SECURITIES EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB
                            Annual Report Pursuant to
                       the Securities Exchange Act of 1934


                       For the fiscal year ended 12-31-98
                       Commission file number 33-26531-LA

                        COMMERCIAL LABOR MANAGEMENT, INC.
             (Exact name of registrant as specified in its charter)

       Nevada                                                88-0241079
-----------------------                                      -------------------
(State of incorporation)                                     (I.R.S. Employer
                                                             Identification No.)

                  137 N. Larchmont, #507, Los Angeles, CA 90004
              ----------------------------------------------------
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code: (323)933-0565

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

                            Title of each class: None

                 Name of each exchange on which registered: N/A

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

                            Title of each class: None

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2)  has  been  subject  to the  filing
requirements for at least the past 90 days.

                      Yes  X              No    
                         -----               ------

Check if disclosure of delinquent  filers pursuant to Item 405 of Regulation S-B
is not contained in this form, and no disclosure will be contained,  to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB.   X
                  -----

State issuer's revenues for its most recent fiscal year. $0



                                        1

<PAGE>



Transitional Small Business Disclosure Format:

                         Yes           X    No
                    -----            ------

Aggregate  market  value  of the  voting  stock  held by  non-affiliates  of the
registrant as of December 31, 1998:  $1,844,550  (based on the closing bid price
of $7.50 per share as reported on OTC BB as of December 31, 1998)

Number of outstanding  shares of the registrant's  $.001 par value common stock,
as of December 31, 1998: 4,564,741.

                                        2

<PAGE>



                                     PART 1

Item 1.           Business

         Commercial  Labor  Management,   Inc.  is  a  Nevada  corporation  (the
"Company")  organized on October 18, 1988 with the initial  name Tokyo  Raiders,
Inc. It  subsequently  changed its name to Club USPN,  Inc. then to XL Corp. and
then to Commercial Labor  Management,  Inc. The Company was incorporated for the
purpose  of  engaging  in any  lawful  business,  with its  original  purpose to
evaluate and acquire one or more unspecified businesses or properties. Until May
1990,  the  Company  was  a  developmental  stage  enterprise  raising  capital,
searching for an acquisition, and acquiring 7.5 acres of undeveloped residential
land in New  Jersey,  at which time it changed  its name to Club USPN,  Inc.  An
acquisition of a pizza marketing network company in 1990 was mutually  rescinded
on September 30, 1990.

         Principal  operations of the Company were not re-established  until May
10,  1993,  when  the  Company  agreed  to  acquire  all of the  shares  of SONO
International, a Nevada corporation,  effective on June 9, 1993, in exchange for
625,000  shares of the Company's  common stock.  SONO  International  ("SI") was
organized  in Nevada  on July 2,  1992 to  provide  contract  manufacturing  and
maquilador  (shelter) services in Tijuana,  Baja California,  Mexico,  with four
wholly-owned subsidiaries: WIRETECH and EXCEL Mexican Manufacturing (both Nevada
corporations),  and WIRETECH de Mexico, S.A. de C.V., and Operadora de Shelters,
S.A. de C.V. (both Mexican corporations).

         On September 30, 1994, the Company sold its SI operations  unit to SI's
former  stockholders  and  received in return  619,200  shares of the  Company's
common stock held by those former SI stockholders.  The Company's motivation for
this  transaction  was due to the  substantial  losses  incurred by the SI unit,
without signs of immediate improvement.  The shares received back by the Company
provided  the Company with a reduction  in share  capitalization  which could be
used in acquiring or merging with a more promising operating company.

         On March 21, 1995,  the Company  entered into an Agreement  and Plan of
Reorganization  with Commercial  Labor  Management,  Inc.  pursuant to which the
Company  acquired 100% of the total issued and outstanding  common and preferred
stock of Commercial Labor  Management,  Inc. in exchange for 1,928,330 shares of
the Company's  stock.  Effective July 1, 1995, the Company and Commercial  Labor
Management,  Inc.  entered  into a Rescission  Agreement  pursuant to which they
mutually agreed to rescind the  acquisition  because the Company did not believe
that it had received adequate  consideration for its purchase.  As a result, the
Company  received a return of its  1,928,330  shares of common  stock which have
been  canceled,  and the Company  tendered  back all of the shares of Commercial


                                        3

<PAGE>



Labor  Management,  Inc.  which it owned.  The  Company  is now  seeking to make
another business  acquisition or enter into another business combination with an
operating entity.

         In June 1997, all issued and outstanding shares of the Company's Series
A  Convertible  Preferred  Stocks were  converted by their holders into 7,200,00
shares of the Company's common stock.

