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

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


                                  FORM 10-QSB

     (Mark One)

        [X]   QUARTERLY REPORT PURSUANT TO SECTION 13
              OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended September 30, 2003.


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

              For the transition period from ______ to ______


                        Commission File Number 0-31152


                                CRDENTIA CORP.
       -----------------------------------------------------------------
       (Exact name of small business issuer as specified in its charter)

                            (Formerly Lifen, Inc.)

                 Delaware                            76-0585701
     -------------------------------      ---------------------------------
     (State or other jurisdiction of      (IRS Employer Identification No.)
      incorporation or organization)


             455 Market Street, Suite 1220, San Francisco, CA 94105
             ------------------------------------------------------
                    (Address of principal executive offices)


                                (415) 543-1535
                          ---------------------------
                          (Issuer's telephone number)


15,432,864 shares of Common Stock, $.0001 par value, outstanding on
November 14, 2003.

Transitional Small Business Disclosure Format (check one): Yes [_]  No [X]

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

<PAGE>

                                CRDENTIA CORP.

                         Form 10-QSB Quarterly Report
                For Quarterly Period Ended September 30, 2003


                              Table of Contents

                                                                         Page
                                                                         ----

PART I -- FINANCIAL INFORMATION                                           1


Item 1.   Consolidated Financial Statements (Unaudited)                   1

          Consolidated Balance Sheet at September 30, 2003 and
          Consolidated Balance Sheet at December 31, 2002                 1

          Consolidated Statements of Operations
          For Three and Nine Months Ended
          September 30, 2003 and September 30, 2002                       2

          Consolidated Statements of Cash Flows
          For Nine Months Ended
          September 30, 2003 and September 30, 2002                       3

          Notes to Financial Statements                                   4


Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations                   17

Item 3.   Controls and Procedures                                         31


PART II -- OTHER INFORMATION                                              32


SIGNATURE                                                                 36

EXHIBIT INDEX                                                             37

                                       i

<PAGE>


                        PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements


                                CRDENTIA CORP.

                         Consolidated Balance Sheets

<TABLE>
<CAPTION>
                                        September 30, 2003   December 31, 2002
                                            (unaudited)
                                        ------------------   -----------------
<S>                                     <C>                  <C>
Current assets:
   Cash                                  $        367,779     $       125,463
   Accounts receivable, net                     1,088,810                   -
   Other current assets                           187,763              33,126
                                        ------------------   -----------------
Total current assets                            1,644,352             158,589


Property and equipment, net                        39,201               6,418
Goodwill                                        3,727,545                   -
Other identifiable intangible assets, net         466,729                   -
Other assets                                      167,771              48,803
                                        ------------------   -----------------
Total assets                             $      6,045,598    $        213,810
                                        ==================   =================

Current liabilities:
   Accounts payable and
     accrued expenses                    $        807,868    $         53,713
   Accrued employee compensation
     and benefits                                 127,568                   -
   Revolving lines of credit                      422,337                   -
   Current portion of notes
     payable to lenders                           916,667                   -
   Current portion of notes
     payable to sellers                         1,290,000                   -
   Other current liabilities                       24,419                   -
                                        ------------------   -----------------
Total current liabilities                       3,588,859              53,713
                                        ------------------   -----------------

Long term debt:
   Notes payable to lenders                        74,216                   -
   Notes payable to sellers                       360,000                   -
                                        ------------------   -----------------
                                                  434,216                   -
                                        ------------------   -----------------
Total liabilities                               4,023,075              53,713
                                        ------------------   -----------------

Commitments and contingencies

Stockholders' equity:
   Common stock, par value $0.0001
     Authorized 50,000,000 shares
     Issued and outstanding
     15,314,780 shares                             1,837                1,100
   Additional paid in capital,
     net of cost of issuing
     common stock and debt                    18,014,366              821,344
   Accumulated deficit                       (15,993,680)            (662,347)
                                        ------------------   -----------------
Total stockholders' equity                     2,022,523              160,097
                                        ------------------   -----------------

Total liabilities and
  stockholders' equity                   $      6,045,598     $       213,810
                                        ==================   =================

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

</TABLE>

                                       1

<PAGE>

                                CRDENTIA CORP.

                     Consolidated Statements of Operations
                                 (unaudited)


<TABLE>
<CAPTION>
                                           Three Months Ended                 Nine Months Ended
                                              September 30,                     September 30,
                                    --------------------------------  --------------------------------
                                          2003             2002             2003             2002
                                    ---------------  ---------------  ---------------  ---------------
<S>                                 <C>              <C>              <C>              <C>
Revenue from services                $     589,108    $           -    $     589,108    $           -
Direct operating expenses                  430,234                -          430,234                -
                                    ---------------  ---------------  ---------------  ---------------
   Gross profit                            158,874                -          158,874                -
                                    ---------------  ---------------  ---------------  ---------------

Operating expenses
   Selling, general, and
     administrative expenses               431,640          190,275          911,065          248,566
   Bad debt expense                          3,488                -            3,488                -
   Depreciation and amortization             1,556               40            2,085              160
   Non-cash compensation                14,475,099                -       14,555,921                -
                                    ---------------  ---------------  ---------------  ---------------
Total operating expenses                14,911,783          190,315       15,472,559          248,726
                                    ---------------  ---------------  ---------------  ---------------

Loss from operations                   (14,752,909)        (190,315)     (15,313,685)        (248,726)
Other expenses:
   Interest expense, net                    12,789                -           17,648                -
                                    ---------------  ---------------  ---------------  ---------------
Loss from operations
  before income taxes                  (14,765,698)        (190,315)     (15,331,333)        (248,726)
Income tax expense                               -                -                -                -
                                    ---------------  ---------------  ---------------  ---------------

Net loss                             $ (14,765,698)   $    (190,315)   $ (15,331,333)   $    (248,726)
                                    ===============  ===============  ===============  ===============
Basic and diluted loss per share     $       (1.48)   $       (0.02)   $       (1.44)   $       (0.03)
                                    ===============  ===============  ===============  ===============
Weighted number of shares
  outstanding- basic and diluted         9,981,561        8,683,162       10,655,574        7,848,333
                                    ===============  ===============  ===============  ===============

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

</TABLE>

                                       2

<PAGE>

                                CRDENTIA CORP.

                     Consolidated Statements of Cash Flows
                    For The Nine Months Ended September 30

<TABLE>
<CAPTION>
                                                    2003              2002
                                                 (unaudited)       (unaudited)
                                               ---------------   ---------------
<S>                                            <C>               <C>
Operating activities

Net loss                                        $ (15,331,333)    $    (248,726)
Adjustments to reconcile net loss to
  net cash provided by operating activities:
   Depreciation                                         2,085               160
   Bad debt expense                                     3,488                 -
   Non-cash compensation                           14,555,921                 -
   Changes in operating assets and
     liabilities, net of effects of
     purchases of subsidiaries:
       Accounts receivable                            122,858            (4,050)
       Other current assets                           111,758           143,201
       Accounts payable and accrued expenses          534,384            11,569
       Accrued employee compensation
         and benefits                                (129,587)                -
                                               ---------------   ---------------
Net cash used by operating activities                (130,426)          (97,846)
                                               ---------------   ---------------

Investing activities

Purchases of property and equipment                    (2,063)                -
Disposal of fixed assets                                    -               705
Cash paid for acquisition of
  subsidiaries, net of cash received                 (269,862)                -
Other investing acitivites                            (44,161)                -
                                               ---------------   ---------------
Net cash used in investing activities                (316,086)              705
                                               ---------------   ---------------

Financing activities

Proceeds from issuance of common stock                      -           447,695
Repayment of debt                                    (168,889)                -
Repayment of revolving lines of credit               (128,394)                -
Proceeds from issuance of notes payable               986,111                 -
                                               ---------------   ---------------
Net cash used in financing activities                 688,828           447,695
                                               ---------------   ---------------

Change in cash                                        242,316           350,554
Cash at beginning of period                           125,463               206
                                               ---------------   ---------------
Cash at end of period                           $     367,779     $     350,760
                                               ===============   ===============

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

</TABLE>

                                       3

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

The accompanying consolidated financial statements of Crdentia Corp. (the
"Company") have been prepared in accordance with accounting principles generally
accepted in the United States of America for interim financial information and
with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. In the
opinion of management, the financial statements reflect all adjustments
considered necessary for a fair presentation. For further information, refer to
the financial statements and footnotes thereto included in our transitional
report on Form 10-KSB for the four months ended December 31, 2002 as filed with
the Securities and Exchange Commission on March 11, 2003 and annual report for
the former fiscal year ended August 31, 2002 as filed with the Securities and
Exchange Commission on November 27, 2002.


Note 1.  Organization
---------------------

Crdentia Corp. (the "Company") was incorporated under the laws of the State of
Delaware on November 10, 1997 under the name Digivision International, Ltd. The
Company's name was changed to Lifen, Inc. on June 22, 2000 and changed to
Crdentia Corp. on May 28, 2003.  The Company commenced commercial operations on
August 7, 2003 when it acquired Baker Anderson Christie, Inc., a San Francisco
based home health care agency.  On September 22, 2003, the Company acquired New
Age Staffing, Inc., a Nashville, TN and New Orleans, LA based travel nurse and
per diem staffing company.  The accompanying financial statements include the
results of operations of these two wholly owned subsidiaries from their
respective dates of acquisition through the end of this reporting period.  All
material intercompany transactions have been eliminated in consolidation.  As
more fully described in Note 12, the Company acquired Nurses Network, Inc. on
October 2, 2003 and on November 4, 2003 executed an Agreement and Plan of
Reorganization to acquire PSR Nurse Recruiting, Inc. and PSR Nurses Holdings
Corp.  The Company has only one operating segment.

On February 21, 2003, the Company received approval from the National
Association of Securities Dealers ("NASD") to permit shares of its common stock
to be traded on the Over The Counter Bulletin Board ("OTCBB").  The first trade
occurred on February 24, 2003.  The Company's common stock is thinly traded,
with little or average daily trading volume.


Note 2.  Summary of Significant Accounting Policies
---------------------------------------------------

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 amount of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. The most significant
estimate relates to the valuation allowance in connection with deferred tax
assets. Actual results could differ from those estimates.


                                       4

<PAGE>

                               CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

Fixed Assets
------------
Fixed assets are stated at cost. Depreciation is provided for utilizing the
straight-line method over the three year estimated useful life of the asset. The
cost of maintenance and repairs is charged to operations as incurred.


Identifiable Intangible Assets
------------------------------
Certain assets acquired through the purchase of the Company's subsidiaries are
amortized over their estimated useful lives of five years.  During the three
month period ended September 30, 2003, the Company recognized approximately $3.7
million in goodwill related to its purchases of Baker Anderson Christie, Inc.
and New Age Staffing, Inc.  Goodwill is not amortized to expense.  However, the
Company periodically reviews the value of goodwill for impairment.


Non-Cash Compensation
---------------------
Shares of the Company's common stock have been granted to certain of its
directors and consultants for services rendered to it.  The Company recognizes
as compensation expense that portion of the respective grants that vest during
the quarter multiplied by the difference between the per share fair market value
of the common stock and the per share grant price.  An offsetting entry is
recorded to additional paid-in capital.


Accounting for Impairment of Long-Lived Assets
----------------------------------------------
In accordance with SFAS 142 and 144, the Company has adopted a policy of
recording an impairment loss on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amount.


Website Development
-------------------
In accordance with SOP 98-1, the Company expensed costs incurred in the
preliminary project stage and most training and data conversion costs. External
direct costs of materials and services and internal direct payroll-related costs
are capitalized once certain criteria are met.


