,200,000             9.88%
                      Management
                      One North Lexington Avenue
                      White Plains, New York 10601

Common                Dr. Frank J. Castanaro          733,000             6.03%
                      71 Bradford Boulevard
                      Yonkers, NY  10710

(1) Carlyn A. Barr is the wife of John H. Treglia. John Treglia has disavowed
any interest in the shares of common stock owned by Ms. Barr.

                                       28


Security Ownership of Management

The following table sets forth information as of June 10, 2004, with respect to
the shareholdings of the Company's executive officers and directors.

Title                 Name and                     Amount and
of                    Address of                   Nature of
Class                 Beneficial                   Beneficial        Percent of
Owner                 Owner                        Class(1)          Class
-----                 ----------                   ----------        ----------
Common                John H. Treglia                       0                0
                      13-44 Henrietta Court
                      Fair Lawn, NJ  07410

Common                Dr. Frank J. Castanaro          733,000             6.03%
                      71 Bradford Boulevard
                      Yonkers, NY  10710

Common                All directors and               733,000             6.03%
                      officers as a group
                      (2 persons)

Pursuant to the rules of the Securities and Exchange Commission, shares of our
common stock, which an individual or member of a group has a right to acquire
within 60 days pursuant to the exercise of options or warrants, are deemed to be
outstanding for the purpose of computing the ownership of such individual or
group, but are not deemed to be outstanding for the purpose of computing the
percentage ownership of any other person shown in the table. Accordingly, where
applicable, each individual or group member's rights to acquire shares pursuant
to the exercise of options or warrants are noted below.

Medical and Professional Advisory Board

We have formed a Medical and Professional Advisory Board which consists of
individuals with experience and expertise in otolaryngology, audiology,
geriatric care (both medical and psychological), and new hearing aid product
developments. The purpose of establishing this advisory board was to assist us
with any complex questions or issues which may arise in connection with their
fields of expertise. W we consult with the members with respect to current
developments in their fields of expertise and, where appropriate, for advice
respecting our business strategy.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The following is a description of any transactions during the fiscal year ended
February 28, 2004 or any presently proposed transactions, to which we were, or
are, to be a party, in which the amount involved in such transaction (or series
of transactions) was $60,000 or more and which any of the following persons had
or is to have a direct or indirect material interest: (ii) any of our directors
or executive officers; (ii) any person who owns or has the right to acquire 5%
or more of our issued and outstanding common stock; and (iii) any member of the
immediate family of any such persons. Current management is not aware of any
requirements, which may have been in effect prior to January 2000, with respect
to the approval of related transactions by independent directors. Because of its
current limited management resources, the company does not presently have any
requirement respecting the necessity for independent directors to approve
transactions with related parties. All transactions are approved by the vote of
the majority, or the unanimous written consent, of the full board of directors.
All member so the board of directors all members of the board of directors,
individually and/or collectively, could have possible conflicts of interest with
respect to transactions with related parties.

                                       29


Employment Agreement with John H. Treglia

On April 3, 2000, we entered into an employment agreement with John H. Treglia,
our President and CEO. The agreement provides for an annual salary in the amount
of $150,000 and a term of three years. On April 3, 2003 we entered into an
amendment to such employment agreement extending the terms of the agreement for
an additional five years based on the same terms and conditions. Mr. Treglia has
agreed to waive the right to be paid in cash until, in the opinion of the board
of directors, we have sufficient financial resources to make such payments. In
lieu of cash salary payments, Mr. Treglia may accept shares of common stock at,
or at a discount from the market price. His agreement provides for the
possibility of both increases in salary and the payment of bonuses at the sole
discretion of the board of directors, participation in any pension plan,
profit-sharing plan, life insurance, hospitalization of surgical program or
insurance program adopted by us (to the extent that the employee is eligible to
do so under the provisions of such plan or program), reimbursement of business
related expenses, for the non-disclosure of information which we deem to be
confidential to it, for non-competition with us for the two-year period
following termination of employment with us and for various other terms and
conditions of employment. We do not intend to provide any of our employees with
medical, hospital or life insurance benefits until our board of directors
determines that we have sufficient financial resources to do so.

ITEM 14. PRINCIPAL ACCOUNTANTING FEES AND SERVICES

Audit Fees

For the Company's fiscal year ended February 28, 2004, we were billed
approximately $12,000 for professional services rendered for the audit of our
financial statements. We also were billed approximately $3,000 for the review of
financial statements included in our periodic and other reports filed with the
Securities and Exchange Commission for our year ended February 28, 2004.

Tax Fees

For the Company's fiscal year ended February 28, 2004, we were billed $2,000 for
professional services rendered for tax compliance, tax advice, and tax planning.

All Other Fees

The Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal year ended February 28, 2004.

ITEM 15.  - EXHIBITS AND REPORTS ON FORM 8K

     (a)  Exhibits:

          None

     (b)  Reports of Form 8-K filed in fourth quarter of the fiscal year:

          None


                                       30


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Yonkers, State of New York.

                                        COMPREHENSIVE HEALTHCARE SOLUTIONS, INC.


February 28, 2005                       By /s/ John H. Treglia
                                        ----------------------------------
                                        John H. Treglia, President and CEO


                                        By: /s/ Frank Castanaro
                                        ----------------------------------
                                        Dr. Frank Castanaro, Secretary

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report
has been signed below by the following persons on behalf of the
registrant and
in the capacities on the dates indicated.


February 28, 2005                       /s/ John H. Treglia
                                        ----------------------------------
                                        John H. Treglia, Director


                                        /s/ Frank Castanaro
                                        ----------------------------------
                                        Dr. Frank Castanaro, Director


                                       31