         In December  1997 the Company,  by the written  consent of its majority
shareholders   representing   approximately   82.6%  of  the  total  issued  and
outstanding   common  stock  of  the  Company,   (i)  amended  its  Articles  of
Incorporation  to  increase  the  authorized  common  stock from  15,000,000  to
50,000,000  shares,  par value $.001 per share, and (ii) effected a one for five
reverse  stock  split to result  in a total of  643,804  shares of common  stock
issued and outstanding.  On December 31, 1997, an additional 7,530,600 shares of
the common stock were issued to a consultant for services rendered, resulting in
a total of 8,173,804 shares of the Company's common issued and outstanding as of
December 31, 1997.

         On August 6, 1998,  the Company  entered into a Plan of  Reorganization
and  Stock  Exchange  Agreement  with  CNG  Communications,  Inc.  and the  sole
shareholder of CNG  Communications,  Inc.  ("CNG") pursuant to which the Company
was to acquire 100% of the issued and outstanding  stock of CNG in consideration
for the issuance of 4,200,000  shares of the  Company's  Common Stock (i.e.,  to
result in the CNG shareholder  owning an agreed upon percentage of the Company's
total  issued and  outstanding  stock ont he closing  of the  transaction).  The
proposed acquisition of CNG did not close.  Management believes that CNG and its
shareholder  breached the  Agreement.  Accordingly,  the Company filed a lawsuit
against CNG in 1999, the sole share holder of CNG, and Westower Corporation (the
company  which  announced  that it had  acquired  CNG) for  breach of  contract,
intentional  interference  with business  relationship  and related claims.  The
Company has not yet specified  the amount of its damages.  There is no assurance
that the Company will prevail in its filed lawsuit  against the  defendants,  or
that it will recover any of its claimed damages.  The principal  shareholders of
the Company are  currently  advancing  the costs of the lawsuit on behalf of the
Company.  There  is no  assurance  that  the  Company  will be able to make  any
business acquisition in the future.

         As a  result  of the  breach  of  that  agreement  by CNG  and  the CNG
shareholder,  the Company did not deliver any shares of its Common  Stock to the
CNG  shareholder.  3,378,434  Common  Shares have been  issued to the  principal
shareholders of the Company pending another business  combination,  if any (none
has yet been  identified),  as  disclosed in the  Company's  Report on Form 8-K,
dated October 27, 1998.


                                        4

<PAGE>


     At year end, the Company had a loss  carryforward in the amount of $821,659
which  probably will not b available to offset future  taxable income due to tax
code  restrictions.  These losses expire as they offset income or can be carried
forward for a maximum of 15 years.  The  intangible  long term asset of $202,326
previously recorded for the potential tax benefit from the loss carryforward was
written off in the second  quarter  because the Company did not believe that the
loss  carryforward will be available to offset income which may be earned by the
Company in the future, if any, due to Internal Revenue Code restrictions.

EMPLOYEES:

         The  Company  does not  currently  have any  employees.  The  executive
officers of the Company are not currently paid any salary or other  compensation
for their services.

         No  significant  business  activity was conducted by the Company during
the fiscal year. As a result,  no income was realized by the Company in its last
fiscal year.

         The Company was  inactive and  presently  does not  participate  in any
industry segment. The Company had no material revenues,  or operating profits or
identifiable assets attributable to its industry segment.



                                        5

<PAGE>



Item 2.           Property

         The Company does not have any formal  offices at year end.  Records are
maintained and mail received at 137 N. Larchmont,  #507, Los Angeles,  CA 90004.
The Company owns no real property.

Item 3.           Legal Proceedings

         The Company  was a party to no pending  legal  proceedings,  nor is any
property subject to such proceedings,  at December 31, 1998.  Subsequent to year
end, the Company filed suit against Paul Bishop,  CNG  Communications,  Inc. and
Westower Corporation for breach of contract.

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

         Written  Consent of a Majority of  Shareholders  was obtained  July 16,
1998 to effect reverse split of one for five issued and outstanding  shares. The
Board of Directors concurred in the action by Board Resolution.

         Also, in December 1997, the Company effected a  one-for-twenty  reverse
stock split of the issued and  outstanding  shares through  written consent of a
majority of the issued and outstanding  shares and concurrent Board of Directors
Resolution.  For trading purposes, there was a delay in implementing the reverse
split.  On November 3, 1998,  the NASDAQ  Stock  Market,  Inc.  issued a Uniform
Practice  Advisory (UPC #084-98) advising NASDAQ members that the effective date
of the one-for-20  reverse stock split for settlement  purposes would be revised
to occur on October  14,  1998 rather than  September  22, 1998  because  NASDAQ
believes that "a sufficient lack of information  and uncertainty  existed in the
marketplace to warrant a revision" ruling.  There is no assurance  regarding the
final outcome of the NASDAQ'S UPC #084-98,  or the effect the ruling and dispute
will have on the Company.


