---



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

**FORM 10-KSB/A**

**(Mark One)**

[X] ANNUAL REPORT UNDER SECTION 13 OR 15D OF THE SECURITIES EXCHANGE ACT OF
1934.

| | For the fiscal year ended **December 31, 2003**.
| | ------------------------------------------------

[ ] TRANSITIONAL REPORT UNDER SECTION 13 OR 15D OF THE SECURITIES EXCHANGE
ACT OF 1934.

|                                            | For the transitional period from ___________to___________.
|------------------------------------------- | ----------------------------------------------------------
|                                           
|Commission file number:
      **333-90614**

|**MCG DIVERSIFIED,
INC.**                                       
|----------------------------------------------------------------
|*(Name of
      small business issuer in its charter)*          
|**Florida**                                                     
|*(State or jurisdiction
      of incorporation or organization)*
|**770 First Avenue North**, **St.
      Petersburg, Florida**   
|*(Address of principal
      executive offices)***              
|Issuer's Telephone Number **(727)
      898-5600**              
|                                                                

|*Title of each class* | *Name of each exchange on which registered*
|--------------------- | -------------------------------------------
|**N/A**               | **N/A**                                    
|                      |                                            

Securities Registered Under Section 12(g) of the Exchange Act:

|**Common stock, $0.001 per share par value, no
      dividends, no preference, nonconvertible**
|-----------------------------------------------------------------------------------------------
|*(Title of class)*                                                                             

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

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the 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. **$12,000**State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which common equity was
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) **There is no market value; the stock is not
trading on any exchange.**

Note: If determining whether a person is an affiliate will involve
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.

**(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
LAST FIVE YEARS)**

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]

(**APPLICABLE ONLY TO CORPORATE REGISTRANTS)**

**As of December 31, 2003, the registrant has outstanding 1,036,900
shares of common stock**

**DOCUMENTS INCORPORATED BY REFERENCE**

If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g. Part 1, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification purposes (e.g. annual
report to security holders for the fiscal year ended December 24, 1990).

Traditional Small Business Disclosure Format (Check one): Yes [ ] ; No
[**X**]

---





**PART I**

**Item 1.  Description
of Business.**

We were incorporated as MCG Diversified, Inc. on December 29, 1993, under the
laws of the State of Florida. We amended our Articles of Incorporation on March
21, 2002 changing the par value of our stock (from $1.00 to $0.001) and the
total authorized capital stock (50,000,000). Since inception, we have engaged in
providing equipment and furniture leasing and have expanded into other business
services as our business plan developed.

Currently, we offer professional business services, such as leasing office
equipment and furniture, outsourcing administrative support and bookkeeping
services, and providing small business development services, such as writing
business plans and giving guidance in implementing those business plans,
identifying and helping to solve business development problems, and generating
marketing ideas.

Initially we pursued leasing office equipment and furniture and placed
several leases for furniture and computer equipment shortly after commencing
operations. During the course of operating the leasing business, we discovered
that many of the companies that were seeking alternatives to satisfy their
equipment and furniture needs were also seeking economical alternatives to
satisfy their administrative and personnel needs. Accordingly, in 1994 we began
to expand our revenue generating activities to include a variety of
administrative support services.

By 1998 we were deriving all of our revenue from our administrative support
services. Our continued pursuit of business drove us to seek to expand our
customer base. We began to target a specific business market segment -- the
accounting industry, and we identified a specific niche -- the outsourcing of
low-level accounting work for Certified Public Accounting ("CPA") firms. Due to
our ability to provide strong administrative services, we discovered we could
offer additional services in the business development arena such as writing
business plans and providing clients with guidance in implementing those
business plans. We now offer our clients in-depth customized services, such as
identifying and helping to solve business development problems, providing
marketing ideas, and offering bookkeeping services. Thus, we have chosen to
limit our target markets: the accounting industry for administrative support
services and small to mid-size development stage companies for business
development services.

***Our Business*****

**(1) Principal Products or
Services and Their Markets**

We provide small companies with professional business services, such as
accounting services, equipment and furniture leasing services, administrative
support services, and also business development services. The professional
business services we offer are those services that are generally not the mission
of the small business client but are necessary to run an effective small
business. The accounting services we offer include daily bookkeeping services
and low-level accounting services. We offer leases for computer equipment,
desks, chairs, tables, and other office necessities. The specific type of office
equipment or furniture to be leased is selected from the hundreds of choices
available from the many office equipment and furniture vendors in the area. We
then assist in the preparation of the necessary lease documents required of the
vendor. Delivery of the furniture and equipment is made directly to the client
upon approval of the lease terms. The administrative support services we provide
include:

(a) Electronic Data Processing (EDP) Services

(b) Payroll Processing Services

(c) Property Management Services

(d) Check Writing Services

(e) Personnel Scheduling

(f) Maintenance Scheduling

(g) Messenger Services

Table 1.0 provides the historical picture of revenue generated from these
services.

**Table 1.0**

|**Professional Services**(1) |              | **Revenue Year Ending**
|---------------------------- | ------------ | -----------------------
|                             | **12/31/00** | **12/31/01**           
|Administrative Support(2)    | $50/hour     | $8,000.00              
|Property Management(3)       | $50/hour     | $0.00                  
|**Total**                    |              | **$8,000.00**          

|(1)
      Services are bundled for billing purposes; in other words, each service is
      not billed individually, but rather offered as a bundle of services and
      billed as a package, such as Administrative Support.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) These services include, among
      others, payroll processing, check writing, scheduling, courier services,
      filing.                                                                                               
|(3) These services include, among
      others, procuring supplies, paying bills, handling sales tax filings,
      filing, maintaining books.                                                                               



The business development services we offer include writing business plans,
assisting in business plan implementation, developing marketing ideas, among
others. Clients are led through a thorough process that gives the client's
management team an opportunity to not only describe what is currently done
within the company, but to develop the company's mission and focus. Because we
cater to smaller businesses, we are able to provide in-depth, customized
services.

We provide small businesses with tailored, professionally written business
plans. We also provide guidance and suggestions to businesses thereby allowing
their management team to focus on the goals of their particular business, both
present and future. Through the process of developing a business plan, we assist
our clients in evaluating their options and in choosing a course of action. We
also help our clients in implementing their business plan. We believe a
well-written business plan (a) helps clients to clarify, focus and research
their business development and prospects; (b) provides a considered and logical
three-to-five year framework to develop and pursue business strategies; and (c)
offers a benchmark against which actual performance can be measured and
evaluated.

We believe that each business is unique, and, therefore, each requires a
tailored business plan to achieve desired results. We believe that a structured,
well-written business plan can provide a business with valuable focus. We begin
most business plans with a conservative, time-tested structure, then customize
the final product to suit the individual client's business and goals. We strive
to make each business plan a realistic account of the expectations and long-term
objectives of the particular client, whether the client is an established
business or a new venture.

We also provide ongoing business development consulting services. Because we
believe that a sound business plan is merely the first step to achieving a
company's goals, we try to facilitate and foster the implementation of the ideas
that are generated during the writing of the business plan. We believe that our
clients benefit from an "outside view" of their operations. This perspective, we
believe, provides them with an unbiased opinion about their business and how
they can change existing structures to improve their overall efficiency and
bottom line. We strive to evaluate our clients' strengths and weaknesses, while
assisting in targeting key areas for operational improvements or changing
overall strategy to accommodate particular business objectives. As small
businesses are challenged to remain competitive in a marketplace characterized
by large, well capitalized competitors, we believe our services will become
increasingly important. We believe that through our focused guidance, a smaller
company can compete with its larger competitors.

The following is a partial list of topics that we address upon request:

(a) Equipment and Furniture Needs

(b) Personnel and Administrative Needs

(c) Low-Level Accounting Needs

(d) Company Mission and Goals

(e) Short and Long-Term Strategic Planning

We also found that there are small companies which do not want to be bothered
with the responsibility of maintaining their own books because they do not have
the staff or the desire to hire the staff to perform the work. Thus, we also
offer our clients daily bookkeeping services, if needed. We believe that this
allows professionals to concentrate on what they do best without worrying
whether they have made the correct accounting entries.

**(2) Distribution Methods
of the Services**

The primary delivery of products and services is through a regional location
in St. Petersburg, Florida. Convenient to the Tampa Bay business market, the
professional business administrative and development services will be marketed
through specific business advertising and strong business to business sales. As
a direct result of the strong networking by the President, Marguerite Godels,
business leads to larger local CPA firms, regional CPA firms, and the Big 5
accounting firms will be a primary avenue to generate business. Ms. Godels is
the spouse of a Certified Public Accountant who has been practicing in Tampa Bay
for over twenty-one (21) years. Through her husband, she has had the opportunity
to meet many accounting and business professionals and has developed a
relationship throughout Tampa Bay with many of these same people. Ms. Godels
currently provides the necessary labor for all the services offered. Since we
are in the development stage, the demand on her time is minimal. We plan to
utilize employee leasing companies, where possible, to avoid the heavy burden
for full-time staff manpower.