Income Taxes
------------
The Company records deferred income taxes using the liability method. Under the
liability method, deferred tax assets and liabilities are recognized for the
expected future tax consequences of temporary differences between the financial
statement and income tax basis of our assets and liabilities. An allowance is
recorded, based on currently available information, when it is more likely than
not that any or all of a deferred tax asset will not be realized


Per Share Data
--------------
The Company adopted the standards set by the Financial Accounting Standards
Board and compute earnings per share data in accordance with SFAS No. 128
"Earning per Share." The basis per share data has been computed on the loss for
the period divided by the historic weighted average number of shares of common
stock outstanding. Excluded from basic earnings


                                       5

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

per share data is the unvested portion of restricted stock grants totaling
747,824 shares.  The Company does not report fully diluted loss per share as to
do so would be anti-dilutive as a result of the net loss for each of the
respective periods included herein.


Note 3.  Acquisitions
---------------------

During the quarter ended September 30, 2003, the Company commenced commercial
operations as the result of closing two acquisitions.  Significant account
policies regarding these acquisitions are as follows:


Baker Anderson Christie, Inc.

On August 7, 2003, the Company acquired Baker Anderson Christie, Inc. ("BAC") in
exchange for 480,000 shares of its common stock, which was valued at $0.36 per
share based upon the appraisal performed by an independent, third party
professional valuation firm.  The primary purpose of the acquisition was to
enable the Company to enter the home health care segment of the nurse staffing
industry.  The following table summarizes the assets acquired and liabilities
assumed as of the closing date:

          Cash acquired                              $      77,257
          Tangible assets acquired                         171,395
          Customer related intangible assets                 5,000
          Goodwill                                         109,873
                                                     -------------
               Total assets acquired                       363,525

          Liabilities assumed                              126,296
                                                     -------------
               Net assets acquired                   $     237,229
                                                     =============

The acquisition will be accounted for using the purchase method of accounting.
Customer related intangible assets will be amortized over their useful life of
five years.  Allocation of the excess of merger consideration over the net book
value of assets acquired between goodwill and customer relationships was
determined by management's estimate.  As the merger consideration was paid
entirely in shares of the Company's common stock, the goodwill acquired may not
be amortized for federal income tax purposes.  The Company may issue additional
shares of its common stock to the former stockholders of BAC should its results
of operations exceed performance standards established in the merger agreement.

New Age Staffing, Inc.

On September 22, 2003, the Company acquired New Age Staffing, Inc. ("NAS") in
exchange for $400,000 in cash, $1,290,000 in notes payable during the next year,
a $360,000 note payable in two years, and 6,884,614 shares of the Company's
common stock, which was valued at $0.36 per share based upon the appraisal
performed by an independent, third party professional valuation firm.  The
primary purpose of the acquisition was to enable the Company to enter the travel


                                       6

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

nurse segment of the nurse staffing industry.  The following table summarizes
the assets acquired and liabilities assumed as of the closing date:

          Cash acquired                              $      61,887
          Tangible assets acquired                       1,410,491
          Customer related intangible assets               460,000
          Goodwill                                       3,617,672
                                                     -------------
               Total assets acquired                     5,550,050

          Liabilities assumed                              904,504
                                                     -------------
               Net assets acquired                   $   4,645,546
                                                     =============

The acquisition will be accounted for using the purchase method of accounting.
Customer related intangible assets will be amortized over their useful life of
five years.  Allocation of the excess of merger consideration over the net book
value of assets acquired between goodwill and customer relationships was
determined by the independent, third party professional valuation firm.  As a
material portion of the merger consideration was paid in shares of the Company's
common stock, the goodwill acquired may not be amortized for federal income tax
purposes.


Note 4.  Income Taxes
---------------------

There is no provision for federal or state income taxes for the nine-month
periods ended September 30, 2003 and 2002, since the Company incurred losses
from inception. Additionally, the Company has reserved fully for any potential
tax benefits resulting from its carryforward operating losses.

As of September 30, 2003, the Company has a net operating loss carryfoward of
approximately $1.5 million which expires in various years from 2012 through
2017.  Should the Company undergo an ownership change as defined in Section 382
of the Internal Revenue Code, utilization of its tax net operating loss
carryforwards may be limited.


Note 5.  Common Stock
---------------------

In August, 2002 the Company sold 2,000,000 shares of its common stock to two
investors at a price of $0.05 per share and received total proceeds of $100,000,
pursuant to a Common Stock Purchase Agreement, executed effective May 15, 2002.
Pursuant to this Agreement, James D. Durham, the Company's Chairman and Chief
Executive Officer, has the right to purchase at a per share price of $0.0001 a
number of shares of common stock from the Company equal to 25% of the number of
shares of the Company's common stock issued or issuable in connection with
certain acquisitions completed by the Company on or before August 7, 2004.  Mr.
Durham's right to purchase such additional shares of common stock will expire on
August 7, 2005.


                                       7

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

In August, 2002 the Company sold 574,286 shares of its common stock to one
foreign investor at a price of $0.70 per share and received total proceeds of
$402,000. The shares were sold pursuant to Regulation S promulgated under the
Securities Act of 1933, as amended.

In October, 2002 the Company authorized the issuance of 100,000 restricted
shares of its common stock to three directors for a total of 300,000 shares in
exchange for providing services to the Company.  The shares were valued at $700
($0.007 per share) for each of the three directors for a total value of $2,100,
and are subject to a three year vesting period commencing at the date of
authorization of issuance.

In November, 2002 the Company authorized the issuance of 399,931 restricted
shares of its common stock to its President and 299,949 restricted shares of its
common stock to its Chief Financial Officer and Secretary for $0.0067 per share.
These shares have been issued in exchange for providing services as consultants
to the Company.  The shares are subject to a four year vesting period beginning
in July, 2002.  In accordance with the guidance in EITF 96-18 "Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services" the Company records these awards at
their fair value on the measurement date, generally based upon the Black-Scholes
valuation model.  Because these awards have a four year vesting (service)
period, the measurement date is the date performance by the consultant is
complete. The Company measures the fair value of the award at each vesting date
to determine the stock compensation expense. As a result, management must make
frequent assumptions regarding the market value of its common stock given that
only several thousand shares have traded since February 24, 2003.  Other
variables in the Black-Scholes valuation model (volatility, expected future
dividend yield and risk free interest rate) must also be frequently estimated by
management.  Therefore any significant changes in any of these assumptions could
have significant impact on the amount of expense recorded in current or future
period.

On August 6, 2003, a number of the Company's stockholders agreed to return an
aggregate of 3,048,000 shares of the Company's common stock to treasury for no
consideration, thus reducing the total number of the Company's issued and
outstanding shares of common stock from 10,998,166 to 7,950,166.  These
stockholders determined in consultation with the Company's management that, in
connection with the Company's acquisition program and on-going financing
efforts, it would be in the Company's best interests to reduce the overall
number of shares of the Company's issued and outstanding common stock.  The
Company cancelled these 3,048,000 shares of common stock and returned them to
treasury.  Refer to Form 8-K filed on August 6, 2003.  In accordance with the
provisions of APB Statement No. 25, the effect of this return of shares to the
Company's treasury is to generate non-cash compensation expense of $5.7 million
as the imputed increase in the value of the Company's stock to its officers and
directors.


                                       8

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

On August 7, 2003, the Company completed the acquisition of Baker Anderson
Christie, Inc. pursuant to which 480,000 shares of the Company's common stock
were issued to the stockholders of Baker Anderson Christie, Inc. as an advance
payment of the merger consideration and the Company may be obligated to issue
additional shares of its common stock as merger consideration in subsequent
fiscal quarters.  As a result of the completion of the acquisition, Mr. Durham,
the Company's Chairman and Chief Executive Officer, will have the right to
purchase 120,000 shares of the Company's common stock at $0.0001 per share and
he may be entitled to purchase additional shares of the Company's common stock
in subsequent fiscal quarters.  Mr. Durham's right to purchase such additional
shares of common stock will expire on August 7, 2005.  The Company recognized
non-cash compensation expense on the closing date of this acquisition of
$600,000 related to Mr. Durham's purchase right.

On September 2, September 29, and October 16, 2003, the Company issued
convertible subordinated notes in the aggregate amount of $820,000 to eight
investors.  The conversion privilege enables the noteholders to exchange their
notes for the Company's common stock at a price of at least $1.50 per share.  To
date, no noteholder has exercised its conversion privileges, but should all of
the note holders elect to do so, a total of at least 466,667 shares of the
Company's common stock would be issued.

On September 22, 2003, the Company completed the acquisition of New Age
Staffing, Inc. pursuant to which 6,884,614 shares of the Company's common stock
were issued to the stockholders of New Age Staffing, Inc.  As a result of the
completion of the acquisition, Mr. Durham, the Company's Chairman and Chief
Executive Officer, will have the right to purchase 1,721,154 shares of the
Company's common stock at $0.0001 per share.  Mr. Durham's right to purchase
such additional shares of common stock will expire on August 7, 2005.  The
Company recognized non-cash compensation expense on the closing date of this
acquisition of $8.2 million related to Mr. Durham's purchase right.

The Company's Chairman and Chief Executive Officer has the right to purchase at
a per share price of $0.0001 a number of shares of common stock from the Company
equal to 25% of the number of shares of the Company's common stock issued or
issuable in connection with certain acquisitions completed by the Company on or
before August 7, 2004.  The Company recognizes compensation expense equal to the
number of shares eligible for purchase multiplied by the closing price of the
Company's common stock on the date the merger is consummated.  An offsetting
entry is recorded to additional paid-in capital.

On August 6, 2003, a number of the Company's stockholders agreed to return an
aggregate of 3,048,000 shares of the Company's common stock to treasury for no
consideration, thus reducing the total number of the Company's issued and
outstanding shares of common stock from 10,998,166 to 7,950,166 on that date.
The Company cancelled these 3,048,000 shares of common stock and returned them
to treasury.  In accordance with the provisions of APB Statement No. 25, the
effect of this return of shares to the Company's treasury was to generate non-
cash compensation expense of $5.7 million as the imputed increase in the value
of the


                                       9

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

Company's stock to its officers and directors.  An offsetting entry was recorded
to additional paid-in capital.


Note 6.  Debt
-------------

The Company has lines of credit with a financial institution and a commercial
factor for the financing of eligible accounts receivable.  Interest accrues at
the financial institution's Prime Rate plus 1% (5% at September 30, 2003) and
24% respectively, and is payable monthly.  Terms of these two facilities are as
follows:

     The financial institution's collateral includes all of the Company's
     tangible and intangible assets.  Customer payments are remitted directly to
     the Company.  The Company may, at its option and within the covenants of
     the loan agreement, repay principal at its discretion.  On a quarterly
     basis, the Company must comply with certain financial and operating
     covenants.

     Customers whose receivables have been financed by the factor remit their
     payments to a lock box controlled by the factor.  These proceeds are used
     to repay the advance from the factor after deducting charges for bad debts,
     reserves for chargebacks, and interest expense.

Approximately $422,000 was payable by the Company on these two lines at
September 30, 2003.  The commercial factor's obligation to purchase accounts
receivable from the Company expires on November 30, 2003.

On August 18, 2003, the Company executed a variable rate installment note with a
financial institution in the amount of $250,000.  On September 12, 2003, the
Company received a loan for this amount.  Under the terms of the note, the
Company is required to make monthly payments of $13,889 plus accrued interest on
the unpaid principal at a rate of the institution's Prime Rate plus 2% (6% at
September 30, 2003).