                                     PART II

Item 5.           Market for Registrant's Common Equity and Related
                  Stockholder Matters

         The Company's common stock trades on the NASD OTC Bulletin Board Market
under the symbol "CLMI."

         The range of high and low bid  quotations for each fiscal quarter since
the last report and  previous two years,  as reported by the National  Quotation
Bureau Incorporated, was as follows:


                                        6

<PAGE>


                  1998                          High        Low 
               ----------------              ----------     ------
               First quarter*                  $  .31        .09
               Second quarter*                 $  .31        .28
               Third quarter*                  $  .56        .09
               Fourth quarter*                 $18.50        .50

* Split adjusted one for 100

                   1997                          High       Low 
               ----------------                --------     -------
                First quarter                     .01          *
                Second quarter                    .01          *
                Third quarter                     .01          *
                Fourth quarter                   $.01          *

                    1996                          High      Low 
                ---------------                  -------    -------
                First quarter                     .07         .05
                Second quarter                    .02         .01
                Third quarter                     .02         .01
                Fourth quarter                   $.02        $.01

* No quotations reported

         The  above  quotations  reflect  inter-dealer  prices,  without  retail
mark-up,  mark-down,  or commission  and may not  necessarily  represent  actual
transactions.

         As of December 31, 1998, there were approximately 300 record holders of
the  Company's  Common  Stock not  including  shares  held in  "street  name" in
brokerage accounts, which number is unknown.

         The Company has not  declared or paid any cash  dividends on its common
stock and does not anticipate paying dividends for the foreseeable future.

Item 6.           Management's Discussion and Analysis of
                  Financial Condition and Results of Operations

                  Financial Condition and Changes in Financial
                  Condition

         During the fiscal year ended December 31, 1998,  the Company  continued
to search for and  evaluate  operating  businesses  for  potential  acquisition,
although no offers were completed by the Company. One agreement was entered into
with CNG Communications,  Inc., but CNG reneged on the agreement, and the matter
is now the subject of litigation.  The search for a new business acquisition was
only  conducted  sporadically  because  management,   which  was  not  paid  any
compensation by the Company during the fiscal year ending December 31, 1998, was
able to  dedicate only  a  limited amount of  time  to  the  Company's  affairs.

                                        7

<PAGE>



Management plans to continue to maintain the Company's reports to the Securities
and  Exchange  Commission  current  in 1999 and to  intensify  its  focus on the
Company's goal of acquiring or entering into a business  combination  with a new
operating business.

LIQUIDITY AND CAPITAL RESOURCES:

         The Company had a working capital deficit of $57,750 as of December 31,
1998,  comprised of accounts payable for accounting and legal services  rendered
for the Company and funds advanced by shareholders. As of December 31, 1998, the
Company has no tangible  assets and total  liabilities  of $57,750.  The Company
presently  has no  operating  businesses  and no sources of revenue,  capital or
financing.  If the  Company  identifies  a business to acquire and needs cash to
accomplish the acquisition, then it will have to issue stock or incur borrowings
in order to obtain such funds.  There is no  assurance  that the Company will be
able to obtain additional funding,  if required.  There is no assurance that the
Company will be able to acquire an operating business.

         No operations  were  conducted  and no revenues  were  generated in the
fiscal  year.  The  Company at year end had no  capital,  no cash,  and no other
assets.  The Company at year end was totally  illiquid and needed cash infusions
from shareholders to provide capital, or loans from any sources.

         Results of Operations

1998 Compared to 1997

The  Company  had no  business  operations  or revenues in the period in 1998 or
1997. The Company incurred $31,875 in officers'  consulting fees and expenses in
the period in 1998  compared to no  expenses  in 1997.  The Company did not have
assets, capital, or cash to pay any of its accounts payable as of year end. Loss
per share for the period was ($.004) adjusted for reverse split,  compared to $0
in 1997.

1997 Compared to 1996

         During the fiscal year ended December 31, 1997, the Company incurred no
general and  administrative  expenses.  In 1996 the Company  incurred $25,875 in
General and  Administrative  expenses most of which were  professional  fees and
wrote off as  uncollectible a $180,000  receivable from an officer.  At present,
the Company has no business  income or  operations.  Accordingly,  the  reported
financial  information herein may not be indicative of future operating results.
Profit/loss  on  operations  in 1997  was  ($0)  compared  to the  1996  loss on
operations ($205,875).