We anticipate that we will not provide services to out-of-state clients
until, and unless, we are able to expand our operations.

**(3) Status of Any Publicly
Announced New Product or Service.**

We have not developed any new or unique products or services that would make
us stand above our competition. Instead, we have chosen to refine the services
that fall within our capability. While the Internet has provided a new tool for
advertising and customer interface, there has been no significant change in
services we provide.

**(4) Our
Competition**

In order to compete effectively in the professional business administrative
and development industries, a company must provide a wide range of quality
services and products at a reasonable cost. The administrative services market,
as a whole, is characterized by intense competition with a large number of
companies offering or seeking to develop services and products that will compete
with those that we offer. It is our belief, based upon our experience, that the
failure rate of small businesses indicates that far too many entrepreneurs begin
operations prior to having the skills and knowledge necessary for the day-to-day
business operations. As a result, we developed our individualized approach to
offering business development services targeting the small business strategic
area. Business consulting firms have also responded to small business needs and
are formulating and implementing new strategies, including developing ancillary
products and services as well as engaging in target marketing programs.

Our ability to provide subjective, personalized assistance, as well as
objective assistance takes our services beyond competitors and their offerings.
Not only do we provide guidance, we can provide any needed services. The small
business owner often has minimal knowledge regarding preparation and
implementation of business plans, marketing and sales initiatives, and the
necessary administrative services and, we believe, often needs a more personal,
hands-on approach.

It is our opinion that we fill a unique niche by providing our services to
small and medium development stage companies whereas most of our competitors
provide similar services to large companies. Our competition includes both
localized business consultants and accounting firms that provide business
consulting services, such as Eide Bailly, Brady Martz & Associates. The
small, localized business consulting services primarily operate within their own
geographic confines and do not directly compete with us in the geographic area
within which we currently operate. We believe we compete favorably with the
accounting firms that provide services similar to ours because those firms still
focus on providing accounting services, not the ancillary business consulting
services. Our focus is the latter - the business consulting services.

Many of our competitors have greater financial resources than we have,
enabling them to finance acquisition and development opportunities or develop
and support their own operations. In addition, many of these companies can offer
bundled, value-added, or additional services not provided by us. Many may also
have greater name recognition. Our competitors may have the luxury of
sacrificing profitability in order to capture a greater portion of the market
for business consulting activities. They may also be in a position to pay higher
prices than we would for the same expansion and development opportunities.
Consequently, we may encounter significant competition in our efforts to achieve
our internal and external growth objectives.

Our competitors have methods of operation that have been proven over time to
be successful. Their ability to operate at a profit with experienced management
places us at a disadvantage. Our methods of operation have not been proven to be
successful.

**(5) Sources and
Availability of Raw Materials**

We provide services and, as a result, we have no issues with raw materials
and the dependence on any specific suppliers. Our only potential dependence
would be on personnel. The availability of personnel with the education and
experience we need does not seem to be critical at this time. As a result of the
downturn in the economy and recent layoffs from accounting firms, the quality of
the pool from which we draw our workforce is quite good. The relationships we
developed with accounting firms and small businesses have resulted in a steady
number of qualified applicants being referred to us. This has made any active
recruiting of personnel unnecessary.

The finished goods necessary to offer office equipment and furniture leasing
include computer systems and other office equipment and furniture. However,
there are hundreds of suppliers of such equipment and furniture. Therefore, we
do not see a critical dependence on any supplier(s) that could adversely effect
our operations.

**(6) Dependence on Limited
Customers**

We currently rely on three major customers (each providing at least 10% of
our revenue); however, we expect to increase our client base once our business
plan is implemented. While our target markets, small businesses and the
accounting industry, are limited in the sense that they are not unlimited, we do
not have to rely on just a few major customers for business. There are over 200
potential customers in the Tampa Bay area. Our ability to provide services to
this many customers will be possible in the future only if we raise additional
capital. For purposes of disclosure, is should be noted that our President,
Marguerite Godels, is also the President of one of our major customers discussed
above, Avalon Development, Inc.

**(7) Patents, Trademarks,
Licenses, Franchises, Concessions, Royalty Agreements or Labor
Contracts**

At the present time we do not own or have any domain names, patents,
trademarks, licenses (other than the usual business license), franchises,
concessions, royalty agreements or labor contracts. However, in the future, our
success may depend in part upon our ability to preserve our trade secrets,
obtain and maintain patent protection for our technologies, products and
processes, and operate without infringing upon the proprietary rights of other
parties. However, we may rely on certain proprietary technologies, trade
secrets, and know-how that are not patentable. Although we may take action to
protect our unpatented trade secrets and our proprietary information, in part,
by the use of confidentiality agreements with our employees, consultants and
certain of our contractors, we cannot guaranty that:

(a) these agreements will not be breached;

(b) we would have adequate remedies for any breach; or

(c) our proprietary trade secrets and know-how will not otherwise become
known or be independently developed or discovered by competitors.

We cannot guaranty that our actions will be sufficient to prevent imitation
or duplication of either our products and services by others or prevent others
from claiming violations of their trade secrets and proprietary rights.

**(8) Need for Government
Approval of Principal Products or Services**

None of the services we offer require government approval.

**(9) Government
Regulation**

As a business services supplier, we are subject to a limited variety of
local, state, and federal regulations. While we believe that our operations are
in compliance with all applicable regulations, there can be no assurances that
from time to time unintentional violations of such regulations will not occur.
We are subject to federal, state and local laws and regulations applied to
businesses, such as payroll taxes on the state and federal levels. In general,
our administrative and consulting activities are subject to local business
licensing requirements.

Internet access and online services are not subject to direct regulation in
the United States. Changes in the laws and regulations relating to the
telecommunications and media industry, however, could impact our business. For
example, the Federal Communications Commission could begin to regulate the
Internet and online services industry, which could result in increased costs for
us. The laws and regulations applicable to the Internet and to our services are
evolving and unclear and could damage our business. There are currently few laws
or regulations directly applicable to access to, or commerce on, the Internet.
Due to the increasing popularity and use of the Internet, it is possible that
laws and regulations may be adopted, covering issues such as user privacy,
defamation, pricing, taxation, content regulation, quality of products and
services, and intellectual property ownership and infringement. Such legislation
could expose us to substantial liability as well as dampen the growth in use of
the Internet, decrease the acceptance of the Internet as a communications and
commercial medium, or require us to incur significant expenses in complying with
any new regulations.

**(10) Research and
Development During Last Two Fiscal Years**

During the last two fiscal years no money was spent on research and
development. We have, however, spent minimal monies on website development. Our
research has been primarily in the are of business market segments that we may
target with our services

**(11) Cost and Effects of
Compliance with Environmental Laws**

As a business services supplier, we are not subject to any federal, state or
local environmental laws.

**(12) Our
Employees**

As of December 31, 2003, we had one full time employee, Ms. Marguerite
Godels. As our founder and President, Ms. Godels currently provides her time as
our only employee, paid on an irregular basis. Ms. Godels currently provides the
strategic direction and the necessary labor to support the operation.

We currently have no key employees, other than Marguerite Godels our
President/Director and Laura L. Larsen our Secretary. Neither Ms. Godels nor Ms.
Larsen is receiving pay or other stock benefits for her performance. There are
also no key consulting contracts with any individuals or companies at this
time.

Where possible, we plan to utilize employee leasing companies in the future
to avoid the heavy burden for full-time staff manpower. This will allow us to
shift the burden of payroll taxes and workers compensation insurance to the
employee leasing company. A local employee leasing firm has indicated that as a
result of the fallout from the Enron debacle, there is a high quality market of
individuals with accounting and business services background from which we will
be able draw sufficient talent to provide our services. We have had many
potential candidates applying for employment as a direct result of referrals
from accounting firms.

By utilizing an employee leasing company we can target specific types of
employees with which we intend to augment our staff. Talent such as Business
Consultant/Coach, Business Writer, Financial/Accounting Technician, and
Marketing Representatives can be supplied through a leasing company. We do not
believe that there is a critical need for a specific type of candidate we would
use in our business. By contracting for services as we need them for a
particular job, we can reduce labor costs.

**Item 2.  Description
of property.**

Our present offices are located in downtown St. Petersburg, Florida, on a
major east/west artery. They are housed in a free-standing building owned by
Avalon Development Enterprises, Inc. Ms. Godels is the President of this company
also. Our location gives us the ability to serve the larger local CPA firms,
regional CPA firms, and the Big 5 accounting firms in St. Petersburg as well as
Tampa. The building is a class A building that we believe provides the
appropriate corporate image for our client base.