On September 2, 2003, the Company issued $675,000 in principal amount of
Convertible Subordinated Promissory Notes (the "Notes") to six investors.  On
September 29, 2003 and October 16, 2003, the Company issued additional Notes in
the principal amounts of $25,000 and $120,000, respectively, to two additional
investors.  Subject to the conversion provisions set forth in the Notes, the
unpaid principal together with all accrued interest on the Notes is due and
payable in full one year following the issuance date of each such Note. Interest
accrues on the unpaid principal balance at a rate of ten percent (10%) per
annum, simple interest, and is payable in quarterly payments.

As partial consideration for the acquisition of New Age Staffing, Inc. on
September 22, 2003, the Company issued an unsecured subordinated note to the
former stockholders as more fully described below:


                                      10

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

     $265,000 payable upon the earlier of the closing of additional financing or
     October 15, 2003.  The Company rendered a payment of approximately $97,000
     on October 15, 2003, and the noteholders agreed to defer the remaining
     balance of $168,000 until such time as the Company secures additional
     financing.

     $665,000 payable in equal installments on March 19, 2004 and September 22,
     2004.  Interest accrues at a rate of 5% per annum, and is payable semi-
     annually.

     $720,000 payable in equal installments on September 22, 2004 and 2005,
     respectively.  This obligation is non-interest bearing.


Note 7.  Related Party Transactions
-----------------------------------

Ameristar Group Incorporated ("Ameristar") is a corporation that is an affiliate
of two corporate shareholders of the Company's common stock and is considered to
be a related party. During the nine months ended September 30, 2003, the Company
paid Ameristar financial consulting fees totaling $40,000, with an additional
$5,000 accrued but unpaid at period end.

On November 1, 2001, the Company reached an agreement with Ameristar to provide
the Company with management services needed for its continuing development.  A
Management Services Agreement was executed on that date with Ameristar to
provide consulting services, office space, and administrative services for a
two-year period. The monthly cost of these services was $5,500, consisting of
$2,500 for consulting services, $1,000 for rent, and $2,000 for administrative
services. The consulting services included such activities as business plans;
introductions to financial community; strategic planning; evaluation of
potential business relationships, such as joint ventures, mergers and
acquisitions; business projections; review of marketing plans; and general
advisory and management services as required.  Effective August 15, 2002, the
Management Services Agreement with Ameristar was terminated in accordance with a
Termination Agreement executed between the Company and Ameristar on that date.
As part of the Termination Agreement, the debt owed to the Company by Ameristar
in the amount of $94,165 was cancelled in full payment of compensation owed to
Ameristar for additional services provided to the Company.

On September 9, 2003, the audit committee of the Company's board of directors
approved a Consulting Agreement with Ameristar pursuant to which they will
provide the Company with assistance relating to the Company's filing
requirements with the Securities and Exchange Commission in exchange for a fee
of $5,000 per month.  This Agreement expires on March 31, 2004.

On June 30, 2003, the Company executed a Promissory Note in favor of one of its
stockholders, Atlantic International Capital Holdings, Ltd., in the principal
amount of $25,000 in exchange for cash in the same amount.  This Promissory Note
accrues interest at 12% per annum and matured


                                      11

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

on August 13, 2003 at which time the principal plus accrued interest would have
been payable in full.  On September 29, 2003, the scheduled repayment date was
extended by the maker until November 30, 2003.  If the Company should default on
this Note, interest will accrue at 18% per annum as of the date of default.

On July 16, 2003, the Company entered into an Agreement and Plan of
Reorganization with Nurses Network, Inc., ("NN").  Upon the terms and subject to
the conditions in the merger agreement, NN will become a subsidiary of the
Company.  NN is based in San Francisco, California and provides licensed staff
for medical clinics as well as skilled home healthcare visits.  Refer to Form
8-K filed on July 16, 2003.  The merger was consummated on October 3, 2003.
Robert Kenneth, a 50% stockholder of NN, also serves as one of the Company's
directors.

On July 21, 2003, the Company executed a Promissory Note in favor of one of its
stockholders, Gable International Holdings, Ltd., in the principal amount of
$25,000 in exchange for cash in the same amount.  This Promissory Note accrues
interest at 12% per annum and matured on September 3, 2003 at which time the
principal plus accrued interest would have been payable in full.  On September
29, 2003, the scheduled repayment date was extended by the maker until November
30, 2003.  If the Company should default on this Note, interest will accrue at
18% per annum as of the date of default.

On September 2, 2003, the Company issued $675,000 in principal amount of
Convertible Subordinated Promissory Notes (the "Notes") to six investors.  The
Company issued additional Notes in the principal amounts of $25,000 and $120,000
on September 29, 2003 and October 16, 2003, respectively.  Subject to the
conversion provisions set forth in the Notes, the unpaid principal together with
all accrued interest on the Notes is due and payable in full one year following
the issuance date of each such Note. Interest accrues on the unpaid principal
balance at a rate of ten percent (10%) per annum, simple interest, and is
payable in quarterly payments. Three of the investors included Joseph M. DeLuca,
Robert P. Oliver and James D. Durham. Messrs. DeLuca and Oliver are current
members of the Company's Board of Directors and its audit committee.  Each of
them purchased, together with an affiliate of Mr. DeLuca's, Notes in the
aggregate principal amount of $125,000. James D. Durham, a member of the
Company's board of directors and its Chairman and Chief Executive Officer,
purchased a Note in the principal amount of $50,000.

On September 22, 2003, the Company issued 6,884,614 shares of its common stock
to the stockholders of New Age Staffing, Inc.  This transaction resulted in
several stockholders becoming related parties for financial reporting purposes.
These transactions are summarized as follows:

     Two of New Age Staffing's stockholders each own common stock in excess of
     10% of the total number of the Company's issued and outstanding common
     stock.  Approximately 70% of the $1,650,000 in notes payable to sellers is
     payable to these two stockholders.


                                      12

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

     The Company assumed liability for a factoring agreement utilized by New Age
     Staffing.  Under the terms of this agreement, the factor will advance a
     certain amount to the Company based upon the computation of eligible
     accounts receivable.  Customer payments are made directly to a lockbox
     controlled by the factor.  Collected funds, less discounts for bad debts,
     reserves for charge backs and monthly interest charges, are remitted to the
     Company.  At September 30, 2003, the factor had advanced $360,000 to the
     Company.  The factor's principal stockholder is also a stockholder in the
     Company.  The commercial factor's obligation to purchase accounts
     receivable from the Company expires November 30, 2003.


Note 8.  Commitments and Contingencies
--------------------------------------

On August 14, 2002, the Company entered into an Agreement for period of two
years with James D. Durham, its Chairman and Chief Executive Officer, which
provides for fees of $200,000 per year.  From August 14, 2002 until such date as
additional funding may be obtained, Mr. Durham will be compensated as an
independent consultant at a rate of $8,333, payable semi-monthly.  Pursuant to
the Common Stock Purchase Agreement dated May 15, 2002, Mr. Durham has the right
to purchase at a per share price of $0.0001 a number of shares of common stock
from the Company equal to 25% of the number of shares of the Company's common
stock issued or issuable in connection with certain acquisitions completed by
the Company on or before August 7, 2004.  His right to acquire these shares
expires on August 7, 2005.

On September 26, 2002, the Company entered into a sublease as successor in
interest to premises at 455 Market Street, San Francisco, California.  The
premise includes 2,487 square feet of office space and furniture.  The term of
the lease is through July 31, 2004 with a monthly rental through the term of the
lease of $4,560.  The first, second, and thirteenth through twentieth months of
the lease were prepaid as an inducement to the lessee to enter into this
sublease.

On October 30, 2002, the Company entered into an agreement with a consulting
firm to generate a list of businesses that met the Company's acquisition
criteria.  The Company paid the consulting firm $14,250 for these services, and
has agreed to pay an additional $42,750 for each business identified by the
consulting firm if acquired by the Company.  The Company consummated the merger
with one such identified business, and has recorded a liability of $42,750 in
the accompanying financial statements.

On November 15, 2002, the Company entered into an agreement with a consultant to
identify businesses that met its acquisition criteria. The Company agreed to pay
the consultant five per cent of the first $1,000,000 in the aggregate purchase
price paid by us to the seller.  This percentage declines by one per cent for
each additional $1,000,000 in aggregate purchase price paid by us to the seller
at which time the consultant is paid one per cent of the excess of $5,000,000 in
aggregate purchase price.  To date, no businesses identified by the consultant
have resulted in a consummated acquisition, and this agreement was terminated
effective February 25, 2003.  Should such a transaction occur with a company
identified by the consultant during the


                                      13

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

period of time that this agreement was in effect, the consultant's fee will be
paid 75% in cash less the $14,250 paid to the consulting firm previously
referenced and 25% in shares of the Company's common stock based upon the
average closing price of the stock over the previous 20 days prior to the date
of consummation.

On January 22, 2003, the Company entered into an agreement with a consulting
firm to generate a list of businesses headquartered in Florida that met its
acquisition criteria. The Company agreed to pay the consulting firm a fee of
$7,500 plus out-of-pocket expenses for these services plus an additional
$22,500 for each business identified by the consulting firm that was acquired
by the Company. To date, no businesses identified by the consulting firm have
resulted in a consummated acquisition, and the fee has been paid in full.


Note 9.  Accounts Receivable and Concentration of Credit Risk
-------------------------------------------------------------

Accounts receivable are uncollateralized customer obligations due under normal
trade terms. The Company provides services to various public and private medical
facilities such as hospitals, nursing care facilities, etc. Management performs
continuing credit evaluations of the customers' financial condition.

Senior management reviews accounts receivable on a monthly basis to determine if
any receivables will potentially be uncollectible. A reserve for uncollectible
accounts is established and reviewed for adequacy.   After all attempts to
collect a receivable have failed, the receivable is written off against the
allowance. Based upon the information available to the Company's management
team, we believe the allowance for doubtful accounts as of September 30, 2003 is
adequate. However, actual write-offs might exceed the recorded allowance.

Approximately 45% of the Company's accounts receivable is due from one customer.
Management does not believe that there is undue risk of collection of the amount
owed to the Company.


Note 10.  Going Concern
-----------------------

The audit report accompanying the Company's financial statements for the four
month period ended December 31, 2002 and 2001 contains a going concern
qualification because the Company was in the development stage and needed
additional capital to continue as an entity until the Company begin commercial
operations.  Refer to "RISK FACTORS" and the audit report contained in "PART
F/S" of Form 10-KSB for the four month period ended December 31, 2002 and Form
10-KSB for former fiscal year ended August 31, 2002.  Management recognizes the
need to raise additional funds to continue planned operations.  Primary to the
Company's solvency is the sale of additional equity in the Company and
continuing its strategy of funding development through additional equity
financing. These funds will be used to manage working capital requirements and
to fund enhancements to its administrative operations.  If additional capital is
not readily available, the Company will be forced to scale back acquisition


                                      14

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

opportunities and identify other sources of funding. Should the Company not be
able to obtain additional financing, there is substantial doubt regarding its
ability to continue as a going concern and, as such, the Company is
substantially dependent upon its ability to raise sufficient capital to cover
its development costs.