                                        8

<PAGE>



Item 7.           Financial Statements and Supplementary Data

                  Please refer to pages F-1 through F-11.

Item 8.           Changes in and Disagreements on Accounting and
                  Financial Disclosure

         In  connection  with  audits of two most  recent  fiscal  years and any
interim period preceding  resignation,  no  disagreements  exist with any former
accountant  on any  matter of  accounting  principles  or  practices,  financial
statement disclosure, or auditing scope of procedure, which disagreements if not
resolved to the  satisfaction of the former  accountant would have caused him to
make  reference  in  connection  with his  report to the  subject  matter of the
disagreement(s).

         The principal  accountants' reports on the financial statements for any
of the past two years  contained no adverse  opinion or a disclaimer  of opinion
nor was  qualified as to  uncertainty,  audit scope,  or  accounting  principles
except for the "going concern" qualification.

                                    PART III

Item 9.           Directors and Executive Officers of the
                  Registrant and Compliance with Section 16(a)

         The directors and executive  officers of the Company as of December 31,
         1998, are as follows:

      Name                       Age              Position
-----------------               -----             ------------------------
Edward L. Torres                 39               President, CFO, Director

         The term of office of each director and  executive  officer ends at, or
immediately  after,  the next annual  meeting of  shareholders  of the  Company.
Except as otherwise indicated,  no organization by which any director or officer
has been  previously  employed  is an  affiliate,  parent or  subsidiary  of the
Company.

     Edward L.  Torres has been the  President,  Chief  Financial  Officer,  and
Chairman of the Board of  Directors  of the Company  since July 30, 1995 and was
the President of the Company from March 21, 1995 until June 1, 1995.  Mr. torres
was also the President and principal shareholder of Commercial Labor Management,
Inc. from its  inception in 1992 until July 30, 1995,  when it ceased to conduct
business.  Commercial  Labor  Management,  Inc.  was engaged in the  business of
leasing employees to a variety of businesses, primarily in California. Since the
cessation of business by Commercial Labor Management,  Inc., Mr. Torres has been
an independent  marketing  consultant for other employee leasing companies.  Mr.
Torres has a Bachelors in Business Administration from South Bay University.

                                        9

<PAGE>




         Section 16(a) of the  Securities  Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's officers and directors,  and persons who
own more than 10% of a registered class of the Company's equity  securities,  to
file reports of ownership  and changes in ownership of equity  securities of the
Company  with the  Securities  and  Exchange  Commission  and NASDAQ.  Officers,
directors and  greater-than  10% shareholders are required by the Securities and
Exchange Commission regulation to furnish the Company with copies of all Section
16(a) filings.

         1. The  following  people did not file any reports  under Section 16(a)
during the most recent fiscal year:

         a.     Edward Torres                        President and Director
         b.     Mark Richardson                      Shareholder
         c.     Mark French                          Vice President and Director
                                                     (resigned in 1998)

         2. For each person, listed by subparagraph letter above:

Number of late             Number of                   Known failures
reports                    transactions not            to file forms
                           reported on a
                           timely basis
----------------           -----------------           ---------------

a.   three                 two                         Form 4 for Aug. 1998
                                                       Form 4 for Oct. 1998
                                                       Form 5 for 1998

b.   three                 two                         Form 4 for Aug. 1998
                                                       Form 4 for Oct. 1998
                                                       Form 5 for 1998

c.   three                 two                         Form 4 for Aug. 1998
                                                       Form 4 for Oct. 1998
                                                       Form 5 for 1998

Item 10.          Executive Compensation

         The Company accrued  $31,875 in compensation to the executive  officers
as a group for  services  rendered to the Company in all  capacities  during the
1998 fiscal year.  No one  executive  officer  received,  or has accrued for his
benefit,  in excess of $60,000 for the year.  No cash  bonuses were or are to be
paid to such persons.

         The Company does not have any employee incentive stock option plans.

         There are no plans pursuant to which cash or non-cash  compensation was
paid or  distributed  during the last fiscal year,  or is proposed to be paid or
distributed in the future,  to the executive  officers of the Company.  No other


                                       10

<PAGE>


compensation not described above was paid or distributed  during the last fiscal
year to the executive  officers of the Company.  There are no compensatory plans
or  arrangements,  with respect to any  executive  office of the Company,  which
result or will result from the resignation,  retirement or any other termination
of such individual's  employment with the Company or from a change in control of
the Company or a change in the individual's  responsibilities following a change
in control.