**Item 3.  Legal
Proceedings.**

There are no current or pending legal proceedings against the company.

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

There were no matters that were submitted to security holders during the
fourth quarter of 2003.

**PART II**

**Item
5.  Market for Common Equity and Related Stockholder Matters.**

**(a)  *Items 201 and 701 of Regulation S-B***

Our common stock is not quoted or traded on any quotation medium at this
time. We have applied to the NASD to have our common stock included for
quotation on the NASD OTC Bulletin Board. As of the date of this report this
process has not been completed. There can be no assurance that an active trading
market for our stock will develop. If our stock is included for quotation on the
NASD OTC Bulletin Board, price quotations will reflect inter-dealer prices,
without retail mark-up, mark-down or commission, and may not represent actual
transactions.

Should a market develop for our shares, the trading price of the common stock
is likely to be highly volatile and could be subject to wide fluctuations in
response to factors such as actual or anticipated variations in quarterly
operating results, announcements of technological innovations, new sales
formats, or new services by us or our competitors, changes in financial
estimates by securities analysts, conditions or trends in Internet or
traditional retail markets, changes in the market valuations of other equipment
and furniture leasing service providers or accounting related business services,
announcements by us or our competitors of significant acquisitions, strategic
partnerships, joint ventures, capital commitments, additions or departures of
key personnel, sales of common stock and other events or factors, many of which
are beyond our control. In addition, the stock market in general, and the market
for business services in particular, has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating
performance of such companies. These broad market and industry factors may
materially adversely affect the market price of the common stock, regardless of
our operating performance.

Consequently, future announcements concerning us or our competitors,
litigation, or public concerns as to the commercial value of one or more of our
products or services may cause the market price of our common stock to fluctuate
substantially for reasons which may be unrelated to operating results. These
fluctuations, as well as general economic, political and market conditions, may
have a material adverse effect on the market price of our common stock.

At the present time we have no outstanding options or warrants to purchase
securities convertible into common stock.

Cash dividends have been paid during the last three (3) years. In the near
future, we intend to retain any earnings to finance the development and
expansion of our business. We do not anticipate paying any cash dividends on our
common stock in the foreseeable future. The declaration and payment of cash
dividends by us are subject to the discretion of our board of directors. Any
future determination to pay cash dividends will depend on our results of
operations, financial condition, capital requirements, contractual restrictions
and other factors deemed relevant at the time by the board of directors. We are
not currently subject to any contractual arrangements which restricts our
ability to pay cash dividends.

We have thirty-five (35) stockholders of record of our common stock as of
December 31, 2003.

**(b)  *Item 701(f) of Regulation S-B***

As our common stock is not quoted or traded on any quotation medium at this
time, no stock has been sold. Thus, there are no proceeds on which to
report.

**Item
6.  Management's Discussion and Analysis or Plan of
Operations.**

The following plan of operation, management's discussion and analysis of
financial condition, and results of operations should be read in conjunction
with our financial statements and notes thereto contained elsewhere in this
prospectus.

***Plan of Operation*****

**(1)  General**

We currently derive all of our revenues and income pursuant to MCG
Diversified, Inc.'s operations, which are located in the Tampa Bay area of
Florida. We do not anticipate revenues from our operations to increase
significantly until the fiscal year ending December 31, 2004. If for any reason
(or for no reason) our operations do not continue to grow, or business is less
than anticipated, such result would have a material adverse effect on us.

We are currently seeking to attract a Chief Executive Officer ("CEO") with
experience in the administrative support services industry. It is this strategic
experience that we believe will allow us to fully develop our business. By using
an individual with prior administrative support services experience we hope to
develop a stronger client base. At present, we have not identified any
individuals with the requisite background in the administrative support services
industry that would be available. We are expanding our search to related
industries such as service companies in retail packing and shipping and multiple
outlet retail sales such as national clothing outlets.

Presently, the cash necessary to support our business plan implementation is
being supplied by the operations. However, this is only enough to sustain the
business in its current manner and is not sufficient for the full implementation
of the business plan, specifically, expanding the business
development/consulting services. We believe that further cash will be needed to
expand operations. We could need to raise as much as $400,000.00 to support
expansion operations over the next twelve months.

Management has not determined the exact extent of business opportunity in the
Tampa Bay area due to the lack of financial information procurable from our
competitors. Any unforeseen events such as happened on September 11, 2001 could
also adversely affect our business. The cost of equipment, technology, and labor
could increase and directly affect our ability to be profitable. Tampa Bay is an
area highly dependent on tourism, an industry experiencing a down turn after
September 11, 2001. In our efforts to stay abreast of our changing business
climate, we subscribe to publications that are general to the business climate
in Tampa Bay as well as industry specific publications.

**(2)  Our
Business**

Presently our President, Marguerite Godels, provides the necessary services
to our clients. She has been actively developing her skills since inception to
provide leadership for employees that will be hired when we have the necessary
capital. The services we provide, professional business services, such as
accounting services, equipment and furniture leasing services, and
administrative support services, and business development services have been
provided on a limited basis due to the development of the business plan as well
as the lack of capital.

We then plan to expand our services to other cities in Florida in the fourth
quarter of 2004 or the first quarter of 2005. We believe it is critical to have
a presence in the major Florida cities so that we can work effectively with
local banks and lending institutions, as well as provide quality service to
clients in those locations. We anticipate that physical staffing in these
locations would not occur until third-quarter 2005 at which time we would staff
each satellite location with individuals experienced in marketing, consulting,
accounting, business operations and computers. We also intend to staff those
locations with a clerical assistant.

We closed our offering that was registered with the Securities Exchange
Commission and effective in December 2002. As a result of closing the offering,
we will not have sufficient capital for expansion during the next twelve months.
We need to raise additional funds, either through subsequent offerings of our
shares or through other financing arrangements, finance such as borrowings.

Our services target the entrepreneur who has yet to start his/her business
and needs assistance in preparing a business plan as well as the necessary
financials or pro formas. We do believe that our website will be fully
operational within thirty days after securing funds from either our offering or
financing activities. Assuming our proposed website becomes operational, we
expect to next focus on expanding the scope of our Internet presence. We hope to
achieve such expansion by registering with major search engines with the goal of
placing our website at the top of search results. This typically requires
pre-funding with certain search engines. We do not currently have adequate
financial resources to conduct such registration.

**(i) How long can we satisfy our cash requirements and will we need to raise
additional funds in the next 12 months?**

Our Plan of Operation for the next twelve months is to modify our business
plan so we can raise additional capital, establish new corporate headquarters,
hire additional staff, and expand our services to other areas of Florida.
Specifically, we plan on expanding our services into Miami, Florida in or around
fourth quarter 2004. We also plan to offer our services in Orlando, Florida in
or around first quarter 2005. We would operate from the one physical facility in
St. Petersburg and travel to the new service areas. We will use the funds raised
from sources other than our primary offering and revenues generated to fund
equipment purchases and office improvement and for marketing activities and
working capital.

We cannot guaranty that additional funding will be available on favorable
terms, if at all. If adequate funds are not available, then we may not be able
to expand our operations. If adequate funds are not available, we believe that
our officers and directors will contribute funds to pay for some of our
expenses. However, we have not made any arrangements or agreements with our
officers and directors regarding such advancement of funds. We do not know
whether we will issue stock for the loans or whether we will merely prepare and
sign promissory notes. If we are forced to seek funds from our officers or
directors, we will negotiate the specific terms and conditions of such loan when
made, if ever. None of our officers or directors is obligated to pay for our
expenses. Moreover, none of our officers or directors have specifically agreed
to pay our expenses should we need such assistance.

The only agreements of any kind are the monthly agreements for our office
space and an agreement with Avalon Development Enterprises for property
management services at a rate of $300.00 per month. This is not the only revenue
generated by us. This transaction has been constructed as an arms length
transaction based on fair market value of these services in the Tampa Bay
area.

The implementation of our full business plan is estimated to take
approximately 12-18 months. Once we are able to secure funding, implementation
will begin immediately. We anticipate 30 days to be in a stage of operational
activity to gain additional clients. The major parts of the business plan that
will be immediately implemented will be the sales and marketing as well as
office equipment and human resource procurement.

**(ii) Summary of product research and development**

We are not currently nor do we anticipate in the future to be conducting any
research and development activities, other than the development of our proposed
website and looking into a possible new industry to target for offering our
services. However, we do plan to market ourselves aggressively.

**(a) Marketing Plan**

Our current marketing plan involves positioning ourselves as a business
services company targeting both the accounting industry, the Big 5 accounting
firms in particular, and small businesses. We intend to retain the services of a
public relations company for the development of our brochures, advertising
sheets, and public relations.