Note 11.  Supplemental Disclosure to Cash Flow Statement
--------------------------------------------------------

                                  For Three Months Ended  For Three Months Ended
                                    September 30, 2003      September 30, 2002
                                  ----------------------  ----------------------

Cash paid during the period for:
  Interest	                       $     14,407            $          -
  Income taxes                         $          -            $          -
Non Cash Transactions:
  Common stock and notes
    payable issued and liabilities
    assumed in acquisitions:
      Tangible assets acquired         $  1,721,030
      Intangible assets acquired          4,192,545
      Liabilities assumed                 1,030,800
      Common stock issued                 2,651,261
      Notes payable issued                1,650,000


Note 12.  Subsequent Events
---------------------------

On October 2, 2003, the Company completed the acquisition of Nurses Network,
Inc. pursuant to an Agreement and Plan of Reorganization dated July 16, 2003, as
amended on September 9, 2003, by and among the Company, Nurses Network, Inc.,
NNI Acquisition Corporation, a wholly owned subsidiary of the Company, and
certain shareholders of Nurses Network, Inc.  Nurses Network is based in San
Francisco, California and provides licensed staff for medical clinics as well as
skilled home healthcare visits.  Upon the terms and subject to the conditions in
the merger agreement, Nurses Network will become a subsidiary of the Company.
Pursuant to the merger, 118,084 shares of the Company's common stock were issued
to the stockholders of Nurses Network, Inc.  As a result of the completion of
the acquisition, Mr. Durham, the Company's Chairman and Chief Executive Officer,
will have the right to purchase 29,252 shares of the Company's common stock at
$0.0001 per share.  Robert Kenneth, a director, officer, and shareholder of
Nurses Network, also serves as one of the Company's directors.

On October 16, 2003, the Company issued an additional $120,000 in principal
amount of a Convertible Subordinated Promissory Note (the "Note") to one
investor.  Subject to the conversion provisions set forth in the Note, the
unpaid principal together with all accrued interest on the Note is due and
payable in full one year following the issuance date of each such Note. Interest
accrues on the unpaid principal balance at a rate of ten percent (10%) per annum
and is payable in quarterly installments.


                                      15

<PAGE>

                                CRDENTIA CORP.

                        NOTES TO FINANCIAL STATEMENTS
                        -----------------------------
                             SEPTEMBER 30, 2003
	                     ------------------

On November 4, 2003, the Company entered into an agreement to acquire PSR Nurse
Recruiting, Inc. and PSR Nurses Holdings Corp., pursuant to an Agreement and
Plan of Reorganization by and among the Company, PSR Acquisition Corporation,
its wholly owned subsidiary, PSR Holdings Acquisition Corporation, its wholly
owned subsidiary, PSR Nurse Recruiting, Inc. and PSR Nurses Holdings Corp.  Upon
the terms and subject to the conditions in the merger agreement, (i) PSR
Acquisition Corporation will be merged with and into PSR Nurse Recruiting, Inc.,
and PSR Nurse Recruiting, Inc. will survive the merger as the Company's
subsidiary and (ii) PSR Holdings Acquisition Corporation will be merged with and
into PSR Nurses Holdings Corp. and PSR Nurses Holdings Corp. will survive the
merger as the Company's subsidiary.  The Company's officers assumed management
and control of PSR Nursing, Inc. and PSR Nurses Holdings Corp. effective October
15, 2003.  The transaction, which is expected to close on or before November 17,
2003, has been approved by the Company's board of directors and the board of
directors of each of PSR Nurse Recruiting, Inc. and PSR Nurses Holdings Corp.
The closing of the transaction is subject to customary closing conditions.  Upon
completion of each of the mergers, all outstanding shares of capital stock of
PSR Nurse Recruiting, Inc. and PSR Nurses Holdings Corp. will be exchanged for
aggregate consideration in an amount equal to 0.55 multiplied by the sum of the
gross revenues for PSR Nurses, Ltd. for the three year fiscal period beginning
September 30, 2002 and will be payable solely in shares of Crdentia's common
stock.


                                      16

<PAGE>

Item 2.  Management's Discussion and Analysis of
         Financial Conditions and Results of Operations

The following discussion and analysis should be read in conjunction with the
unaudited financial statements and notes thereto included in Part I - Item 1 of
this report, and Management's Discussion and Analysis of Financial Conditions
and Results of Operations and Risk Factors contained in our transitional report
on Form 10-KSB for the four months ended December 31, 2002 as filed with the
Securities and Exchange Commission on March 11, 2003 and annual report for the
former fiscal year ended August 31, 2002 as filed with the Securities and
Exchange Commission on November 27, 2002.


Forward-Looking Statements

Some of the information contained in this report may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Any such forward-looking statements are based on current expectations and
projections about future events. The words estimate, plan, intend, expect,
anticipate and similar expressions are intended to identify forward-looking
statements which involve, and are subject to, known and unknown risks,
uncertainties and other factors which could cause our actual results, financial
or operating performance, or achievements to differ materially from future
results, financial or operating performance, or achievements expressed or
implied by such forward-looking statements.

Projections and assumptions contained and expressed herein were reasonably based
on information available to us at the time so furnished and as of the date of
this filing. All such projections and assumptions are subject to significant
uncertainties and contingencies, many of which are beyond our control, and no
assurance can be given that the projections will be realized.  Readers are
cautioned not to place undue reliance on any such forward-looking statements,
which speak only as of the date hereof. Careful consideration should be given to
those risks and uncertainties set forth below under the heading "Risk Factors,"
as well as those risk factors discussed in our Form 10-KSB for the former fiscal
year ended August 31, 2002 and transitional report on Form 10-KSB for the four
months ended December 31, 2002. Actual results that we achieve may differ
materially from any forward looking statements due to such risks and
uncertainties, and we undertake no obligation to publicly release any revisions
to these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.


Overview of Crdentia's Business Strategy

Our objective is to capitalize on an opportunity that currently exists in the
healthcare industry by targeting the critical shortage of available nurses.
There are many small existing medical staffing agencies that are attempting to
address the rapidly expanding needs resulting from the severe shortages of
highly skilled, licensed healthcare staff.  Due to their relatively small
capitalization, these agencies are unable to maximize their potential, obtain
outside capital, or expand.  By consolidating well-run small private companies
into a large public entity, we intend to facilitate access to capital, the
acquisition of technology, and expanded distribution that, in turn, drive
internal growth.  We have selected this focus for several reasons, including the
significant industry and sector growth, the increased need for skilled
healthcare workers, and the potential access to public capital markets.


                                      17

<PAGE>

Our web site is currently under development, but may be viewed at
www.crdentia.com.  Our web site and the information contained therein, however,
are not part of this quarterly report.  For more detailed information regarding
our operations, we direct to our transitional report on Form 10-KSB for the four
month period ended December 31, 2002 filed on November 27, 2002 and our annual
report on Form 10-KSB for the former fiscal year ended August 31, 2002 filed on
March 11, 2003.


Critical Accounting Policies and Estimates

This discussion and analysis of our financial condition and results of operation
is based on our financial statements, which we prepare in conformity with
accounting principles generally accepted in the United States of America. The
preparation of our financial statements requires us to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses and the disclosure of contingent assets and liabilities. These
estimates and assumptions are based on historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
These estimates and assumptions also require the application of certain
accounting policies, many of which require us to make estimates and assumptions
about future events and their impact on amounts reported in our financial
statements and related notes. We periodically review our accounting policies and
estimates and make adjustments when facts and circumstances dictate.


Stock-Based Compensation

Several events have required us to record non-cash compensation expense (or
credit) in these financial statements:

     We have granted and issued 299,949 shares of our common stock to one
     consultant acting as our chief financial officer.  The shares are subject
     to a four year vesting period beginning in July, 2002.  Additionally, we
     have granted 300,000 shares to three directors for past services.  The
     shares are subject to a three year vesting schedule beginning in November,
     2002.  In accordance with the guidance in EITF 96-18 "Accounting for Equity
     Instruments That Are Issued to Other Than Employees for Acquiring, or in
     Conjunction with Selling, Goods or Services" we record these awards at
     their fair value on the measurement date, generally based upon the Black-
     Scholes valuation model.  Because these awards have a four year vesting
     (service) period, the measurement date is the date performance by the
     consultant is complete. We measure the fair value of the award at each
     vesting date to determine the stock compensation expense. As a result,
     management must make frequent assumptions regarding the market value of our
     common stock given that only several thousand shares have traded since
     February 24, 2003.  Other variables in the Black-Scholes valuation model
     (volatility, expected future dividend yield and risk free interest rate)
     must also be frequently estimated by management.  Therefore any significant
     changes in any of these assumptions could have significant impact on the
     amount of expense recorded in current or future period.  Based upon the
     preliminary results of an appraisal performed by a third party professional
     valuation firm of our share price, we have utilized $0.36 per share for
     valuing these grants.  Accordingly, we have recognized a non-cash credit of
     $50,792 against our stock compensation expense in these financial


                                       18

<PAGE>

     statements to offset the higher share price estimated in our quarterly
     report on Form 10-QSB filed on August 12, 2003.

     As more fully described in Note 5 to the accompanying financial statements,
     certain of our stockholders voluntarily returned 3,048,000 shares to our
     treasury on August 6, 2003.  These shareholders determined in consultation
     with our management that, in connection with our acquisition program and
     on-going financing efforts, it would be in our best interests to reduce the
     overall number of shares that are issued and outstanding.  The effect of
     this return was to increase the stock compensation expense for the three
     month period ended September 30, 2003 by approximately $5.7 million as the
     imputed increase in the value of our common stock to our officers and
     directors.

     As more fully described in Note 5 to the accompanying financial statements,
     our Chairman and Chief Executive Officer has the right to purchase at a per
     share price of $0.0001 a number of shares of common stock equal to 25% of
     the number of shares of our common stock issued in connection with certain
     acquisitions completed by us on or before August 7, 2004.  As a result of
     our completed acquisitions of Baker Anderson Christie, Inc. and New Age
     Staffing, Inc., on August 7, 2003 and September 27, 2003, respectively, Mr.
     Durham has the right to acquire 1,841,154 shares of common stock, which has
     given rise to a non-cash compensation expense of approximately $8.8
     million.


Revenue Recognition

We recognize revenue and the corresponding cost of revenue at the time staffing
services are provided to our customers.  Allowances are recorded for potential
uncollectible receivables based upon management's estimate of their
collectibility.  We record an allowance for doubtful accounts based on
specifically identified amounts that we believe to be uncollectible. We also
record additional allowance based on certain percentages of our aged
receivables, which are determined based on historical experience and our
assessment of the general financial conditions affecting our customer base. If
our actual collections experience changes, revisions to our allowance may be
required. We have a limited number of customers with individually large amounts
due at any given balance sheet date. Any unanticipated change in one of those
customers's credit worthiness or other matters affecting the collectibility of
amounts due from such customers could have a material affect on our results of
operations in the period in which such changes or events occur. After all
attempts to collect a receivable have failed, the receivable is written off
against the allowance.


Results of Operations

We commenced operations on August 7, 2003 with the closing of our acquisition of
Baker Anderson Christie, Inc.  Revenue of $589,108 was generated this quarter
through the operating results of this entity for approximately two months along
with the operating results of our acquisition of New Age Staffing, Inc. for a
period of eight days.

The audit report accompanying our financial statements for the four month period
ended December 31, 2002 and 2001 contains a going concern qualification because
we are in the development stage and need additional capital to fund our
operations until we can begin commercial operations.  In this regard, please
refer to those risks and uncertainties set forth below under the heading "Risk
Factors," as well as the "RISK FACTORS" and the audit report contained in "PART


                                       19

<PAGE>

F/S" of Form 10-KSB for the four month period ended December 31, 2002 and Form
10-KSB for former fiscal year ended August 31, 2002.

The net loss for the three month period ended September 30, 2003 was $14,765,698
compared to a net loss of $190,315 for the comparable period in the prior year,
an increased loss of $14,575,383 as a result of incurring non-cash compensation
expense of $14,475,099.  This charge resulted from (1) the return of common
shares to treasury by certain shareholders which resulted in imputed
compensation to our officers and directors, and (2) the value of the stock
purchase rights granted to our Chairman and Chief Executive Officer.

During the three month period ended September 30, 2003, we incurred borrowing
costs of $12,789 compared to $-0- for the comparable period in the prior year.
These borrowing costs were the result of obtaining financing for insurance
premiums, short term loans from stockholders, and the issuance of convertible
subordinated notes to meet working capital requirements and to close our second
acquisition.