<TABLE>
<CAPTION>

                                     SUMMARY COMPENSATION TABLE OF EXECUTIVES

<S>                   <C>            <C>            <C>            <C>                   <C>                     <C>
                                     Annual         Compensation                                 Awards
Name and              Year           Salary         Bonus          Other Annual          Restricted              Securities
Principal                            ($)            ($)            Compensation          Stock                   Underlying
Position                                                           ($)                   Award(s)                Options/
                                                                                         ($)                     SARs (#)
----------------------------------------------------------------------------------------------------------------------------

Edward L.             1998           0                0              31,875                      0                       0
Torres,
President

                      1997           0                0              0                           0                       0

                      1996           0                0              0                           0                       0
----------------------------------------------------------------------------------------------------------------------------

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

Mark                  1998           0                0              0                           0                       0
French,
Secretary
(resigned
in 1998)

                      1997           0                0              0                           0                       0

                      1996           0                0              0                           0                       0

</TABLE>

     Option/SAR Grants Table (None)

     Aggregated  Option/SAR  Exercises in Last Fiscal Year an FY-End  Option/SAR
value (None)

     Long Term Incentive Plans - Awards in Last Fiscal Year (None)


                                       11

<PAGE>



                   DIRECTOR COMPENSATION FOR LAST FISCAL YEAR

(Except for  compensation of Officers who are also Directors which  Compensation
is listed in Summary Compensation Table of Executives)

<TABLE>
<CAPTION>

                             Cash Compensation                                                      Security Grants
<S>                          <C>                 <C>                <C>                      <C>              <C>
Name                         Annual              Meeting            Consulting               Number           Number of
                             Retainer            Fees               Fees/Other               of               Securities
                             Fees ($)            ($)                Fees ($)                 Shares           Underlying
                                                                                             (#)              Options/SARs(#)
-----------------------------------------------------------------------------------------------------------------------------

A. Director                     0                   0                  0                        0                0
Edward L. Torres

B. Director                     0                   0                  0                        0                0
Mark French
(resigned in
1988)

</TABLE>

Item 11.          Security Ownership of Certain Beneficial
                  Owners and Management

         The following  table sets forth  information,  as of December 31, 1998,
with respect to the beneficial ownership of the Company's $.001 par value common
stock by each  person  known by the Company to be the  beneficial  owner of more
than five percent of the outstanding common stock and each member of management.

<TABLE>
<CAPTION>

<S>                        <C>                                <C>                      <C>
      Stock                Names and Address                  Beneficial               Percent
Title of Class             of Beneficial Owner                Ownership                of Class
--------------             ---------------------              -----------              --------
Common                     Mark J. Richardson (1)             1,689,217                 37%
                           1299 Ocean Avenue
                           Suite 900
                           Santa Monica, CA  90401

Common                     Edward L. Torres (2)               1,689,217                 37%
                           208 Mira Mar Ave.
                           Suite One
                           Long Beach, CA  90803
                           President and Director

</TABLE>

(1)      Mr. Richardson is a consultant to the Company.

(2)      Mr. Torres is the President,  Chief  Financial  Officer and Chairman of
         the Board of Directors of the Company.

Item 12.          Certain Relationships and Related Transactions

         In Sept. 1998 the Company issued 4,200,000 shares of its common
stock for the closing of the proposed CNG acquisition, which were never
delivered and such shares were canceled.


                                       12

<PAGE>



         On July 31,  1998,  the Company  canceled  6,539,044  shares due to the
reverse  split (one for five) to  facilitate  the proposed CNG  acquisition.  On
October 27, 1998, the Company reissued  3,378,434 shares consisting of 1,689,217
shares each to Mark Richardson,  a shareholder  holding more than ten percent of
the outstanding shares of the corporation,  and Ed Torres President and Director
in consideration of their efforts and services.


                                     PART IV

Item 13.          Exhibits and Reports on Form 8-K

                  The following documents are filed as part of this report:

                  1.       Reports on Form 8-K:
                           August 11, 1998
                           September 11, 1998
                           October 27, 1998

                  2.       Exhibits:

                           None.