The extensive advertising needed to produce a major increase in potential
business will not be done during the next twelve months. We will use a softer
approach and target advertising to grow the business in a controlled way. This
will allow us to determine human resource needs and ensure we do not overstaff
too early thereby avoiding high labor and benefits costs.

We will utilize a direct marketing person to contact companies to solicit
business. Ms. Godels' personal contacts within the accounting industry, we
believe, will assist our marketing person in gaining entry to decision makers.

Our target markets and marketing strategy will be fully developed. We will
primarily market our services to accounting firms and small and mid-size
businesses, which we believe can benefit from our knowledge of the day-to-day
requirements of operating a business. Our marketing initiatives will
include:

(a) utilizing direct response print advertisements placed primarily in small
business, entrepreneurial, and special interest magazines;

(b) links to industry focused websites;

(c) advertising by television, radio, banners, affiliated marketing and
direct mail

(d) presence at industry trade shows; and

(e) promoting our services and attracting businesses through our proposed
website.

**(b) Sales Strategies**

- Power Point Presentation. We plan to create a flexible Power Point
presentation that our marketing department will use to deliver a professional
sales presentation specifically tailored to the needs of our target markets. The
presentation will have a core section that is generic to all customer segments
as well as specific customer segment modules allowing modification of the
presentation for the appropriate audience. Additionally, this Power Point
presentation will be the basis for brochures and print advertising layout to
ensure we have a consistent look through out all our marketing
communications.

- Capability Brochures. We expect to create a capability brochure featuring
our family of services and products. This will be a high quality brochure with
extensive detail.

- Public Relations and Advertising. We plan to implement a campaign to obtain
media coverage by publishing persuasive news articles and feature stories that
increase the awareness of the business services and further the acceptance of
our products, services and technologies as the solution to targeted customer
segments.

**(c) Other Markets**

During our nine years of developing our business plan and our small
operations we have uncovered another potential target market in addition to the
accounting industry: the travel/leisure industry. The entry into the
travel/leisure industry appears to be easy and there is a large percentage of
these business that are the traditional "mom and pop" operations that likely
need assistance with administrative services as well as business planning.

**(iii) Any expected purchase or sale of plant and significant
equipment?**

We do not anticipate purchases of plant or significant equipment other than
general office supplies and general office equipment, should we raise sufficient
funds to purchase such office equipment. In the event that we expand our
customer base, then we may need to hire additional employees or independent
contractors. Specifically, if we are able to raise sufficient capital to expand
our services and service area and our revenue levels justify such action, we
plan on hiring five additional employees over the next 12 months. Accordingly,
we are hoping to move to a new, larger location in 2004/2005, however, no
locations have been identified at this time, and such move depends upon our
securing sufficient capital.

**(iv) Employees**

As of December 31, 2003 we had one full time employee, Marguerite Godels. As
our founder and President, Ms. Godels currently provides her time as our only
employee, paid on an irregular basis. We anticipate that we will not hire any
additional employees in the next six months unless we generate significant
revenues. From time to time, we anticipate using the services of an outside firm
for additional website design and development.

With our growth strategy our objective is to expand our operations by adding
staff while increasing our market presence in the Tampa Bay area of Florida, and
into nearby regions. We anticipate achieving growth by leasing additional staff
through an employee leasing company, installing computers, and launching a
professionally designed website to attract new clients. We plan to lease or hire
individuals with the following strengths:

- Business Consultant/Coach: This position will be critical to our expansion.
We will seek an individual with experience in business start-ups and
turnarounds. We will look for an individual who has experience in consulting and
coaching.

- Business Writer: This individual will be experienced in writing business
plans, proposals, and other types of business writing, and will coordinate and
publish a monthly newsletter for our clients.

- Financial/Accounting Technician: This individual will have experience in
accounting and business operations, and provide bookkeeping and record keeping
services to clients.

- Marketing Representative: This position requires an individual experienced
in marketing to small businesses, writing proposals, and developing and
implementing ongoing marketing ideas. This position will be a liaison between us
and those institutions which traditionally assist small businesses, such as:
banks, legal offices and government agencies.

- Clerical Assistant: This individual will perform all daily office tasks
including, but not limited to, computer input and bookkeeping.

- Computer Assistant: This individual will have web design experience, a
working knowledge of computer networks, as well as work with an outside web
design firm to establish our proposed website. We believe that our proposed
website will be an important tool to expand our area of operations and client
base.

***Results of Operations*****

**(1)  General**

During the year ended December 31, 2003, our assets consisted of our cash and
receivables and our revenues were generated from services sold to businesses at
large. The following table shows our revenues, expenditures and net income for
the years from 1994-2003.

**Table 4.0  Revenues, Expenses, and Net
Income**

|**YEAR** | **REVENUE** | **EXPENSES** | **NET INCOME**
|-------- | ----------- | ------------ | --------------
|1994     | $ 6,551.00  | $ 1,200.00   | $ 5,351.00    
|1995     | $ 22,856.00 | $ 8,328.00   | $ 14,528.00   
|1996     | $ 19,004.00 | $ 2,217.00   | $ 16,787.00   
|1997     | $ 21,320.00 | $ 754.00     | $ 20,566.00   
|1998     | $ 8,000.00  | $ 5,452.00   | $ 2,548.00    
|1999     | $ 8,000.00  | $ 2,432.00   | $ 5,568.00    
|2000     | $ 8,000.00  | $ 39,375.00  | ($31,375.00)  
|2001     | $ 14,000.00 | $ 42,088.87  | ($28,316.87)  
|2002     | $14,560.00  | $46,402.80   | ($31,842.80)  
|2003     | $12,000     | $47,806.58   | ($35,806.58)  

It should be noted that a portion of the revenue generated from 2001 through
2003 was generated from a property management agreement with Avalon Development
Enterprises, Inc. ("Avalon"). Our president, Marguerite Godels is a 50%
shareholder in Avalon and provides the services required under the agreement to
Avalon. This transaction was structured at arms length and the rates charged
were and continue to be at fair market value. Mr. Charles Godels is a
stockholder in Avalon Development Enterprises, Inc.

Although we are seeking to expand services to areas outside of the Tampa Bay
area market, the uncertain economy could have a material adverse effect on such
plans. While we have seen limited improvement in the Tampa Bay business economy,
we cannot be assured that continued recovery will occur.

**(2)  Results of Operations For the Period Ended December 31,
2003.**

During the year ended December 31, 2003, we had revenues of approximately
$12,000.00. Approximately 30% of this revenue was derived from a related entity,
Avalon Development Enterprises, Inc. Our President, Marguerite Godels is also
the President of this company and she is a fifty percent (50%) shareholder in
Avalon as well as owning fifty-nine percent (59%) of our stock.

We utilized $1,507.97 of cash flow for operating activities. We had a
$35,806.58 net loss including $32,890.48 of noncash expense in executive
compensation which was foregone and recognized as contributed capital.

We did not have any cash flows from investing activities for the year ended
December 31, 2003, but did have utilization of cash flow of $1156.00 from
financing activities resulting from the sale of stock.

The result of the above activity was a net cash decrease of $351.97 for the
year ended December 31, 2003, which when deducted from $347.41 of cash and cash
equivalents at the beginning of the period, resulted in ($4.56) of cash and cash
equivalents at the end of the period.

We do not foresee any circumstances or events that will have an adverse
impact on our operations. We do anticipate an increase in our business based on
our current business plan and the activities of our officers and directors.
Thus, we do not expect to satisfy our current cash requirements. We will need
additional cash to implement the expansion strategy contained in our business
plan, which includes expanding the business development/consulting services and
to continue operations.

**(3)  Results of
Operations For the Period Ended December 31, 2002**

During the year ended December 31, 2002, we had revenues of approximately
$14,560.00. Approximately 20% of this revenue was derived from a related entity,
Avalon Development Enterprises, Inc. Our President, Marguerite Godels is also
the President of this company and she is a fifty percent (50%) shareholder in
Avalon as well as owning fifty-nine percent (59%) of our stock.

We utilized $424.59 of cash flow for operating activities. We had a
$31,842.80 net loss including $30,791.79 of noncash expense in executive
compensation which was foregone and recognized as contributed capital.

We did not have any cash flows from investing activities for the year ended
December 31, 2002, but did have utilization of cash flow of $100.00 from
financing activities resulting from repayment of shareholder loans.

The result of the above activity was a net cash decrease of $524.59 for the
year ended December 31, 2002, which when deducted from $872.00 of cash and cash
equivalents at the beginning of the period, resulted in $347.41 of cash and cash
equivalents at the end of the period.

