Amended Annual Report

THE PHOENIX GROUP
CORPORATION
CONSOLIDATED BALANCE
SHEETS
DECEMBER 31, 2001 AND
2000

                                            2001       2000

ASSETS

CURRENT ASSETS
  Cash and cash equivalents   $     622   $  1,627

  Accounts Receivable   968,946    -

  Inventory   15,218    -

  Deposits and other   49,270   32,542

      Total current assets   1,034,057   34,169

PROPERTY AND EQUIPMENT, net    57,820   75,808

OTHER ASSETS
  Intangible assets, net   1,620,939   -
  Security deposits   17,216   14,198
  Note Receivable   10,005    -
TOTAL ASSETS   $2,740,037   $124,175


LIABILITIES AND STOCKHOLDERS' EQUITY(DEFICIT)

CURRENT LIABILITIES
  Notes payable - related party and other   $4,710,402   $2,699,887
  Accounts payable   1,750,472   684,669
  Accrued expenses and other current liabilities   1,410,011   387,101
  Net liabilities of discontinued operations   6,990,000   6,575,000

      Total current liabilities   14,860,885   10,346,657

COMMITMENTS AND CONTINGENCIES   -   -

STOCKHOLDERS' EQUITY(DEFICIT)
  Preferred Stock, $.001,5,000,000 shares authorized:
      Series A, 533,333 shares issued and outstanding   533   533
      Series B, 100,000 shares issued and outstanding   100   100
  Common Stock, $.001 par value,50,000,000 shares
      authorized; 58,203,567 and 36,253,495 issued
      or issuable and outstanding in 2001 and 2000, respectively   83,085   58,204
  Additional Paid-In Capital   46,516,306   45,669,761
  Accumulated Deficit   (58,720,874)   (55,951,080)

   (12,120,849)   (10,222,482)


TOTAL LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)   $ 2,740,035   $   124,175
The accompanying notes are an integral part of these consolidated financial statements

THE PHOENIX GROUP
CORPORATION
CONSOLIDATED STATEMENTS OF
OPERATIONS
YEARS ENDED DECEMBER 31,
2001 AND 2000

   2001   2000
Operating revenues - net   3,328,810   -
Operating expenses
  General and administrative    $5,408,346    $2,120,009


Loss from continuing operations before other income (expense),
  discontinued operations and extraordinary item   (2,079,536)   (2,120,009)



Other income (expense)
  Interest, net    (461,067)   (257,876)


Depreciation/Amortization   (112,152)   (38,936)

   (573,220)   (296,812)


Loss from continuing operations before discontinued operations
      and extraordinary item   (2,652,756)   (2,416,812)

Discontinued operations:
  Net gain (loss) on settlement and disposition of discontinued accounts    211,090   1,673,231

  Net loss from operations    (327,377)   (729,476)

   (116,287)   943,755


Loss from operations before extraordinary item   (2,769,043)   (1,473,066)


Extraordinary item:
  Net gain on extinguishment of debt obligations    -     -

Net Loss    $(2,769,043)   (1,473,066)

Basic and diluted loss per share:
  Continuing operations   $(0.03)   $(0.05)
  Discontinued operations    (0.001)    0.02
  Extraordinary item    -    -
Loss per Common Share    $(0.03)   $(0.03)

Weighted Average Common Shares   82,632,925   49,574,829

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








THE PHOENIX GROUP CORPORATION
CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS'
EQUITY (DEFICIT)
YEAR ENDED DECEMBER 31, 2001
   Preferred   Stock   Common   Stock   Additional   Accumulated    Total
   Shares   Amount   Shares   Amount   Paid-in Capital   Deficit

Balance, December 31, 1998   633,333   $633   36,253,495   36.25   $38,097,836   (54,478,014)   $(16,343,292

Issuance of common stock in connection with the
  conversion of debt obligations   -   -   2,715,876   2,716   1,041,956   -   1,044,672