                                       13

<PAGE>



                                      INDEX

                                                      Form 10-K
Regulation                                            Consecutive
S-K Number          Exhibit                           Page Number
------------        ---------------                   ------------

3.1                 Articles of                       *Incorporated by
                    Incorporation                     reference to Registration
                                                      Statement #2-87742-D

3.2                 Bylaws                            *Incorporated by
                                                      reference to Registration
                                                      Statement #2-87742-D

3.3                 Amendments to Articles
                    of Incorporation filed
                    May 1998

3.4                 Amendments to the Articles
                    of Incorporation filed
                    August 1998

27.1                Financial Data Schedule           F-12


                                       14

<PAGE>



                                   SIGNATURES

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

                                            COMMERCIAL LABOR MANAGEMENT, INC.
                                            (Registrant)

Date: 4/12/99                                               
                                            /s/ Edward M. Torres
                                            ------------------------------------
                                            President


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

                                            COMMERCIAL LABOR MANAGEMENT, INC.
                                            (Registrant)

Date: 4/12/99                              
                                            /s/ Edward M. Torres
                                            ------------------------------------
                                            Director


                                            ------------------------------------
                                            Director


                                            ------------------------------------
                                            Director


                                       15

<PAGE>

<TABLE>
<CAPTION>


                                             COMMERCIAL LABOR MANAGEMENT, INC.
                                                       BALANCE SHEET






                                            ASSETS

<S>                                       <C>                           <C>
                                          December 31,                  December 31,
                                          1998                          1997
                                          ---------------------------------------------------------------

CURRENT ASSETS
Note receivable                                $0                              $0
                                          ---------------------------------------------------------------

TOTAL CURRENT ASSETS                            0                               0

FIXED ASSETS
Tax benefit                                     0                         202,326
Land                                            0                               0
                                          ---------------------------------------------------------------

TOTAL FIXED ASSETS                              0                         202,326
                                          ---------------------------------------------------------------

TOTAL ASSETS                                   $0                        $202,326
                                          ===============================================================





                               The Accompanying Notes are an Integral Part of This Statement

</TABLE>

                                                            F-1


<PAGE>

<TABLE>
<CAPTION>


                                             COMMERCIAL LABOR MANAGEMENT, INC.
                                                      BALANCE SHEETS






                                           LIABILITIES AND STOCKHOLDERS' EQUITY


<S>                                          <C>                          <C>
                                             December 31,                 December 31,
                                             1997
                                             ----------------------------------------------------------

CURRENT LIABILITIES:
Accounts payable                                 $57,750                     $25,875
Note payable for land                                  0                           0
                                             ----------------------------------------------------------

TOTAL CURRENT LIABILITIES                         57,750                      25,875
                                             ----------------------------------------------------------

TOTAL LIABILITIES                                 57,750                      25,875

STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
50,000,000 shares authorized;
8,173,804 (1997) & 4,564,741
(1998) issued & outstanding                      231,813                     231,813
Paid-in Capital                                  572,506                     572,506
Accumulated deficit                             (862,069)                   (627,868)
                                             ----------------------------------------------------------

TOTAL STOCKHOLDERS' EQUITY                       (57,750)                    176,451
                                             ----------------------------------------------------------

TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                                  $0                    $202,326
                                             ==========================================================






                               The Accompanying Notes are an Integral Part of This Statement

</TABLE>


                                                            F-2


<PAGE>

<TABLE>
<CAPTION>


                                             COMMERCIAL LABOR MANAGEMENT, INC.
                                                    STATEMENT OF INCOME







<S>                                    <C>                           <C>
                                       December 31,                  December 31,
                                       1998                          1997
                                       -------------------------------------------------------------

Expenses:
 Professional fees                       $31,875                            $0
 Tax Benefit Write-off                   202,326                             0
                                       -------------------------------------------------------------

TOTAL EXPENSES                           234,201                             0

Net Income/(Loss) Before Taxes          (234,201)                            0

NET INCOME (LOSS)                      ($234,201)                            0
                                       -------------------------------------------------------------

Weighted Average Number of
Shares Outstanding                     6,013,655                    10,205,625

Income Per Share of Common Stock
                                           ($.04)                            0
                                       =============================================================





                               The Accompanying Notes are an Integral Part of This Statement

</TABLE>


                                                            F-3


<PAGE>

<TABLE>
<CAPTION>


                                             COMMERCIAL LABOR MANAGEMENT, INC.
                                                  STATEMENT OF CASH FLOW







<S>                                                      <C>                      <C>
                                                         December                 December
                                                         31, 1998                 31, 1997
                                                         -----------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net Cash from Operating Activities                            0                        0
                                                         -----------------------------------

CASH FLOWS USED IN INVESTING ACTIVITIES

Net Cash from Investing Activities                            0                        0
                                                         -----------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES

Net Cash from Financing Activity                              0                        0
                                                         -----------------------------------

Net Increase (Decrease) in Cash                               0                        0

Cash at beginning of year                                     0                        0
                                                         -----------------------------------

Cash at end of year                                          $0                       $0
                                                         ===================================





                               The Accompanying Notes are an Integral Part of This Statement

</TABLE>


                                                            F-4


<PAGE>

<TABLE>
<CAPTION>


                                             COMMERCIAL LABOR MANAGEMENT, INC.
                                      CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                        FROM DECEMBER 31, 1993 TO DECEMBER 31, 1998