The total cash and cash equivalents at September 30, 2003 were $367,779 compared
to $125,463 at December 31, 2002, an increase of $242,316, resulting primarily
from proceeds received through our debt financing facilities.

During 2003, we continued the implementation of our new strategic direction by
conducting additional discussions with several medical staffing companies that
meet our desired acquisition criteria.  As more fully described below under the
heading entitled "Completed and Pending Transactions," we have completed three
acquisitions and have entered into an agreement to complete another.
Additionally, we entered into two consulting agreements regarding the
identification of potential acquisitions.  Refer to Financial Statements, Note
8, "Commitments and Contingencies."


Plan of Operation

Our success in achieving profitability will depend upon our ability to
consummate acquisitions of healthcare staffing companies, and then to operate
them efficiently after consummation.  During the implementation of our business
plan, we will be subject to all of the risks inherent in an emerging business,
including the need to provide reliable and effective products and services, to
develop marketing expertise, and to generate sales. In the event that our
projected market does not develop as anticipated, our business, financial
condition and results of operations could be materially adversely affected.

As more fully described below under the heading entitled "Completed and Pending
Transactions," we have completed three acquisitions and have entered into an
agreement to complete another.  During the next twelve months, we intend to
perform the activities required to further establish our business operations.
In executing our current plans, our objectives will include the following:


     o  Finding and acquiring additional healthcare companies that complement
        our current operations and consummating these acquisitions

     o  Integrating the businesses that we have acquired business into an
        operating entity


                                       20

<PAGE>

     o  Raising the necessary funding for our business operations

     o  Developing brand awareness

     o  Building an operations structure to support the business

     o  Developing management information systems and technology to support
        operations

     o  Attracting and retaining qualified personnel

At September 30, 2003, we had cash totaling $367,779.  As a result, our ability
to establish these business operations in the coming twelve months on the terms
proposed will therefore depend upon our ability to raise additional equity for
working capital purposes.  In the event that we fail to raise this necessarily
working capital, our ability to establish these business operations as proposed,
will be materially and adversely affected.

We have received an audit opinion which includes a "going concern" emphasis. We
are aware of this risk and are attempting to raise the necessary capital to fund
our operations through the sale of additional equity. If additional capital is
not readily available, we will be forced to scale back our development
activities and will attempt to develop other sources of revenue.
Notwithstanding the foregoing, there is substantial doubt regarding our ability
to continue as a going concern without additional working capital investment
and, as such, we are substantially dependent upon our ability to raise
sufficient capital to cover our development costs.  Our planned business does
not require the purchase of plants, factories, extensive capital equipment, or
inventory.

During the three month period ended September 30, 2003, we completed two
acquisitions, giving us approximately 50 full time employees and approximately
250 nurses on assignment for customers.  In addition, we intend to hire
additional employees during the next twelve months as our business plan is
executed, which will be dependent on our ability to raise the required funds.
In the interim, we will rely on our management to perform the activities
required for preliminary business development. The failure to attract and retain
the additional required personnel would have a material adverse effect on our
business and results of operations.


Completed and Pending Transactions

On August 7, 2003, we completed the acquisition of Baker Anderson Christie, Inc.
pursuant to an Agreement and Plan of Reorganization, dated June 19, 2003 and
amended July 31, 2003, by and among us, Baker Anderson Christie, Inc., BAC
Acquisition Corporation, our wholly owned subsidiary and the stockholders of
Baker Anderson Christie, Inc.  Baker Anderson Christie, Inc. is based in San
Francisco, California and provides total clinical staffing for both residential
care facilities and hospices.  Upon the terms and subject to the conditions in
the merger agreement, BAC Acquisition Corporation was merged with and into Baker
Anderson Christie, Inc. and Baker Anderson Christie, Inc. survived the merger as
our subsidiary.  The total merger consideration is equal to six times the sum of
Baker Anderson Christie, Inc.'s earnings before interest, taxes, depreciation
and amortization for the six consecutive fiscal quarters commencing with the
fiscal quarter ending September 30, 2003 and will be payable solely in shares of
our common stock.  At the closing, we issued an aggregate of 480,000 shares of
our common stock to the stockholders of Baker Anderson Christie, Inc. as an


                                       21

<PAGE>

advance payment of the merger consideration and we may issue additional shares
of our common stock as merger consideration in subsequent fiscal quarters.

On September 22, 2003, we completed the acquisition of New Age Staffing, Inc.
pursuant to an Agreement and Plan of Reorganization dated September 15, 2003 by
and among us, New Age Staffing, Inc., NAS Acquisition Corporation, our wholly
owned subsidiary, and the shareholders of New Age Staffing.  New Age Staffing is
a New Orleans based healthcare agency which provides temporary medical staffing
services to hospitals and other medical facilities.  Upon the terms and subject
to the conditions in the merger agreement, New Age Staffing was merged with and
into NAS Acquisition Corporation and NAS Acquisition Corporation survived the
merger as our subsidiary.  In connection with the merger all outstanding shares
of capital stock of New Age Staffing were converted into the right to receive a
ratable portion of the aggregate merger consideration.  The aggregate merger
consideration consists of 6,884,614 shares of Crdentia Corp. common stock and
$2,050,000 in cash, $400,000 of which was paid on the closing date, $97,000 of
which was paid on October 15, 2003, $168,000 of which shall be payable when we
close our next round of financing, $332,500 of which shall be paid on or before
180 days from the closing date, $332,500 of which shall be paid on or before the
first anniversary of the closing date, $360,000 of which shall be paid on the
first anniversary of the closing date and $360,000 of which shall be paid on the
second anniversary of the closing date.  We funded the acquisition from the
proceeds received from the issuance of convertible notes on September 2, 2003.
Future cash payments required by this agreement are anticipated to be funded
through a combination of operating cash flow and the sale of our common stock.

On October 2, 2003, we completed the acquisition of Nurses Network, Inc.
pursuant to an Agreement and Plan of Reorganization dated July 16, 2003, as
amended on September 9, 2003, by and among us, Nurses Network, Inc., NNI
Acquisition Corporation, our wholly owned subsidiary, and certain shareholders
of Nurses Network, Inc.  Nurses Network, Inc. is a San Francisco based nurse
staffing agency which provides licensed staff for medical clinics as well as
skilled home healthcare visits.  In connection with the merger all outstanding
shares of capital stock of Nurses Network, Inc. were converted into the right to
receive a ratable portion of the merger consideration.  The merger consideration
is equal to sixty percent of the sum of Nurses Network, Inc.'s revenue for the
six consecutive fiscal quarters commencing with the fiscal quarter ending
September 30, 2003 and will be payable solely in shares of Crdentia common
stock. Subject to the terms and conditions of the merger agreement, as amended,
an advance closing payment of 118,084 shares of Crdentia common stock was issued
to the former Nurses Network, Inc. shareholders at the closing.  The
consideration for and the other terms and conditions of the merger were
determined by arms-length negotiations between us and Nurses Network, Inc.
Robert Kenneth, a member of our board of directors, was a director, officer and
shareholder of Nurses Network, Inc.

As more fully described in Note 3 to the accompanying financial statements,
based upon the number of shares of our common stock issued in connection with
these three acquisitions, our Chairman and Chief Executive Officer has the right
to purchase up to 1,762,675 shares of our Company's common stock at a price of
$0.0001 per share.  As more fully discussed under the heading entitled Stock
Based Compensation, the difference between the closing price of our common stock
as quoted on the Over-The-Counter Bulletin Board as of the date of the closing
of each acquisition and $0.0001 is accounted for as non-cash compensation
expense.  As of the date of this quarterly report on Form 10-QSB, Mr. Durham has
not exercised his right to purchase any of these shares.


                                       22

<PAGE>

On November 4, 2003, we entered into an agreement to acquire PSR Nurse
Recruiting, Inc. and PSR Nurses Holdings Corp., pursuant to an Agreement and
Plan of Reorganization by and among us, PSR Acquisition Corporation, our wholly
owned subsidiary, PSR Holdings Acquisition Corporation, our wholly owned
subsidiary, PSR Nurse Recruiting, Inc. and PSR Nurses Holdings Corp.  Upon the
terms and subject to the conditions in the merger agreement, (i) PSR Acquisition
Corporation will be merged with and into PSR Nurse Recruiting, Inc., and PSR
Nurse Recruiting, Inc. will survive the merger as our subsidiary and (ii) PSR
Holdings Acquisition Corporation will be merged with and into PSR Nurses
Holdings Corp. and PSR Nurses Holdings Corp. will survive the merger as our
subsidiary.  Our officers assumed management and control of PSR Nurse
Recruiting, Inc. and PSR Nurses Holdings Corp. effective October 15, 2003.  The
transaction, which is expected to close on or before November 17, 2003, has been
approved by our board of directors and the board of directors of each of PSR
Nurse Recruiting, Inc. and PSR Nurses Holdings Corp.  The closing of the
transaction is subject to customary closing conditions.  Upon completion of each
of the mergers, all outstanding shares of capital stock of PSR Nurse Recruiting,
Inc. and PSR Nurses Holdings Corp. will be exchanged for aggregate consideration
in an amount equal to 0.55 multiplied by the sum of the gross revenues for PSR
Nurses, Ltd. for the three year fiscal period beginning September 30, 2002 and
will be payable solely in shares of our common stock.


Related Party Transactions

Ameristar Group Incorporated ("Ameristar") is a corporation that is an affiliate
of two of our corporate shareholders and is considered to be a related party.
During the nine months ended September 30, 2003, we paid Ameristar financial
consulting fees totaling $40,000, with an additional $5,000 accrued but unpaid
at period end.

On November 1, 2001, we reached an agreement with Ameristar to provide us with
management services needed for our continuing development.  A Management
Services Agreement was executed on that date with Ameristar to provide
consulting services, office space, and administrative services for a two-year
period. The monthly cost of these services was $5,500, consisting of $2,500 for
consulting services, $1,000 for rent, and $2,000 for administrative services.
The consulting services included such activities as business plans;
introductions to financial community; strategic planning; evaluation of
potential business relationships, such as joint ventures, mergers and
acquisitions; business projections; review of marketing plans; and general
advisory and management services as required.

Effective August 15, 2002, the Management Services Agreement with Ameristar was
terminated in accordance with a Termination Agreement executed between us and
Ameristar on that date.  As part of the Termination Agreement, indebtedness owed
to us by Ameristar in the amount of $94,165 was cancelled in full payment of
compensation owed to Ameristar for additional services provided to us.

On September 9, 2003, the audit committee of our board of directors approved a
Consulting Agreement with Ameristar in which they will provide us with
assistance relating to our filing requirements with the Securities and Exchange
Commission in exchange for a fee of $5,000 per month.  This Agreement expires on
March 31, 2004.


                                       23

<PAGE>

On June 30, 2003, we executed a Promissory Note in favor of one of our
stockholders, Atlantic International Capital Holdings, Ltd., in the principal
amount of $25,000 in exchange for cash in the same amount.  This Promissory Note
accrues interest at 12% per annum and matured on August 13, 2003 at which time
the principal plus accrued interest would have been payable in full.  On
September 29, 2003, the scheduled repayment date was extended by the maker until
November 30, 2003.  If we should default on this Note, interest will accrue at
18% per annum as of the date of default.

On July 21, 2003, we executed a Promissory Note in favor of one of our
stockholders, Gable International Holdings, Ltd., in the principal amount of
$25,000 in exchange for cash in the same amount.  This Promissory Note accrues
interest at 12% per annum and matured on September 3, 2003 at which time the
principal plus accrued interest would have been payable in full.  On September
29, 2003, the scheduled repayment date was extended by the maker until November
30, 2003.  If we should default on this Note, interest will accrue at 18% per
annum as of the date of default.