Issuance of common stock associated with the purchase
  acquisition of now discounted operations   -   -   8,150,000   8,150   1,111,800   1,119,950

Issuance of common stock in lieu of payment for
  professional services rendered   -   -   1,731,699   1,732   269,518   -   271,250


Issuance of common stock associated with securing
  working capital financing   -   -   4,130,500   4,131   485,870   -   490,001

Issuance of common stock in connection with executive
  compensation   -   -   5,221,997   5,222   928,837   -   934,05

Increase in additional paid in capital resulting from the
  disposition of net liabilities associated with discontinued
  operations   -   -   -   -   3,733,944   -3,033,944

Net Loss   -   -   -   -   -   (1,473,066)   (1,473,066)
Balance, December 31, 2000   633,333   $633   58,203,567   $58,204   $45,669,761   $(55,951,080)   $(10,222,482)


Issuance of common stock in connection with the
  Conversion of debt obligations   -   -   4,600,000   4,600   192,850   -   197,450

Issuance of common stock associated with the purchase
  Acquisition of now discontinued operations   -   -   1,665,160   1,665   81,593   -   83,258


Issuance of common stock associated with the purchase
  Acquisition of new operations   -   -   549,999   550   21,150   -   21,700

Issuance of common stock in lieu of payment for
  Professional services rendered   -   -   5,098,966   5,097   338,280   -   343,377

Issuance of common stock associated with securing
  Working capital financing   -   -   6,702,943   6,703   335,060   -   341,764

Issuance of common stock in connection with executive
  Compensation   -   -   6,262,258   6,262   314,608   -   320,871

Increase in additional paid in capitalresulting from the
  Disposition of net liabilities associated with discontinued
  Operations   -   -   -   -   (436,996)   -   (437,746)


Net Loss    -   -   -   -   -   (2,769,043)   (2,769,043)

Balance, December 31, 2001   633,333   $633   82,632,915   $83,085   $46,516,306   $(58,720,123)   $(12,120,849)

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

THE PHOENIX GROUP
CORPORATION
CONSOLIDATED STATEMENTS
OF CASH FLOWS
YEARS ENDED DECEMBER 31,
2000 AND 1998
   2001   2000


OPERATING ACTIVITIES
  Net loss   $(2,769,043)   $ 1,473,066

  Adjustments to reconcile net loss to net cash provided
    (utilized) by operating activities:
    Depreciation and amortization   112,152   122,096
    Write down of intangible assets    -   400,000
    Provision for doubtful accounts receivable      -
    Net gain on settlement and disposition of accounts   67,168   (1,673,231)

    Common stock issued for services rendered   343,379   1,151,616
Changes in:
    Accounts receivable   968,946   -
    Inventory   15,218   -
    Prepaid expenses and other   16,728   (23,638)
    Accounts payable and accrued expenses   2,088,713   (6,101)
Net cash provided (utilized) by operating activities   499,882   (1,502,324)



INVESTING ACTIVITIES
  Changes in property and equipment   17,988   16,294
  Net decrease in other assets   (1,702,774)   81,989
   (1,684,786)   98,283

FINANCING ACTIVITIES
  Short-term borrowings, net   1,183,899   1,389,866

   1,183,899   1,389,866

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   (1,005)   (14,175)
  Cash and cash equivalents, beginning of year   1,627   15,802
  Cash and cash equivalents, end of year   $622   $1,627

   </TABLE>


The accompanying notes are an integral part of these consolidated financial
statements.
THE PHOENIX GROUP CORPORATION


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000

NOTE 1: NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A  summary  of  the Company's significant accounting policies  consistently
applied  in  the  preparation  of the accompanying  consolidated  financial
statements is as follows:

Business

The  Phoenix Group Corporation (the "Company" or "Phoenix") is  a  Delaware
Corporation organized in June 1988. Phoenix has predominately been  engaged
in  providing healthcare management and ancillary services to the long-term
care  industry.   During  2000  and  2001,  the  Company  discontinued  all
operations associated with its historic businesses.  New management of  the
Company has undertaken to implement a strategic business plan to reposition
Phoenix   through  new  growth  initiatives  involving  targeted   business
acquisitions.