                                     Common Stock                Preferred Stock
                          ----------------------------------------------------------


<S>                            <C>                       <C>                        <C>          <C>          <C>
                                                                                   
                                                                                    Additional   Treasury
                               Number of                 Number of                  Paid-in      Stock &      Accumulated
                               Shares         Amount     Shares         Amount      Capital      Adj's        Deficit       Total
                          ----------------------------------------------------------------------------------------------------------

BALANCE -
12/31/93                       800,000       40,000                                 219,197      (171,685)    105,287       364,479

        1994 ACTIVITY
Exercise of
warrants                        50,000
2-for-1 split
3/1/94                         850,000
Warrants
exercised                      197,867       11,813                                 473,340       171,685                   656,838
Adjust stock to
reflect the 1993
SEMAC debt
exchange                      (395,141)
Sale of
operations                    (619,200)                                             171,685
Loss for the year
ended 12/31/94
                                                                                                             (590,767)     (590,767)
                          ----------------------------------------------------------------------------------------------------------

BALANCE - Dec.
31, 1994                       883,526      $51,813                                $864,217             0   ($485,480)     $430,550
                          ==========================================================================================================
        1995 ACTIVITY
3-for-1 reverse
split 3/20
1995 Net                      (589,018)
Transactions
Issuance of                  8,970,076
Preferred Stock
Loss for the
period ended                                              180,000       180,000                                             180,000
9/30/95

                                                                                                               (6,513)       (6,513)
                          ----------------------------------------------------------------------------------------------------------

BALANCE - Dec.
31, 1995                     9,264,584      $51,813       180,000       180,000    $864,217             0   ($491,993)     $604,037
                          ==========================================================================================================

        1996 ACTIVITY
Loss for the year
ended 12/31/96
                                                                                                             (135,875)     (135,875)
                          ----------------------------------------------------------------------------------------------------------

BALANCE - June
30, 1996                     9,264,584      $51,813       180,000       180,000    $864,217             0   ($627,868)     $468,162
                          ==========================================================================================================

        1997 ACTIVITY
Cancellation of
land transaction                                                                                                           (291,711)
General                                                                            (291,711)
cancellations
                            (2,603,548)
                          ----------------------------------------------------------------------------------------------------------

BALANCE - Mar. 31, 1997      6,661,036      $51,813       180,000       180,000    $572,506             0   ($627,868)      176,451
                          ==========================================================================================================

Cancellations
Issuances/Con-              (4,425,000)
versions                    10,628,048      180,000       180,000       180,000    $572,506             0   ($627,868)      176,451
                          ----------------------------------------------------------------------------------------------------------

BALANCE - June
30, 1997                    12,864,048      231,813             0             0    $572,506             0   ($627,868)      176,451
                          ==========================================================================================================

BALANCE - Sept.
30, 1997                    12,864,048      231,813             0             0    $572,506             0   ($627,868)      176,451
                          ==========================================================================================================

20-for-1 reverse
split                      (12,220,880)
New issuances                7,530,600
                          ----------------------------------------------------------------------------------------------------------
BALANCE -                                                                                          
Dec. 31, 1997                8,173,804       231,813            0             0    $572,506             0    (627,868)      176,451
                          ==========================================================================================================

        1998 ACTIVITY

20-for-1 reverse
split                       (6,539,043)                                                                      (234,201)     (234,201)
Cancellation of
shares                       7,530,600
New issuances                3,378,434
                          ----------------------------------------------------------------------------------------------------------

BALANCE -
Dec. 31, 1998                4,564,741      231,813             0             0    $572,506             0    (862,069)      (57,750)
                          ==========================================================================================================




                                         The Accompanying Notes are an Integral Part of This Statement


</TABLE>


                                                                      F-5


<PAGE>



                           COMMERCIAL LABOR MANAGEMENT
                        NOTES TO THE FINANCIAL STATEMENT
                                DECEMBER 31, 1998


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

         General:

         Commercial  Labor  Management,  Inc.  (formerly XL Corp.)  is  a Nevada
         corporation (the "Company") was organized October 19, 1988.


         The  Company  was  originally  incorporated  in Nevada  under the Tokyo
         Raiders on October 19,  1988.  In 1990,  the Company  acquired  certain
         rights to a pizza  franchise and changed its name to Club USPN, Inc. In
         June of 1993, the Company acquired Sono International,  Inc., but those
         operations were  discontinued,  and the shares of Sono were sold to the
         original shareholders of Sono. In March of 1995, the Board approved the
         merger with Commercial  Labor Management which was handled as a reverse
         merger and also approved a name change to Commercial Labor  Management.
         However, that merger was rescinded and never completed.  The Company is
         currently seeking other potential mergers or acquisitions.