We do not foresee any circumstances or events that will have an adverse
impact on our operations. We do anticipate an increase in our business based on
our current business plan and the activities of our officers and directors.
Thus, we expect to satisfy our current cash requirements indefinitely. However,
we will need additional cash to implement the expansion strategy contained in
our business plan, which includes expanding the business development/consulting
services.

**(4)  Results of
Operations Ended December 31, 2001**

During the year ending December 31, 2001, we had revenues of approximately
$14,000.00, and our costs associated with generating revenues was approximately
$42,088.87. After a loss on disposition of equipment and income taxes, this
resulted in a net loss of approximately $28,088.87. Approximately 27% of this
revenue was derived from a related entity, Avalon Development Enterprises, Inc.
Our President, Marguerite Godels is also the President of this company and she
is a fifty percent (50%) shareholder in Avalon as well as owning fifty-nine
percent (59%) of our stock.

Furthermore, during the year ended December 31, 2001, we generated $704.00 of
cash flow from operating activities. We had a $28,316.87 net loss including the
recognition of $197.00 of noncash losses on disposition of fixed assets along
with $28,492.80 of noncash expense in executive compensation which was foregone
and recognized as contributed capital. We also had an increase of $331.00 in
liabilities (expenses incurred but not paid as of the December 31, 2001 year
end) consisting of customer deposits of $300.00 and income taxes payable of
$31.00. Since these amounts were deducted in determining net income but did not
utilize cash funds (as they were unpaid liabilities at year end), they are added
back to net income (just as the above noncash loss on fixed assets) in
determining cash flows from operating activities.

We also received $68.00 for the issuance of additional shares of its common
stock as a financing activity.

The result of the above operating and financing activities was net cash flow
of $772.00 for the year ended December 31, 2001, which when added to $100.00 of
cash and cash equivalents at the beginning of the year, resulted in $872.00 of
cash and cash equivalents at the end of the year.

**(5)  Results of
Operations Ended December 31, 2000**

During the year ended December 31, 2000 MCG Diversified, Inc. generated
$8,000.00 of revenue from operating activities. We had a negative net income of
$31,375.00 including the recognition of $36,000.00 of noncash expense in
executive compensation which was foregone and recognized as contributed
capital.

We also distributed $4,625.00 of dividends to Marguerite Godels, its
shareholder as a financing activity.

The result of the above operating and financing activities was net cash flow
of $0.00 for the year ended December 31, 2000.

***Liquidity & Capital Resources*****

During the year ended December 31, 2003, we had revenues of approximately
$12,000.00.

We utilized $351.97 of cash flow for operating activities. We had a
$35,806.58 net loss including $32,890.48 of noncash expense in executive
compensation which was foregone and recognized as contributed capital.

We did not have any cash flows from investing activities for the year ended
December 31, 2003, but did have utilization of cash flow of $1156.00 from
financing activities resulting from the sale of stock.

The result of the above activity was a net cash decrease of $351.97 for the
year ended December 31, 2003, which when deducted from $347.41 of cash and cash
equivalents at the beginning of the period, resulted in ($4.56) of cash and cash
equivalents at the end of the period.

During the year ended December 31, 2002 we had a decrease in cash flow of
$524.59 for operating activities and we had a net loss of $30,791.79. We had no
cash flows from investing activities or financing activities for the year ending
December 31, 2002.

The result of the foregoing activities was a net cash decrease of $526.94 for
the eight months ending August 31, 2002, which when deducted from the $872.00 of
cash and cash equivalents at the beginning of the period, results in $345.06 of
cash and cash equivalents at the end of the period.

As of December 31, 2001, we generated $704.00 of cash flow from operating
activities. We had a $28,088.87 net loss including the recognition of $197.00 of
noncash losses on the disposition of fixed assets. There was an increase in
liabilities of $331.00 (expenses incurred but not paid as of December 31, 2001)
consisting of customer deposits of $300.00 and income taxes payable of $31.00.
Since these amounts were deducted in determining net income but did not utilize
cash funds (they were unpaid liabilities at year end), they are added back to
net income in determining cash flows from operating activities.

During the year 2001, we received $68.00 for the issuance of additional
shares of common stock as a financing activity.

The result of the operating and financing activities was a net cash flow of
$772.00 for the year ended December 31, 2001, which when added to the $100.00 of
cash and cash equivalents at the beginning of the year results is $872.00 of
cash and cash equivalents at the end of the year 2001.

For the year ended December 31, 2000 we generated $4,625.00 of cash flow from
operating activities. We had a negative net income of $31,375.00 including the
recognition of $36,000.00 of noncash expense in executive compensation which was
foregone and recognized as contributed capital. We distributed $4,625.00 in
dividends to our President, Marguerite Godels resulting in a net cash flow of
$0.00 for the year ended December 31, 2000.

We believe that the minimal net cash increase for the years 2000, 2001, 2002
and the minimal net decrease in cash for the year ended December 31, 2003 will
not be sufficient to sustain current and expanded operations and additional
funds will be needed to support our business. Consequently, we will seek
additional funding through public or private financing or other arrangements.
Such additional funding may be financed by bank borrowings, public offerings, or
private placements of equity or debt securities, loans with shareholders, or a
combination of the foregoing.

It is our belief that our cash flow is only sufficient to sustain our current
level of minimal operations. While operations could be sustained for a long time
(over twelve months), there would be minimal to be distributed for the efforts
of the officers and directors. To begin expansion, funds will need to be brought
into the company to permit us to move forward with our expansion. Without these
funds, management believes it cannot sustain expanding operations.

**Item 7.  Financial
Statements.**

|******FINANCIAL
  STATEMENTS**
|------------------------------
|**CONTENTS**                  

|**Report of Randall N. Drake, C.P.A., Independent Auditor, as of
      December 31, 2003**   | **F-2** 
|-------------------------------------------------------------------------------------------- | --------
|**Balance Sheet, December 31, 2003**                                                         | **F-3** 
|                                                                                             | ****    
|**Income Statement, for the Year Ended December 31,
      2003**                             | **F-4** 
|**Statement of Cash Flows, for the Year Ended December 31,
      2003**                      | **F-5** 
|**Statement of Changes in Stockholders' Equity, for the Year
      Ended December 31, 2003** | **F-6** 
|**Notes to the Financial Statements, December 31, 2003**                                     | **F-7** 
|**Report of Randall N. Drake, C.P.A., Independent Auditor, as of
      December 31, 2002**   | **F-8** 
|**Balance Sheet, December 31, 2002**                                                         | **F-9** 
|**Income Statement, for the Year Ended December 31,
      2002**                             | **F-10**
|**Statement of Cash Flows, for the Year Ended December 31,
      2002**                      | **F-11**
|**Statement of Changes in Stockholders' Equity, for the Year
      Ended December 31, 2002** | **F-12**
|**Notes to the Financial Statements, December 31, 2002**                                     | **F-13**
|**Report of Randall N. Drake, C.P.A., Independent Auditors, as
      of December 31, 2001**  | **F-14**
|**Balance Sheet, December 31, 2001**                                                         | **F-15**
|**Income Statement, for the Year Ended December 31,
    2001**                               | **F-16**
|**Statement of Cash Flows, for the Year Ended December 31,
      2001**                      | **F-17**
|**Statement of Changes in Stockholders' Equity, for the Year
      Ended December 31, 2001** | **F-18**
|**Notes to the Financial Statements, December 31, 2001**                                     | **F-19**
|**Report of Randall N. Drake, C.P.A., Independent Auditors, as
      of December 31, 2000**  | **F-20**
|**Balance Sheet, December 31, 2000**                                                         | **F-21**
|**Income Statement, for the Year Ended December 31,
      2000**                             | **F-22**
|**Statement of Cash Flows, for the Year Ended December 31,
      2000**                      | **F-23**
|**Statement of Changes in Stockholders' Equity, for the Year
      Ended December 31, 2000** | **F-24**
|**Notes to the Financial Statements, December 31, 2000**                                     | **F-25**



---



|**Randall N. Drake, C.P.A.** 
|-----------------------------
|**1981 Promenade Way**       
|**Clearwater, Florida 33760**



---



**Independent Auditor's
Report**

|******To the Board of Directors and Stockholders of**
|-----------------------------------------------------
|**MCG Diversified, Inc.**                            

I have audited the accompanying balance sheet of MCG Diversified, Inc. (a
development stage company) as of December 31, 2003, and the related statements
of income, changes in stockholders' equity, and cash flows for the year then
ended and for the period from December 29, 1993 (inception) to December 31,
2003. These financial statements are the responsibility of Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MCG Diversified, Inc. as of
December 31, 2003, and the results of its operations and its cash flows for the
year then ended and for the period from December 29, 1993 (inception) to
December 31, 2003 in accordance with accounting principles generally accepted in
the United States of America.