On August 6, 2003, a number of our stockholders agreed to return an aggregate of
3,048,000 shares of our common stock to us for no consideration, thus reducing
the total number of our issued and outstanding common stock on that date from
10,998,166 to 7,950,166.  These stockholders determined in consultation with our
management that, in connection with our acquisition program and on-going
financing efforts, it would be in our best interests to reduce the overall
number of shares of our common stock that are issued and outstanding.  We have
cancelled these 3,048,000 shares of common stock and returned them to our
treasury.  Refer to Form 8-K filed on August 6, 2003.  In accordance with the
provisions of APB Statement No. 25, the effect of this return of shares to our
treasury is to generate non-cash compensation expense of $5.7 million as the
imputed increase in the value of our stock to our officers and directors.

On September 2, 2003, we issued $675,000 in principal amount of Convertible
Subordinated Promissory Notes (the "Notes") to six investors.  We issued
additional Notes in the principal amounts of $25,000 and $120,000 on September
29, 2003 and October 16, 2003, respectively.  Subject to the conversion
provisions set forth in the Notes, the unpaid principal together with all
accrued interest on the Notes is due and payable in full one year following the
issuance date of each such Note. Interest accrues on the unpaid principal
balance at a rate of ten percent (10%) per annum, simple interest, and is
payable in quarterly payments. Three of the investors included Joseph M. DeLuca,
Robert P. Oliver and James D. Durham. Messrs. DeLuca and Oliver are current
members of our Board of Directors and our audit committee.  Each of them
purchased, together with an affiliate of Mr. DeLuca's, Notes in the aggregate
principal amount of $125,000. James D. Durham, a member of our board of
directors and our Chairman and Chief Executive Officer, purchased a Note in the
principal amount of $50,000.

On September 22, 2003, we issued 6,884,614 shares of our common stock to the
stockholders of New Age Staffing, Inc.  This transaction resulted in several
stockholders becoming related parties for financial reporting purposes.  These
transactions are summarized as follows:

     Two of New Age Staffing's stockholders each own common stock in excess of
     10% of the total number of our issued and outstanding common stock.
     Approximately 70% of the $1,650,000 in notes payable to sellers is payable
     to these two stockholders.


                                       24

<PAGE>

     We assumed liability for a factoring agreement utilized by New Age.  Under
     the terms of this agreement, the factor will advance a certain amount to us
     based upon the computation of eligible accounts receivable.  Customer
     payments are made directly to a lockbox controlled by the factor.
     Collected funds, less discounts for bad debts, reserves for charge backs
     and monthly interest charges, are remitted to us.  At September 30, 2003,
     the factor had advanced $360,000 to us.  The factor's principal shareholder
     is also a shareholder of ours.  The commercial factor's obligation to
     purchase accounts receivable from us expires November 30, 2003.

As previously described, on October 2, 2003, we consummated our acquisition of
Nurses Network, Inc.  Upon the terms and subject to the conditions in the merger
agreement, Nurses Network, Inc. became our subsidiary.  Nurses Network, Inc. is
based in San Francisco, California and provides licensed staff for medical
clinics as well as skilled home healthcare visits.  Refer to Form 8-K filed on
October 8, 2003.  Robert Kenneth, a member of our board of directors, was a
director, officer and shareholder of Nurses Network, Inc.


Liquidity and Capital Resources

The audit report accompanying the Company's financial statements for the four
month period ended December 31, 2002 and 2001 contains a going concern
qualification because the Company was in the development stage and needed
additional capital to continue as an entity until the Company begin commercial
operations.  Refer to "RISK FACTORS" and the audit report contained in "PART
F/S" of Form 10-KSB for the four month period ended December 31, 2002 and Form
10-KSB for former fiscal year ended August 31, 2002.  Management recognizes the
need to raise additional funds to continue planned operations.  Primary to our
solvency is the sale of additional equity and continuing our strategy of
funding development through additional equity financing. These funds will be
used to manage working capital requirements and to fund enhancements to our
administrative operations.  If additional capital is not readily available, we
will be forced to scale back acquisition opportunities and identify other
sources of funding. Should we not be able to obtain additional financing, there
is substantial doubt regarding our ability to continue as a going concern and,
as such, we are substantially dependent upon our ability to raise sufficient
capital to cover our development costs.

On June 30, 2003, we executed a Promissory Note in favor of one of our
stockholders, Atlantic International Capital Holdings, Ltd., in the principal
amount of $25,000 in exchange for cash in the same amount.  This Promissory Note
accrues interest at 12% per annum and matured on August 13, 2003 at which time
the principal plus accrued interest would have been payable in full.  On
September 29, 2003, the scheduled repayment date was extended by the maker until
November 30, 2003.  If we should default on this Note, interest will accrue at
18% per annum as of the date of default.

On July 21, 2003, we executed a Promissory Note in favor of one of our
stockholders, Gable International Holdings, Ltd., in the principal amount of
$25,000 in exchange for cash in the same amount.  This Promissory Note accrues
interest at 12% per annum and matured on September 3, 2003 at which time the
principal plus accrued interest would have been payable in full.  On September
29, 2003, the scheduled repayment date was extended by the maker until November
30, 2003.  If we should default on this Note, interest will accrue at 18% per
annum as of the date of default.


                                       25

<PAGE>

On August 18, 2003, we executed a variable rate installment note with a
financial institution in the amount of $250,000.  On September 12, 2003, we
received a loan for this amount.  Under the terms of the note, we are required
to make monthly payments of $13,889 plus accrued interest on the unpaid
principal at a rate of the institution's Prime Rate plus 2% (6% at September 30,
2003).

On August 18, 2003, we executed a loan and security agreement with a financial
institution in the amount of $1,250,000.  Our ability to receive advances under
this agreement is determined by the balance of eligible accounts receivable.
Interest is payable monthly at the institution's Prime Rate plus 1% (5% at
September 30, 2003).  At September 30, 2003, we had borrowed $62,000 under the
terms of this agreement.

On September 2, 2003, we issued $675,000 in principal amount of Convertible
Subordinated Promissory Notes (the "Notes") to six investors.  We issued
additional Notes in the principal amount of $25,000 and $120,000 on September
29, 2003 and October 16, 2003, respectively.  Subject to the conversion
provisions set forth in the Notes, the unpaid principal together with all
accrued interest on the Notes is due and payable in full one year following the
issuance date of each such Note. Interest accrues on the unpaid principal
balance at a rate of ten percent (10%) per annum, simple interest, and is
payable in quarterly payments. Three of the investors included Joseph M. DeLuca,
Robert P. Oliver and James D. Durham. Messrs. DeLuca and Oliver are current
members of the Company's Board of Directors and its audit committee.  Each of
them purchased, together with an affiliate of Mr. DeLuca's, Notes in the
aggregate principal amount of $125,000. James D. Durham, a Director of Crdentia
and its Chairman and Chief Executive Officer, purchased a Note in the principal
amount of $50,000.

On September 22, 2003, at the closing of our acquisition of New Age Staffing,
Inc., we assumed liability for a factoring agreement utilized by them.  Under
the terms of this agreement, the factor will advance a certain amount to us
based upon the computation of eligible accounts receivable.  Customer payments
are made directly to a lockbox controlled by the factor.  Collected funds, less
discounts for bad debts, reserves for charge backs and monthly interest charges,
are remitted to us.  At September 30, 2003, the factor had advanced $360,000 to
us.  The principal stockholder of the factor is also a stockholder of ours.  The
commercial factor's obligation to purchase accounts receivable from us expires
November 30, 2003.

At September 30, 2003, we had cash totaling $367,779.  We currently plan to
raise additional working capital by issuing additional shares of our common
stock or by issuing debt.  There is no assurance, however, that we will be able
to raise the amount of capital required to meet our working capital needs.


Risk Factors

We were formed in November, 1997, and have recently commenced operations.  Any
investment in our common stock involves a high degree of risk.  You should
consider carefully the following information about these risks, together with
the other information contained in this quarterly report, before you decide to
buy our common stock.  The risks and uncertainties described below are not the
only ones we face.  Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also impair our operations.  If any of
the following risks actually occur, our business would likely suffer and our
results could differ materially from those expressed in any forward-looking
statements contained in this quarterly report including those contained in the


                                       26

<PAGE>

section captioned "Management's Discussion and Analysis of Financial Conditions
and Results of Operations" under Item 2.  In such case, the trading price of our
common stock could decline, and you may lose all or part of the money you paid
to buy our common stock.

     We have a lack of operating history and earnings.

     We were formed in November, 1997 and recently commenced operations on
August 7, 2003 with our acquisition of Baker Anderson Christie, Inc.  Most
recently, we have been engaged in the development of a new business plan and the
search for funding in order to commence commercial operations.  Therefore, we
must be considered to be a "start-up" operation and subject to all the risks
inherent in a new business venture, many of which are beyond our control,
including the inability to implement successful operations, lack of capital to
finance acquisitions and failure to achieve market acceptance.  In addition, as
a start-up venture we will face significant competition from many companies
virtually all of which are larger, better financed and have significantly
greater market recognition than us.

     The ability to attract and retain highly qualified personnel to operate and
manage our operations is extremely important and our failure to do so could
adversely affect us.

     Presently, we are totally dependent upon the personal efforts of our
management team.  The loss of any of our officers or directors could have a
material adverse effect upon our business and future prospects.  We do not
presently have key-person life insurance upon the life of any of our officers or
directors.  Further, all decisions with respect to management of our affairs
will be made exclusively by current management.  We will also employ independent
consultants to provide business and marketing advice.  Such consultants have no
fiduciary duty to us or our stockholders, and may not perform as expected.  Our
success will, in significant part, depend upon the efforts and abilities of
management, including such consultants as may be engaged in the future.
Additionally, as we implement our planned expansion of commercial operations, we
will require the services of additional skilled personnel.  There can be no
assurance that we can attract persons with the requisite skills and training to
meet our future needs or, even if such persons are available, that they can be
hired on terms favorable to us.

     Our financial statements contain a "going concern" qualification and our
operations are dependent upon our ability to raise additional working capital.

     We may not be able to operate as a going concern.  The independent
auditor's report accompanying our financial statements contains an explanation
that our financial statements have been prepared assuming that we will continue
as a going concern.  We are in the development stage and need additional funds
to implement our plan of operations.  As of September 30, 2003, we had cash
totaling $367,779.  This condition raises substantial doubt about our ability to
continue as a going concern.  The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.  As a
result, our ability to continue to operate as a going concern will depend upon
our ability to raise additional working capital.  Our failure to raise this
additional working capital would materially and adversely affect our ability to
continue as a going concern.


                                       27

<PAGE>

     Our inability to repay short term indebtedness would materially affect our
business and operations.

     At September 30, 2003, we had a cash balance of $367,779.  As discussed
previously under the heading "Liquidity and Capital Resources," we have borrowed
approximately $50,000 from two of our stockholders to finance our operations
pursuant to Promissory Notes.  These Notes mature November 30, 2003, at which
point the respective Promissory Notes become immediately payable in full and
interest will accrue at an applicable default rate.  Additionally, on November
30, 2003, our factoring facility matures.  Although we will attempt to have the
maturity date extended, there can be no assurance that the lender will agree to
do so.  We may be forced to obtain a revolving line of credit on terms and
conditions that are not as favorable as those of our existing facility.  We
currently plan to raise additional working capital by issuing additional shares
of our common stock or by issuing debt.  However, we can make no assurances that
we will be able to raise the necessary working capital to repay these Promissory
Notes prior to their maturity date or that the noteholders will agree to extend
the terms of the Promissory Notes on terms acceptable to us.  Our inability to
repay these Promissory Notes when due would have a material, adverse affect upon
our business and operations.