         Income Tax Reporting:

         The Company files a corporate tax return in the U.S.

         Earnings per share:

         The  calculations  of earnings per share was determined by dividing the
         net income or loss by the computed  weighted  average  number of common
         share  outstanding   during  the  applicable   period.  For  1997,  the
         calculation is as follows:  9,264,584  shares  outstanding for 7 weeks,
         6,661,036  were   outstanding  for  9  weeks,   1,194,528  shares  were
         outstanding for 1 week, 12,864,084 for approximately 9 weeks, equals an
         average of 10,811.998. For January 1, 1998, the shares outstanding were
         8,173,804. From July 31, 1998 to August 4, 1998, the shares outstanding
         were  1,634,760.  from August 4, 1998 to October 27,  1998,  the shares
         outstanding were 1,186,307. From October 27, 1998 to December 31, 1998,
         the shares outstanding were 4,564,741. On December 31, 1998, the shares
         outstanding were 4,564,741.

2.       PAID IN CAPITAL:

         Paid in capital is made up in part by contributions of office furniture
         & equipment,  manufacturing equipment,  trade receivable,  and accounts
         payable in exchange for common stock.  Common stock was issued to

                                       F-6


<PAGE>




                           COMMERCIAL LABOR MANAGEMENT
                        NOTES TO THE FINANCIAL STATEMENT
                                DECEMBER 31, 1997

         shareholders  of record in exchange for these net assets.  Also, in the
         forth  quarter  of  1994,  the  Company issued  some  common  stock  to
         individuals  to whom money was owed for professional  services rendered
         prior to September 30, 1994.

3.       CAPITAL STOCK:

         Preferred Convertible Stock
         The authorized  capital stock of the Company includes  2,000,000 shares
         of  Preferred  Stock,  par value  $.001 per share.  The  Company has no
         outstanding shares of Preferred Stock as of December 31, 1998.

         Common Stock
         The authorized capital stock of the Company includes  50,000,000 shares
         of Common  Stock,  par value $.001 per share.  As of December 31, 1998,
         4,564,741  shares of the Company's  Common  Stock,  par value $.001 per
         share, were outstanding.

         In 1997 and 1998, the Company  effected two reverse stock splits, a one
         for 20 reverse split and a one for five reverse  split.  On November 3,
         1998, the NASDAQ Stock Market,  Inc. issued a Uniform Practice Advisory
         (UPC #084- 98) advising  NASDAQ  members that the effective date of the
         one for 20 reverse stock split for settlement purposes would be revised
         to occur on October 14, 1998 rather than  September  22, 1998,  because
         NASDAQ  believes that "a sufficient lack of information and uncertainty
         existed in the  marketplace to warrant a revision."  Certain members of
         the NASDAQ  disagree  with the NASDAQ's  ruling.  There is no assurance
         regarding the final outcome of the NASDAQ's UPC #084-98,  or the effect
         that the ruling and dispute will have on the Company. In addition,  the
         Company  entered  into a Plan  of  Reorganization  and  Stock  Exchange
         Agreement with CNG Communications, Inc. and the sole shareholder of CNG
         Communications,  Inc.  ("CNG") pursuant to which the Company planned to
         issue 4,200,000  shares of its Common Stock to the sole  shareholder of
         CNG, and cancel a sufficient number of outstanding  shares to result in
         the CNG shareholder  owning an agreed upon percentage of the Company on
         the  closing  of the  transactions.  As a result of the  breach of that
         agreement by CNG and the CNG shareholder, the Company did not issue any
         shares of its Common  Stock to the CNG  shareholder.  Shares which were
         surrendered  for have been reissued and are currently being held by the
         principal   shareholders  of  the  Company  pending  another   business
         combination.
                                       F-7


<PAGE>


                           COMMERCIAL LABOR MANAGEMENT
                        NOTES TO THE FINANCIAL STATEMENT
                                DECEMBER 31, 1997

4.       Related Party Transactions:

         On July 31,  1998,  the Company  canceled  6,539,044  shares due to the
         reverse   split  (one  for  five)  to   facilitate   the  proposed  CNG
         acquisition. On October 27, 1998, the Company reissued 3,378,434 shares
         consisting of 1,689,217 shares each to Mark  Richardson,  a shareholder
         holding  more  than  ten  percent  of  the  outstanding  shares  of the
         corporation,  and Ed Torres  President and Director in consideration of
         their efforts and services.



                                       F-8