|/s/ RANDALL N. DRAKE, C.P.A.
|----------------------------
|**Randall N. Drake, C.P.A.**

March 26, 2004



---



|**Telephone: 727-535-9764**
|---------------------------
|**Fax: 727-521-2825**      

**F-2**

---



|**MCG
      Diversified, Inc.******                                                 
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Balance
      Sheet******                                                         
|**December 31, 2003**                                                               
|                                                                                    
|**ASSETS**                                                                          
|**Current Assets:**                                                                 
|****                                                                                
|****                                                                                
|**TOTAL ASSETS**                                                                    
|****                                                                                
|**LIABILITIES & STOCKHOLDERS'
      EQUITY**                                        
|**Current Liabilities:**                                                            
|****                                                                                
|****                                                                                
|****                                                                                
|**TOTAL LIABILITIES**                                                               
|****                                                                                
|**Stockholder's Equity:**                                                           
|**Common Stock, $.001 par value, 50,000,000
      shares**                          
|****                                                                                
|**Contributed Capital**                                                             
|**Retained Earnings**                                                               
|                                                                                    
|                                                                                    
|**TOTAL LIABILITIES & STOCKHOLDERS'
    EQUITY**                                    
|                                                                                    
|**The accompanying notes are an integral
      part of these financial statements.**
|                                                                                    

**F-3**

---



|**MCG
      Diversified, Inc.******                                                 
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Operations******                                               
|**For the Year Ended December 31,
      2003**                                      
|                                                                                    
|**Revenues**                                                                        
|****                                                                                
|**Operating Expenses:**                                                             
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|**Net Income (Loss)**                                                               
|****                                                                                
|****                                                                                
|**Cumulative Revenue From Inception**                                               
|****                                                                                
|**Cumulative Expenses From Inception**                                              
|****                                                                                
|**Earnings (loss) per common share:**                                               
|**Net income (loss) per share**                                                     
|****                                                                                
|**The accompanying notes are an integral
      part of these financial statements.**

**F-4**

---



|**MCG
      Diversified, Inc.******                                                 
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Cash Flows******                                               
|**For the Year Ended December 31,
      2003**                                      
|                                                                                    
|**OPERATING ACTIVITIES:**                                                           
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|**INVESTING ACTIVITIES**                                                            
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|**FINANCING ACTIVITIES:**                                                           
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|**NET CASH INCREASE (DECREASE) FOR THE
    PERIOD**                                 
|****                                                                                
|**BEGINNING CASH**                                                                  
|****                                                                                
|**ENDING CASH**                                                                     
|****                                                                                
|**SUPPLEMENTAL DISCLOSURE:**                                                        
|**Noncash Investing & Financing
    Activities**                                    
|****                                                                                
|****                                                                                
|****                                                                                
|****                                                                                
|**The accompanying notes are an integral
      part of these financial statements.**
|                                                                                    

**F-5**

---



|**MCG
      Diversified, Inc.******                                                 
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Changes in Stockholder's Equity******                          
|**For the Year Ended December 31,
      2003**                                      
|****                                                                                
|****                                                                                
|****                                                                                
|**Balances at January 1, 2003**                                                     
|****                                                                                
|**Net Income (Loss)**                                                               
|****                                                                                
|**May 15, 2003 6:1 Forward Split**                                                  
|****                                                                                
|**June 16, 2003 Issuance of 28,900 Shares**                                         
|****                                                                                
|**Contributed Capital**                                                             
|****                                                                                
|**Balances at December 31, 2003**                                                   
|****                                                                                
|****                                                                                
|**The accompanying notes are an integral
      part of these financial statements.**

**F-6**

---



|**MCG Diversified,
      Inc.**        
|---------------------------------------
|**(A Development Stage Company)**      
|**Notes to Financial
      Statements**
|**December 31, 2003**                  

**NOTE A - ORGANIZATION AND NATURE OF BUSINESS**

The Company was incorporated December 29, 1993 in the State of Florida. The
Company is in the business of providing EDP processing, administrative support
services, property management products and services, and business development
services such as writing business plans and providing business development
solution services. The Company is considered to be a development stage company
as defined by FAS-7.

**NOTE B - SIGNIFICANT ACCOUNTING POLICIES**

**Cash and Cash Equivalents**

For purposes of the statement of cash flows, the Company considers all
short-term securities with a maturity of three months or less to be cash
equivalents.

**Fixed Assets**

Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

**Use of Estimates**

The preparation of financial statements in conformity with generally accepted
accounting principles requires the corporation to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

**Revenue Recognition**

The Company generates revenue by providing a variety of administrative
support, EDP processing, payroll, and property management services. The Company
provides these services and bills for them on a monthly basis. The Company
recognizes its revenue when its monthly services are completed and its customers
are billed.

**NOTE C - RENT**

The Company sublets its principal business location at 770 First Avenue
North, St. Petersburg, Florida on a month-to-month basis from a customer that
has a common stockholder with the Company. The monthly rent of $300.00 is fair
market value for the space and usage being provided.

**NOTE D - RELATED PARTY TRANSACTIONS**

As a development stage company, the Company currently derives all of its
revenue from related entities in which the Company and the related entities have
common stockholders. The services being provided by the Company are charged at
prevailing arm's length market rates.

**NOTE E - EARNINGS PER COMMON SHARE**

Earnings (loss) per common share of ($.05) were calculated based on a net
loss numerator of ($35,806.58) divided by a denominator of 715,373
weighted-average shares of outstanding common stock. The denominator was
calculated based on the following issuances of common shares during the year
ended December 31, 2003:

|January 1, 2003 | 168,000 common shares outstanding                 
|--------------- | --------------------------------------------------
|May 15, 2003    | 1,008,000 common shares issued (6:1 forward split)
|June 16, 2003   | 28,900 additional common shares issued            

**F-7**

---



|**Randall N. Drake, C.P.A.** 
|-----------------------------
|**1981 Promenade Way**       
|**Clearwater, Florida 33760**



---



**Independent Auditor's
Report**

|******To the Board of Directors and Stockholders of**
|-----------------------------------------------------
|**MCG Diversified, Inc.**                            

I have audited the accompanying balance sheet of MCG Diversified, Inc. (a
development stage company) as of December 31, 2002, and the related statements
of income, changes in stockholders' equity, and cash flows and for the year then
ended and for the period from December 29, 1993 (inception) to December 31,
2002. These financial statements are the responsibility of Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MCG Diversified, Inc. as of
December 31, 2002, and the results of its operations and its cash flows for the
year then ended and for the period from December 29, 1993 (inception) to
December 31, 2002 in accordance with accounting principles generally accepted in
the United States of America.

|/S/RANDALL N. DRAKE, C.P.A. 
|----------------------------
|**Randall N. Drake, C.P.A.**
|                            
|March 20, 2003              

________________________________________________________________________

|**Telephone: 727-535-9764**
|---------------------------
|**Fax: 727-521-2825**      

**F-8**

---



|**MCG Diversified, Inc.**                                                           
|------------------------------------------------------------------------------------
|**(A Development Stage Company)**                                                   
|**Balance Sheet**                                                                   
|**December 31, 2002**                                                               
|                                                                                    
|**ASSETS**                                                                          
|**Current Assets:**                                                                 
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**TOTAL ASSETS**                                                                    
|                                                                                    
|**LIABILITIES & STOCKHOLDERS' EQUITY**                                              
|**Current Liabilities:**                                                            
|                                                                                    
|                                                                                    
|**TOTAL LIABILITIES**                                                               
|                                                                                    
|**Stockholder's Equity:**                                                           
|**Common Stock, $.001 par value, 50,000,000
      shares**                          
|                                                                                    
|**Contributed Capital**                                                             
|**Retained Earnings**                                                               
|                                                                                    
|                                                                                    
|**TOTAL LIABILITIES & STOCKHOLDERS'
      EQUITY**                                  
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-9**

---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage Company)**                                                   
|**Statement
      of Operations**                                                   
|**For the Year Ended December 31,
      2002**                                      
|                                                                                    
|**Revenues**                                                                        
|                                                                                    
|**Operating Expenses:**                                                             
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Net Income (Loss)**                                                               
|                                                                                    
|                                                                                    
|**Cumulative Revenue From Inception**                                               
|                                                                                    
|**Cumulative Expenses From Inception**                                              
|                                                                                    
|**Earnings (loss) per common share:**                                               
|**Net income (loss) per share**                                                     
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**

**F-10**

---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Cash Flows**                                                   
|**For the Year Ended December 31,
      2002**                                      
|                                                                                    
|**OPERATING ACTIVITIES:**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**INVESTING ACTIVITIES**                                                            
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**FINANCING ACTIVITIES:**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**NET CASH INCREASE (DECREASE) FOR THE YEAR**                                       
|                                                                                    
|**BEGINNING CASH**                                                                  
|                                                                                    
|**ENDING CASH**                                                                     
|                                                                                    
|**SUPPLEMENTAL DISCLOSURE:**                                                        
|**Noncash Investing & Financing
      Activities**                                  
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-11**

---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Changes in Stockholder's Equity**                              
|**For the Year Ended December 31,
      2002**                                      
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Balances at January 1, 2002**                                                     
|                                                                                    
|**Net Income (Loss)**                                                               
|                                                                                    
|**Contributed Capital**                                                             
|                                                                                    
|**Balances at December 31, 2002**                                                   
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-12**

---



|**MCG Diversified,
      Inc.**        
|---------------------------------------
|**(A Development Stage Company)**      
|**Notes to Financial
      Statements**
|**December 31, 2002**                  

**NOTE A - ORGANIZATION AND NATURE OF BUSINESS**

The Company was incorporated December 29, 1993 in the State of Florida. The
Company is in the business of providing EDP processing, administrative support
services, property management products and services, and business development
services such as writing business plans and providing business development
solution services. The Company is considered to be a development stage company
as defined by FAS-7.