Principles of consolidation

The  consolidated financial statements include the accounts of The  Phoenix
Group  Corporation  and  its wholly-owned subsidiaries.  All  inter-company
transactions and accounts have been eliminated.

Cash and cash equivalents

The Company considers all highly liquid debt instruments purchased with  an
original maturity of three months or less to be cash equivalents.

The Company or its subsidiaries maintains cash accounts, which at times may
exceed federally insured limits. The Company has not experienced any losses
from  maintaining  cash  accounts in excess of  federally  insured  limits.
Management believes that the Company does not have significant credit  risk
related to its cash accounts.

Property and Equipment

Property  and  equipment  is  stated at cost.  The  cost  of  property  and
equipment  is depreciated over the estimated useful lives of the respective
assets  using  primarily the straight-line method. Normal  maintenance  and
repair  costs  are charged against income. Major expenditures for  renewals
and  betterments, which extend useful lives, are capitalized. When property
and  equipment is sold or otherwise disposed of, the asset gain or loss  is
included in operations.  Property and equipment is principally comprised of
office  furniture, fixtures and equipment having useful lives ranging  from
three to seven years for purposes of computing depreciation.

Intangible assets

The  Company  evaluates  the carrying value of its  long-lived  assets  and
identifiable  intangibles when events or changes in circumstances  indicate
that  the carrying amount of such assets may not be recoverable. The review
includes an assessment of industry factors, contract retentions, cash  flow
projections   and  other  factors  the  Company  believes   are   relevant.
Intangible  assets reported by the Company during 1999 include  capitalized
license  rights  representing the costs of acquiring software  and  related
intellectual property rights.  Such costs were fully amortized during  2000
in connection with suspending related business activities.

Income taxes

The Company employs the asset and liability method in accounting for income
taxes  pursuant  to  Statement  of Financial  Accounting  Standards  (SFAS)
No.  109  "Accounting  for Income Taxes." Under this method,  deferred  tax
assets  and  liabilities  are  determined based  on  temporary  differences
between the financial reporting and tax bases of assets and liabilities and
net  operating loss carryforwards, and are measured using enacted tax rates
and  laws  that  are  expected to be in effect  when  the  differences  are
reversed.
THE PHOENIX GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000


NOTE  1:  NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)

Earnings per share

The  Company  adopted Statement of Financial Accounting  Standard  No.  128
"Earnings per Share" ("SFAS 128") in 1997.

Basic  earnings  per share are based upon the weighted  average  number  of
common shares outstanding during the period.

Diluted  earnings  per share is based upon the weighted average  number  of
common  shares outstanding during the period plus the number of incremental
shares of common stock contingently issuable upon exercise of stock options
and warrants.

Use of Estimates

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


NOTE 2: GOING CONCERN

For  the  year ended December 31, 2001, the Company reported  a  loss  from
continuing operations of $2,769,043.  This is largely attributable  to  the
costs  of  sustaining a corporate infrastructure and the  related  overhead
deemed  necessary  to  support management's strategic  growth  initiatives.
Recent   operating  losses  reported  by  the  Company  from   discontinued
operations  have  exhausted  the Company's  capital  resources  and  had  a
material  adverse effect on short-term liquidity and the Company's  ability
to  satisfy its residual corporate obligations.  At December 31, 2001,  the
Company  reports  a  working capital deficit of  $12,120,849.  The  Company
requires an infusion of new capital, a newly established business base  and
a related level of profitability to meet its short-term obligations.