     Our ability to execute upon our strategy of acquiring companies will
require us to obtain additional working capital.

     Our business strategy will require that substantial capital investment and
adequate financing be available to us for the completion of acquisitions,
development and integration of operations and technology as needed.  In the
event that we cannot obtain the necessary capital to fund our operations as
planned, we may need to limit our operations and development activities.  We
cannot guarantee that such capital investment will be available to us at all or
on terms that are acceptable to us.  Our failure to obtain the necessary amount
of working capital to fund our operations as currently anticipated could have a
material, adverse effect upon our capacity to continue operations.

     The means by which we raise additional working capital could cause
substantial dilution to stockholders or result in significant interest expense
or restrictive covenants.

     Our ability to continue as a going concern and to fund our planned
operations will require that we obtain substantial capital investment and
financing.  We may raise these funds by selling additional shares of our common
stock or by incurring additional debt.  Depending on the terms negotiated with
potential investors, such shares of common stock may be issued at a price per
share significantly less than the trading prices listed for our common stock on
the OTC Bulletin Board and thus may be significantly dilutive to our current
stockholders.  In addition, such dilution could likely have a depressive effect
on the market price of our common stock, should a public market continue for our
shares of common stock.  In addition, any debt financing that we are able to
obtain, if any, may involve significant interest expense or restrictive
covenants that may limit our operations.

     Our business strategy depends upon our ability to acquire operating
companies and our failure to successfully do so would have a material adverse
affect upon our operations.

     Our acquisition plan depends on our ability to identify suitable
acquisition candidates, effectively integrate acquired companies into our
organization, retain personnel and customers in the acquired companies and


                                       28

<PAGE>

obtain necessary financing on acceptable terms.  As previously described under
the heading "Completed and Pending Transactions," we have completed three
acquisitions and have entered into an agreement to complete another.
Additionally, we entered into two consulting agreements regarding the
identification of potential acquisitions.  However, there can be no assurances
that any additional transactions will be consummated on the terms proposed.  Our
failure to consummate these transactions on the terms proposed could have a
material, adverse effect on our business and operations.

     Our failure to successfully integrate any companies that we acquire into
our operations would materially and adversely affect our business and
operations.

     As previously described under the heading "Completed and Pending
Transactions," we recently completed three acquisitions and have entered into an
agreement to complete another.  However, any acquisition that we complete or
will contemplate, is accompanied by risks which include difficulty assimilating
the operations and personnel of acquired businesses, maximizing our financial
and strategic position through the successful incorporation and integration of
acquired personnel and customers, maintaining uniform standards and preventing
the impairment of relationships with employees and customers.  Additionally, as
we implement our business plan, there can be no assurance that there will not be
substantial unanticipated costs and expenses associated with the start-up and
implementation of such acquisition plan.  Our failure to integrate these
businesses satisfactorily or to consummate these transactions on the terms
proposed could have a material, adverse effect on our business and operations.

     The successful implementation of our business strategy depends upon the
ability of our management to monitor and control costs.

     With respect to our planned operations, management cannot accurately
project or give any assurance with respect to our ability to control development
and operating costs and/or expenses in the future.  Consequently, even if we are
successful in implementing our planned commercial operations (of which there can
be no assurance), management still may not be able to control costs and expenses
adequately, and such operations may generate losses.

     We may become subject to governmental regulations and oversight, which
could adversely affect our ability to continue or expand our business strategy.

     Although our planned operations are currently not subject to any
regulations governing the acquisition of healthcare companies, it is possible
that, in the future, such regulations may be legislated. Although we cannot
predict the extent of any such future regulations, a possibility exists that
future or unforeseen changes may have an adverse impact upon our ability to
continue or expand our operations as presently planned.

     We do not foresee issuing any cash dividends.

     We have not paid any dividends to date nor, by reason of our present
financial status and contemplated financial requirements, do we anticipate
paying any dividends in the foreseeable future.


                                       29

<PAGE>

     There is a lack of an active public market for our common stock.

     We received approval to list our common stock on the OTC Bulletin Board and
trading of shares began on February 24, 2003.  There can be no assurances,
however, that a market will develop or continue for our common stock.  Our
common stock may be thinly traded, if traded at all, even if we achieve full
operation and generate significant revenue.  In addition, our stock is defined
as a "penny stock" under Rule 3a51-1 adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended. In general, a
"penny stock" includes securities of companies which are not listed on the
principal stock exchanges or the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") or National Market System ("NASDAQ NMS")
and have a bid price in the market of less than $5.00; and companies with net
tangible assets of less than $2,000,000 ($5,000,000 if the issuer has been in
continuous operation for less than three years), or which have recorded revenues
of less than $6,000,000 in the last three years.  "Penny stocks" are subject to
rule 15g-9, which imposes additional sales practice requirements on broker-
dealers that sell such securities to persons other than established customers
and "accredited investors" (generally, individuals with net worth in excess of
$1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their
spouses, or individuals who are officers or directors of the issuer of the
securities). For transactions covered by Rule 15g-9, a broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, this
rule may adversely affect the ability of broker-dealers to sell our common
stock, and therefore, may adversely affect the ability of our stockholders to
sell common stock in the public market.

     Sales by our existing stockholders of shares of our common stock could
cause our stock price to decline.

     A total of 15,432,864 shares of common stock were issued and outstanding as
of November 14, 2003, of which 11,292,864 shares thereof were "restricted
securities" as that term is defined under the Securities Act of 1933, as
amended.  All such restricted shares must be held indefinitely unless
subsequently registered under the Securities Act or an exemption from
registration becomes available.  One exemption which may be available in the
future is Rule 144 adopted under the Securities Act.  Generally, under Rule 144
any person holding restricted securities for at least one year may publicly sell
in ordinary brokerage transactions, within a 3 month period, the greater of one
(1%) percent of the total number of a company's shares outstanding or the
average weekly reported volume during the four weeks preceding the sale, if
certain conditions of Rule 144 are satisfied by the company and the seller.
Furthermore, with respect to sellers who are "non-affiliates" of the company, as
that term is defined in Rule 144, the volume sale limitation does not apply and
an unlimited number of shares may be sold, provided the seller meets a holding
period of 2 years.

     Purchases of additional shares of common stock by our Chief Executive
Officer could cause significant dilution to our stockholders and cause our stock
price to decline.

     Subject to the terms and conditions of a Common Stock Purchase Agreement
dated May 15, 2002 with James Durham, Mr. Durham has the right to purchase at a
purchase price of $0.0001 per share, up to a number of additional shares of our
common stock equal to twenty-five (25%) of the aggregate number of additional
shares of our common stock and other securities convertible into common stock
issued or issuable in connection with any acquisitions we complete on or before


                                       30

<PAGE>

August 7, 2004.  We have issued an aggregate of 7,482,698 shares as
consideration for our three completed acquisitions of Baker Anderson Christie,
Inc., New Age Staffing, Inc. and Nurses Network, Inc.  As a result of the
completion of these acquisitions, Mr. Durham will have the right to purchase up
to 1,870,675 shares of our common stock at $0.0001 per share and he may be
entitled to purchase additional shares of our common stock in subsequent fiscal
quarters.  In addition, the difference between $0.0001 and the closing price of
our common stock as quoted on the OTC Bulletin Board is currently accounted for
as a non-cash compensation expense.  In the event that we are required to issue
additional shares of common stock to Mr. Durham in connection with the closing
of these three acquisitions or in connection with any other completed
acquisition, such issuances may cause substantial dilution to our stockholders,
cause us to account for additional non-cash compensation expense and may have a
depressive effect on the market price of our securities, should a public market
continue for our shares of common stock.


Item 3.  Controls and Procedures

Based on their evaluation, as of the end of the three month period covered by
this quarterly report on Form 10-QSB, our Chief Executive Officer and Chief
Financial Officer have concluded that our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934) are effective.  Due to the limited number of personnel, we do not fully
segregate a number of core business processes or control activities.

There has been no change in our internal controls over financial reporting that
occurred during the three month period covered by this quarterly report on Form
10-QSB that has materially affected, or is reasonably likely to materially
affect, our internal control over financial reporting.


                                       31

<PAGE>

                          PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

         There is no material litigation currently pending against us.


Item 2.  Change in Securities and Use of Proceeds

     (c) On August 7, 2003, we completed the acquisition of Baker Anderson
Christie, Inc., pursuant to which Baker Anderson Christie, Inc. became a wholly-
owned subsidiary of ours.  In connection with the merger, we issued an aggregate
of 480,000 shares of our common stock to three stockholders of Baker Anderson
Christie, Inc. as an advance payment of the merger consideration and we may
issue additional shares of our common stock as merger consideration in
subsequent fiscal quarters.  Such issuances were made pursuant to an exemption
from registration provided by Section 4(2) of the Securities Act of 1933, as
amended and/or Regulation D promulgated under the Securities Act of 1933, as
amended.  The issuances were made without general solicitation or advertising.
Each of the stockholders of Baker Anderson Christie, Inc. had access to all
relevant information necessary to evaluate the investment and represented that
the securities were being acquired for investment.

     On September 2, 2003, September 29, 2003 and October 16, 2003, we issued
$820,000 in principal amount of Convertible Subordinated Promissory Notes (the
"Notes") to eight investors, three of which were members of our board of
directors.  Subject to the conversion provisions set forth in the Notes, the
unpaid principal together with all accrued interest on the Notes is due and
payable in full one year following the issuance date of each such Note.
Interest accrues on the unpaid principal balance at a rate of ten percent (10%)
per annum, simple interest, and is payable in quarterly payments.  The
outstanding principal balance under the Note plus accrued and unpaid interest on
the Notes is convertible at the investor's option prior to the maturity date
into shares of our common stock at a conversion price equal to lesser of (i)
$1.50 or (ii) the per share price of the equity securities issued in connection
with the closing of our next private equity financing.  If, however, we issue
certain shares of our common stock at a per share price less than the then
effective conversion price, the conversion price then in effect will be adjusted
to the price paid per share for such additional stock.  Such issuances were made
pursuant to an exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended and/or Regulation D promulgated under the
Securities Act of 1933, as amended.  The issuances were made without general
solicitation or advertising.  Each of the investors had access to all relevant
information necessary to evaluate the investment and represented that the
securities were being acquired for investment.

     On September 22, 2003, we completed the acquisition of New Age Staffing,
Inc., pursuant to which New Age Staffing became a wholly-owned subsidiary of
ours.  In connection with the merger, we issued an aggregate of 6,884,614 shares
of our common stock to 12 stockholders of New Age Staffing, Inc.  Such issuances
were made pursuant to an exemption from registration provided by Section 4(2) of
the Securities Act of 1933, as amended and/or Regulation D promulgated under the
Securities Act of 1933, as amended.  The issuances were made without general
solicitation or advertising.  Each of the stockholders of New Age Staffing had
access to all relevant information necessary to evaluate the investment and
represented that the securities were being acquired for investment.


                                       32

<PAGE>


Item 3.  Defaults Upon Senior Securities

         None.


Item 4.  Submission of Matters to a Vote of Security Holders

         None.


Item 5.  Other Information

         None.


Item 6.  Exhibits and Reports on Form 8-K

     (a) Exhibits

         Exhibit No.   Description
         -----------   -----------
         2.1(1)        Agreement and Plan of Reorganization, dated as of June
                       19, 2003, by and among Crdentia Corp., Baker Anderson
                       Christie, Inc., BAC Acquisition Corporation and certain
                       stockholders of Baker Anderson Christie, Inc. (the "BAC
                       Merger Agreement").  Certain schedules and exhibits
                       referenced in the BAC Merger Agreement have been omitted
                       in accordance with Item 601(b)(2) of Regulation S-K. A
                       copy of any omitted schedule and/or exhibit will be
                       furnished supplementally to the Securities and Exchange
                       Commission upon request.