**NOTE B - SIGNIFICANT ACCOUNTING POLICIES**

**Cash and Cash Equivalents**

For purposes of the statement of cash flows, the Company considers all
short-term securities with a maturity of three months or less to be cash
equivalents.

**Fixed Assets**

Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

**Use of Estimates**

The preparation of financial statements in conformity with generally accepted
accounting principles requires the corporation to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

**Revenue Recognition**

The Company generates revenue by providing a variety of administrative
support, EDP processing, payroll, and property management services. The Company
provides these services and bills for them on a monthly basis. The Company
recognizes its revenue when its monthly services are completed and its customers
are billed.

**NOTE C - RENT**

The Company sublets its principal business location at 770 First Avenue
North, St. Petersburg, Florida on a month-to-month basis from a customer that
has a common stockholder with the Company. The monthly rent of $300.00 is fair
market value for the space and usage being provided.

**NOTE D - RELATED PARTY TRANSACTIONS**

As a development stage company, the Company currently derives all of its
revenue from related entities in which the Company and the related entities have
common stockholders. The services being provided by the Company are charged at
prevailing arm's length market rates.

**NOTE E - EARNINGS PER COMMON SHARE**

Earnings (loss) per common share of ($.25) were calculated based on a net
loss numerator of ($31,842.80) divided by a denominator of 128,916
weighted-average shares of outstanding common stock. The denominator was
calculated based on the following issuances of common shares during the year
ended December 31, 2002:

|January 1, 2002 | 168 common shares outstanding                       
|--------------- | ----------------------------------------------------
|March 27, 2002  | 168,000 common shares issued 1,000:1 forward split )



**F-13**

---



|**Randall N. Drake, C.P.A.** 
|-----------------------------
|**1981 Promenade Way**       
|**Clearwater, Florida
33760**



---



**Independent Auditor's
Report**

|******To the Board of Directors and Stockholders of**
|-----------------------------------------------------
|**MCG Diversified, Inc.**                            

I have audited the accompanying balance sheet of MCG Diversified, Inc. (a
development stage company) as of December 31, 2001, and the related statements
of income, changes in stockholders' equity, and cash flows and for the year then
ended and for the period from December 29, 1993 (inception) to December 31,
2001. These financial statements are the responsibility of Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MCG Diversified, Inc. at
December 31, 2001, and the results of its operations and its cash flows for the
year then ended and for the period from December 29, 1993 (inception) to
December 31, 2001 in accordance with accounting principles generally accepted in
the United States of America.

|/s/ RANDALL N. DRAKE        
|----------------------------
|**RANDALL N. DRAKE, C.P.A.**
|October 26, 2002            



---



|**Telephone: 727-535-9764**
|---------------------------
|**Fax: 727-521-2825**      



**F-14**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Balance
      Sheet**                                                             
|**December 31, 2001**                                                               
|                                                                                    
|**ASSETS**                                                                          
|**Current Assets:**                                                                 
|                                                                                    
|                                                                                    
|                                                                                    
|**Fixed Assets:**                                                                   
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Other Assets:**                                                                   
|                                                                                    
|                                                                                    
|                                                                                    
|**TOTAL ASSETS**                                                                    
|                                                                                    
|**LIABILITIES & STOCKHOLDERS'
EQUITY**                                              
|**Current Liabilities:**                                                            
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Stockholder's Equity:**                                                           
|**Common Stock, $1.00 par value, 1,000
    shares**                                 
|                                                                                    
|**Contributed Capital**                                                             
|**Retained Earnings**                                                               
|                                                                                    
|                                                                                    
|**TOTAL LIABILITIES & STOCKHOLDERS'
    EQUITY**                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-15**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Income
      Statement**                                                          
|**For the Year Ended December 31,
      2001**                                      
|                                                                                    
|**Revenues**                                                                        
|                                                                                    
|**Operating Expenses:**                                                             
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Income From Operations**                                                          
|                                                                                    
|**Loss - Fixed Assets Disposition**                                                 
|                                                                                    
|**Income Before Provision for Income Taxes**                                        
|                                                                                    
|**Provision for Income Taxes**                                                      
|                                                                                    
|**Net Income**                                                                      
|                                                                                    
|**Cumulative Revenue From Inception**                                               
|                                                                                    
|**Cumulative Expenses From Inception**                                              
|                                                                                    
|**Earnings per common share:**                                                      
|**Net income (loss) per share**                                                     
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-16**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Cash Flows**                                                   
|**For the Year Ended December 31,
      2001**                                      
|                                                                                    
|**OPERATING ACTIVITIES:**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**INVESTING ACTIVITIES**                                                            
|                                                                                    
|                                                                                    
|                                                                                    
|**FINANCING ACTIVITIES:**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**NET CASH INCREASE (DECREASE) FOR THE
YEAR**                                       
|                                                                                    
|**BEGINNING CASH**                                                                  
|                                                                                    
|**ENDING CASH**                                                                     
|                                                                                    
|**SUPPLEMENTAL DISCLOSURE:**                                                        
|**Noncash Investing & Financing
    Activities**                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-17**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Changes in Stockholder's Equity**                              
|**For the Year Ended December 31,
      2001**                                      
|                                                                                    
|                                                                                    
|                                                                                    
|**Balances at January 1, 2001**                                                     
|                                                                                    
|**Issuance of Common Stock**                                                        
|                                                                                    
|**Net Income (Loss)**                                                               
|                                                                                    
|**Contributed Capital**                                                             
|                                                                                    
|**Balances at December 31, 2001**                                                   
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-18**



---



|**MCG Diversified,
      Inc.**        
|---------------------------------------
|**(A Development Stage Company)**      
|**Notes to Financial
      Statements**
|**December 31,
2001**                  

**NOTE A - ORGANIZATION AND NATURE OF BUSINESS**

The Company was incorporated December 29, 1993 in the State of Florida. The
Company is in the business of providing EDP processing, administrative support
services, property management products and services, and business development
services such as writing business plans and providing business development
solution services. The Company is considered to be a development stage company
as defined by FAS-7.

**NOTE B - SIGNIFICANT ACCOUNTING POLICIES**

**Cash and Cash Equivalents**

For purposes of the statement of cash flows, the Company considers all
short-term securities with a maturity of three months or less to be cash
equivalents.

**Fixed Assets**

Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

**Use of Estimates**

The preparation of financial statements in conformity with generally accepted
accounting principles requires the corporation to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

**Revenue Recognition**

The Company generates revenue by providing a variety of administrative
support, EDP processing, payroll, and property management services. The Company
provides these services and bills for them on a monthly basis. The Company
recognizes its revenue when its monthly services are completed and its customers
are billed.

**NOTE C - RENT**

The Company sublets its principal business location at 770 First Avenue
North, St. Petersburg, Florida on a month-to-month basis from a customer that
has a common stockholder with the Company. The monthly rent of $300.00 is fair
market value for the space and usage being provided.

**NOTE D - RELATED PARTY TRANSACTIONS**

As a development stage company, the Company currently derives all of its
revenue from related entities in which the Company and the related entities have
common stockholders. The services being provided by the Company are charged at
prevailing arm's length market rates.

**NOTE E - EARNINGS PER COMMON SHARE**

Earnings per common share of ($168.55) were calculated based on a net loss
numerator of ($28,316.87) divided by a denominator of 168 shares of outstanding
common stock.

**NOTE F - DEPOSITS**

The Company's deposits represent funds on deposit for rent and utilities.