During  the  fourth quarter of 1998, the Company experienced  a  change  of
control, which included the introduction of new executive management.   New
management  plans  have  included pro-active dealings  with  the  Company's
financial  and  creditor issues while implementing a growth  plan  for  the
future.  During 1999 and 2000, the Company discontinued all of its existing
business operations.  Having repositioned the Company for implementing  its
strategic business plan, new management now intends to aggressively exploit
prospects  in  pursuit  of  business acquisitions and  related  development
opportunities in targeted business sectors.

In  light  of  the Company's current financial position, its  inability  to
independently  meet  its  short-term corporate  obligations,  its  need  to
further  capitalize  existing corporate operations and  its  dependency  on
revenue  growth to support continuing operations, its viability as a  going
concern is uncertain. While the Company has experienced a change in control
together with an infusion of limited new working capital, there can  be  no
assurance that new management's efforts to re-direct and re-capitalize  the
Company will be successful.

THE PHOENIX GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000

NOTE 3:  SIGNIFICANT TRANSACTIONS

On  May 4, 2001, the Company consummated a transaction pursuant to which it
acquired all of the common stock of Lifeline Home Health, Inc.  (Lifeline),
including  its  wholly  owned  subsidiary,  Lifeline  Managed  Care,  Inc.,
representing all of the issued and outstanding shares of the company.   The
acquisition was accounted for under the purchase method of accounting  with
assets  acquired  of $1,161,297 and liabilities of $2,973,352.   Lifeline's
results  have  been  included  in  our  consolidated  financial  statements
effective  June 1, 2001.  Lifeline, based in Dallas, Texas,  is  the  third
largest  home  health company serving the greater metropolitan  Dallas/Fort
Worth market area.

In  August 2000, the Company borrowed $200,000 from a Bank.  The note bears
interest  at  9.5%  and  is due April 1,2002.  The note  is  guaranteed  by
certain executive officers of the Company.

NOTE 4: SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

No  interest  or  income taxes were paid in 2001 and  2000  for  continuing
operations.

During 2000, the Company issued 8,150,000 shares of common stock valued  at
$1,119,950  to  individuals in connection with the purchase acquisition  of
now discontinued operations; 2,715,876 shares of common stock in connection
with the conversion of notes payable in the principal amount of $1,044,672;
1,731,699  shares of common stock valued at $271,250 to satisfy obligations
associated  with  professional services rendered to the Company;  4,130,000
shares  of  common  stock  in  connection  with  securing  working  capital
financing in the amount of $490,000; and, 5,221,997 shares of common  stock
in-lieu of executive compensation  totaling $934,059.

During  2000,  the  Company  disposed of net  liabilities  associated  with
discontinued   operations   and  relating  to  obligations   of   operating
subsidiaries  which assets have been fully liquidated.  The disposition  of
such  accounts  resulted  in  an increase to  additional  paid  in  capital
totaling $3,733,944.

During  2001 and 2000, $434,701 and $257,876 of accrued interest was  added
to notes payable, respectively.


THE PHOENIX GROUP CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2001 AND 2000

NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement  of  Financial Accounting Standards No. 107,  "Disclosures  About
Fair  Value  of Financial Instruments", requires that the Company  disclose
estimated fair values of financial instruments.

Cash  and  cash equivalents, deposits and other current assets,  notes  and
accounts  payable, accrued expenses and other current liabilities  and  net
liabilities  of  discontinued  operations  are  carried  at  amounts   that
approximate their fair values because of the short-term maturity  of  these
instruments.



NOTE 6: INCOME TAXES

The  effective income tax rate differs each year from the statutory Federal
income  tax  rate due to graduated Federal income tax rates,  state  income
taxes,  utilization  and  valuation of net  operating  loss  carryforwards,
certain  permanently  non-deductible charges  to  net  income  and  certain
temporary  differences  between the financial and income  tax  bases.   The
reconciliation of these differences follows:

                                     2001           2000
Federal Income Tax Rate              (34)%          (34)%
State   Taxes,  Net  of   Federal   (3.5)%         (3.5)%
Benefit
Effect of Net Operating Losses       37.5%          37.5%
                                      0%             0%