         2.2(2)        Amendment No. 1 made and entered into effective as of
                       July 31, 2003, to the BAC Merger Agreement dated June 19,
                       2003.

         2.3(3)        Agreement and Plan of Reorganization, dated as of July
                       16, 2003, by and among Crdentia Corp., Nurses Network,
                       Inc., NNI Acquisition Corporation and certain
                       shareholders of Nurses Network, Inc. (the "NNI Merger
                       Agreement").  Certain schedules and exhibits referenced
                       in the NNI Merger Agreement have been omitted in
                       accordance with Item 601(b)(2) of Regulation S-K. A copy
                       of any omitted schedule and/or exhibit will be furnished
                       supplementally to the Securities and Exchange Commission
                       upon request.

         2.4(4)        Agreement and Plan of Reorganization, dated as of
                       September 15, 2003, by and among Crdentia Corp., New Age
                       Staffing, Inc., NAS Acquisition Corporation and the
                       shareholders of New Age Staffing, Inc. (the "NAS Merger
                       Agreement").  Certain schedules and exhibits referenced


                                       33

<PAGE>

                       in the NAS Merger Agreement have been omitted in
                       accordance with Item 601(b)(2) of Regulation S-K. A copy
                       of any omitted schedule and/or exhibit will be furnished
                       supplementally to the Securities and Exchange Commission
                       upon request.

         2.5(5)        Amendment No. 1 made and entered into effective as of
                       September 9, 2003, by and among Crdentia Corp., NNI
                       Acquisition Corporation, Nurses Network, Inc. and certain
                       shareholders of Nurses Network, Inc., to the NNI Merger
                       Agreement dated July 16, 2003.

         3.1(6)        Restated Certificate of Incorporation.

         3.2(7)        Certificate of Amendment to Restated Certificate of
                       Incorporation.

         3.3(8)        Restated Bylaws.

         10.2          Agreement to Purchase Accounts and Security Agreement
                       dated February 8, 2002 between New Age Staffing, Inc. and
                       Katz Factoring, Inc.

         10.3          Amendment to Agreement to Purchase Accounts and Security
                       Agreement, dated effective as of August 8, 2003, made by
                       and between New Age Staffing, Inc. and Katz Factoring,
                       Inc.

         10.4          Omitted

         10.5          Variable Rate Installment Note dated August 18, 2003 in
                       the principal amount of $250,000.00 made payable by
                       Crdentia Corp. to Comerica Bank-California.

         10.6          Subordinated Promissory Note dated September 22, 2003 in
                       the principal amount of $1,650,000.00 made payable by
                       Crdentia Corp. to Nick Luizza, Jr.

         31.1          Certification of Chief Executive Officer pursuant to
                       Rules 13a-14(a) and 15d-14(a) promulgated pursuant to
                       the Securities Exchange Act of 1934, as amended.

         31.2          Certification of Chief Financial Officer pursuant to
                       Rules 13a-14(a) and 15d-14(a) promulgated pursuant to
                       the Securities Exchange Act of 1934, as amended.

         32.1          Certification of Chief Executive Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.

         32.2          Certification of Chief Financial Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.


                                       34

<PAGE>

________________________________________

         (1)   Previously filed as Exhibit 2.1 to the Form 8-K filed with the
               Securities and Exchange Commission on June 20, 2003 and
               incorporated herein by reference.

         (2)   Previously filed as Exhibit 2.3 to the Form 10-QSB filed with the
               Securities and Exchange Commission on August 12, 2003 and
               incorporated herein by reference.

         (3)   Previously filed as Exhibit 2.1 to the Form 8-K filed with the
               Securities and Exchange Commission on July 18, 2003 and
               incorporated herein by reference.

         (4)   Previously filed as Exhibit 2.1 to the Form 8-K filed with the
               Securities and Exchange Commission on September 16, 2003 and
               incorporated herein by reference.

         (5)   Previously filed as Exhibit 2.2 to the Form 8-K filed with the
               Securities and Exchange Commission on October 8, 2003 and
               incorporated herein by reference.

         (6)   Previously filed as Exhibit 3.1 to the Form 8-K filed with the
               Securities and Exchange Commission on August 22, 2002 and
               incorporated herein by reference.

         (7)   Previously filed as Exhibit 3.2 to the Form 10-QSB filed with the
               Securities and Exchange Commission on August 12, 2003 and
               incorporated herein by reference.

         (8)   Previously filed as Exhibit 3.2 to the Form 8-K filed with the
               Securities and Exchange Commission on August 22, 2002 and
               incorporated herein by reference.

         (9)   Previously filed as Exhibit 10.1 to the Form 8-K filed with the
               Securities and Exchange Commission on September 3, 2003 and
               incorporated herein by reference.


     (b) Reports on Form 8-K

         On August 6, 2003, we filed a Form 8-K under Item 5, Other Events and
         Required FD Disclosure, to report the return to our treasury of
         3,048,000 shares of common stock.

         On August 14, 2003, we filed a Form 8-K under Item 2, Acquisition or
         Disposition of Assets and Item 7, Financial Statements, Pro Forma
         Financial Information and Exhibits, to report the completion of the
         acquisition of Baker Anderson Christie, Inc.

         On September 3, 2003, we filed a Form 8-K under Item 5, Other Events
         and Required FD Disclosure and Item 7 Financial Statements, Pro Forma
         Financial Information and Exhibits, to report the issuance of $675,000
         in principal amount of Convertible Subordinated Promissory Notes to six
         investors.


                                       35

<PAGE>

         On September 16, 2003, we filed a Form 8-K under Item 5, Other Events
         and Required FD Disclosure and Item 7 Financial Statements, Pro Forma
         Financial Information and Exhibits, to report the execution of an
         Agreement and Plan of Reorganization to acquire New Age Staffing, Inc.



                                   SIGNATURES

In accordance with the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed in
its behalf by the undersigned, thereunto duly authorized.

Date:  November 14, 2003          By:  /s/ James D. Durham
                                      ----------------------------------------
                                           James D. Durham
                                           Chief Executive Officer

Date:  November 14, 2003          By: /s/  Lawrence M. Davis
                                      ----------------------------------------
                                           Lawrence M. Davis
                                           Chief Financial Officer and Secretary



                                       36

<PAGE>

                                 EXHIBIT INDEX

         Exhibit No.   Description
         -----------   -----------
         2.1(1)        Agreement and Plan of Reorganization, dated as of June
                       19, 2003, by and among Crdentia Corp., Baker Anderson
                       Christie, Inc., BAC Acquisition Corporation and certain
                       stockholders of Baker Anderson Christie, Inc. (the "BAC
                       Merger Agreement").  Certain schedules and exhibits
                       referenced in the BAC Merger Agreement have been omitted
                       in accordance with Item 601(b)(2) of Regulation S-K. A
                       copy of any omitted schedule and/or exhibit will be
                       furnished supplementally to the Securities and Exchange
                       Commission upon request.

         2.2(2)        Amendment No. 1 made and entered into effective as of
                       July 31, 2003, to the BAC Merger Agreement dated June 19,
                       2003.

         2.3(3)        Agreement and Plan of Reorganization, dated as of July
                       16, 2003, by and among Crdentia Corp., Nurses Network,
                       Inc., NNI Acquisition Corporation and certain
                       shareholders of Nurses Network, Inc. (the "NNI Merger
                       Agreement").  Certain schedules and exhibits referenced
                       in the NNI Merger Agreement have been omitted in
                       accordance with Item 601(b)(2) of Regulation S-K. A copy
                       of any omitted schedule and/or exhibit will be furnished
                       supplementally to the Securities and Exchange Commission
                       upon request.

         2.4(4)        Agreement and Plan of Reorganization, dated as of
                       September 15, 2003, by and among Crdentia Corp., New Age
                       Staffing, Inc., NAS Acquisition Corporation and the
                       shareholders of New Age Staffing, Inc. (the "NAS Merger
                       Agreement").  Certain schedules and exhibits referenced
                       in the NAS Merger Agreement have been omitted in
                       accordance with Item 601(b)(2) of Regulation S-K. A copy
                       of any omitted schedule and/or exhibit will be furnished
                       supplementally to the Securities and Exchange Commission
                       upon request.

         2.5(5)        Amendment No. 1 made and entered into effective as of
                       September 9, 2003, by and among Crdentia Corp., NNI
                       Acquisition Corporation, Nurses Network, Inc. and certain
                       shareholders of Nurses Network, Inc., to the NNI Merger
                       Agreement dated July 16, 2003.

         3.1(6)        Restated Certificate of Incorporation.

         3.2(7)        Certificate of Amendment to Restated Certificate of
                       Incorporation.

         3.3(8)        Restated Bylaws.

         10.2          Agreement to Purchase Accounts and Security Agreement
                       dated February 8, 2002 between New Age Staffing, Inc. and
                       Katz Factoring, Inc.

         10.3          Amendment to Agreement to Purchase Accounts and Security
                       Agreement, dated effective as of August 8, 2003, made by
                       and between New Age Staffing, Inc. and Katz Factoring,
                       Inc.


                                       37

<PAGE>

         10.4          Omitted

         10.5          Variable Rate Installment Note dated August 18, 2003 in
                       the principal amount of $250,000.00 made payable by
                       Crdentia Corp. to Comerica Bank-California.

         10.6          Subordinated Promissory Note dated September 22, 2003 in
                       the principal amount of $1,650,000.00 made payable by
                       Crdentia Corp. to Nick Luizza, Jr.

         31.1          Certification of Chief Executive Officer pursuant to
                       Rules 13a-14(a) and 15d-14(a) promulgated pursuant to
                       the Securities Exchange Act of 1934, as amended.

         31.2          Certification of Chief Financial Officer pursuant to
                       Rules 13a-14(a) and 15d-14(a) promulgated pursuant to
                       the Securities Exchange Act of 1934, as amended.

         32.1          Certification of Chief Executive Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.

         32.2          Certification of Chief Financial Officer pursuant to
                       Section 906 of the Sarbanes-Oxley Act of 2002.

________________________________________

         (1)   Previously filed as Exhibit 2.1 to the Form 8-K filed with the
               Securities and Exchange Commission on June 20, 2003 and
               incorporated herein by reference.

         (2)   Previously filed as Exhibit 2.3 to the Form 10-QSB filed with the
               Securities and Exchange Commission on August 12, 2003 and
               incorporated herein by reference.

         (3)   Previously filed as Exhibit 2.1 to the Form 8-K filed with the
               Securities and Exchange Commission on July 18, 2003 and
               incorporated herein by reference.

         (4)   Previously filed as Exhibit 2.1 to the Form 8-K filed with the
               Securities and Exchange Commission on September 16, 2003 and
               incorporated herein by reference.

         (5)   Previously filed as Exhibit 2.2 to the Form 8-K filed with the
               Securities and Exchange Commission on October 8, 2003 and
               incorporated herein by reference.

         (6)   Previously filed as Exhibit 3.1 to the Form 8-K filed with the
               Securities and Exchange Commission on August 22, 2002 and
               incorporated herein by reference.

         (7)   Previously filed as Exhibit 3.2 to the Form 10-QSB filed with the
               Securities and Exchange Commission on August 12, 2003 and
               incorporated herein by reference.

         (8)   Previously filed as Exhibit 3.2 to the Form 8-K filed with the
               Securities and Exchange Commission on August 22, 2002 and
               incorporated herein by reference.

         (9)   Previously filed as Exhibit 10.1 to the Form 8-K filed with the
               Securities and Exchange Commission on September 3, 2003 and
               incorporated herein by reference.



                                       38