**F-19**



---



|**Randall N. Drake, C.P.A.** 
|-----------------------------
|**1981 Promenade Way**       
|**Clearwater, Florida
33760**



---



**Independent Auditor's
Report**

|******To the Board of Directors and Stockholders of**
|-----------------------------------------------------
|**MCG Diversified, Inc.**                            

I have audited the accompanying balance sheet of MCG Diversified, Inc. (a
development stage company) as of December 31, 2000, and the related statements
of income, changes in stockholders' equity, and cash flows and for the year then
ended and for the period from December 29, 1993 (inception) to December 31,
2000. These financial statements are the responsibility of Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

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

In my opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of MCG Diversified, Inc. at
December 31, 2000, and the results of its operations and its cash flows for the
year then ended and for the period from December 29, 1993 (inception) to
December 31, 2000 in accordance with accounting principles generally accepted in
the United States of America.

|/s/ RANDALL N. DRAKE        
|----------------------------
|**RANDALL N. DRAKE, C.P.A.**
|October 26, 2002            



---



|**Telephone: 727-535-9764**
|---------------------------
|**Fax: 727-521-2825**      

**F-20**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Balance
      Sheet**                                                             
|**December 31, 2000**                                                               
|                                                                                    
|**ASSETS**                                                                          
|**Current Assets:**                                                                 
|                                                                                    
|                                                                                    
|                                                                                    
|**Fixed Assets - NOTE B**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Other Assets:**                                                                   
|                                                                                    
|                                                                                    
|                                                                                    
|**TOTAL ASSETS**                                                                    
|                                                                                    
|**LIABILITIES & STOCKHOLDER'S EQUITY**                                              
|**Current Liabilities:**                                                            
|                                                                                    
|                                                                                    
|                                                                                    
|**Stockholder's Equity:**                                                           
|**Common Stock, $1.00 par value, 1,000
    shares**                                 
|                                                                                    
|**Contributed Capital**                                                             
|**Retained Earnings**                                                               
|                                                                                    
|                                                                                    
|**TOTAL LIABILITIES & STOCKHOLDER'S
    EQUITY**                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-21**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Income
      Statement**                                                          
|**For the Year Ended December 31,
      2000**                                      
|                                                                                    
|**Revenues**                                                                        
|                                                                                    
|**Operating Expenses:**                                                             
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**Net Income**                                                                      
|                                                                                    
|**Cumulative Revenue From Inception**                                               
|                                                                                    
|**Cumulative Expenses From Inception**                                              
|                                                                                    
|**Earnings per common share:**                                                      
|**Net income per share**                                                            
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-22**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Cash Flows**                                                   
|**For the Year Ended December 31,
      2000**                                      
|                                                                                    
|**OPERATING ACTIVITIES:**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**INVESTING ACTIVITIES**                                                            
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**FINANCING ACTIVITIES:**                                                           
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|                                                                                    
|**NET CASH INCREASE (DECREASE)**                                                    
|                                                                                    
|**BEGINNING CASH**                                                                  
|                                                                                    
|**ENDING CASH**                                                                     
|                                                                                    
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**



**F-23**



---



|**MCG
      Diversified, Inc.**                                                     
|------------------------------------------------------------------------------------
|**(A Development Stage
    Company)**                                               
|**Statement
      of Changes in Stockholder's Equity**                              
|**For the Year Ended December 31,
      2000**                                      
|                                                                                    
|                                                                                    
|                                                                                    
|**Balances at January 1, 2000**                                                     
|                                                                                    
|**Net Income (Loss)**                                                               
|                                                                                    
|**Contributed Capital**                                                             
|                                                                                    
|**Shareholder Distributions**                                                       
|                                                                                    
|**Balances at December 31, 2000**                                                   
|                                                                                    
|**The accompanying notes are an integral part of these
      financial statements.**

**F-24**



---



|**MCG Diversified,
      Inc.**        
|---------------------------------------
|**(A Development Stage Company)**      
|**Notes to Financial
      Statements**
|**December 31,
2000**                  

**NOTE A - ORGANIZATION AND NATURE OF BUSINESS**

The Company was incorporated December 29, 1993 in the State of Florida. The
Company is in the business of providing EDP processing, administrative support
services, property management products and services, and business development
services such as writing business plans and providing business development
solution services. The Company is considered to be a development stage company
as defined by FAS-7.

**NOTE B - SIGNIFICANT ACCOUNTING POLICIES**

**Cash and Cash Equivalents**

For purposes of the statement of cash flows, the Company considers all
short-term securities with a maturity of three months or less to be cash
equivalents.

**Fixed Assets**

Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the estimated useful lives of the
assets. Expenditures for major renewals and betterments that extend the useful
lives of property and equipment are capitalized. Expenditures for maintenance
and repairs are charged to expense as incurred.

**Use of Estimates**

The preparation of financial statements in conformity with generally accepted
accounting principles requires the corporation to make estimates and assumptions
that affect certain reported amounts and disclosures. Accordingly, actual
results could differ from those estimates.

**Revenue Recognition**

The Company generates revenue by providing a variety of administrative
support, EDP processing, payroll, and property management services. The Company
provides these services and bills for them on a monthly basis. The Company
recognizes its revenue when its monthly services are completed and its customers
are billed.

**NOTE C - RELATED PARTY TRANSACTIONS**

As a development stage company, the Company currently derives all of its
revenue from related entities in which the Company and the related entities have
common stockholders. The services being provided by the Company are charged at
prevailing arm's length market rates.

**NOTE D - EARNINGS PER COMMON SHARE**

Earnings per common share of ($313.75) were calculated based on a net loss
numerator of ($31,375.00) divided by a denominator of 100 shares of outstanding
common stock.

**NOTE E - DEPOSITS**

The Company's deposits represent funds on deposit for rent and utilities.



**F-25**



---



On December 3, 2001, we engaged Randall N. Drake, C.P.A., ("Drake ") as our
independent auditor. He is our first auditor and we have had no disagreements
with Drake on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, in connection with its
reports.

**Item 8A. Controls and Procedures.**

Our Chief Executive Officer and Chief Financial Officer have evaluated MCG
Diversified, Inc.'s disclosure controls and procedures as of December 31, 2003,
and they concluded that these controls and procedures are effective.

As required by Rule 13a-15 under the Exchange Act, within the 90 days prior
to the filing date of this report, we carried out an evaluation of the
effectiveness of the design and operation of our company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of our company's management, including our company's President
and Chief Executive Officer. Based upon that evaluation, our company's President
and Chief Executive Officer concluded that our company's disclosure controls and
procedures are effective. There have been no significant changes in internal
controls or in other factors, including any corrective actions with regard to
significant deficiencies and material weaknesses that could significantly affect
these controls subsequent to the date we carried out our evaluation

Disclosure controls and procedures are controls and procedures that are
designed to ensure that information required to be disclosed in our company's
reports filed or submitted under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in our company's reports filed or submitted
under the Exchange Act is accumulated and communicated to management, including
our company's President and Chief Executive Officer as appropriate, to allow
timely decisions regarding required disclosure.

**PART III**

**Item
9.  Directors, Executive Officers, Promoters, and Control Persons;
Compliance with Section 16(a) of the Exchange Act.**

***Directors and Executive Officers*****

The names and ages of our directors and executive officers are set forth
below. Our By-Laws provide for not less than one and not more than fifteen
directors. All directors are elected annually by the stockholders to serve until
the next annual meeting of the stockholders and until their successors are duly
elected and qualified.

**Table 5.0**



|**Name**          | **Age** | **Position**                                     
|----------------- | ------- | -------------------------------------------------
|Marguerite Godels | 41      | President, Chairman of the Board of Directors (1)
|Laura L. Larsen   | 28      | Secretary/Director                               
|Jay D. Solomon    | 46      | Treasurer/Director                               
|Brian Bell        | 37      | Director                                         
|Dale Salmon       | 38      | Director                                         

(1) This is the first Directorship held by Mrs.
Godels.

The backgrounds of our executive officers and directors are provided below:

- *Marguerite Godels* has served as our Chairman of the Board of
Directors since inception on December 29, 1993. She is the current President and
Chief Executive Officer. Prior to the incorporation of MCG Diversified, Inc.,
Ms. Godels began assisting her husband in a variety of administrative functions
in his C.P.A. firm. Upon refinement of her organizational and communication
skills, Ms. Godels founded MCG Diversified, Inc. to pursue her ambition for
assisting business clients. She has specifically performed and accomplished the
following during her tenure as President of MCG Diversified, Inc:

(a) Negotiated agreements with customers;

(b) Acquired assets for lease and negotiated leasing arrangements with
customers;

(c) Established and promoted relationships in the business community through
various business/social functions critical to expanding the Company's contacts
and customer base;

(d) Performed the actual administrative support, EDP support and property
management services for which the Company bills in generating its actual
revenues;

(e) Interfaced with customer management in reviewing performance and
restructuring/expanding desired services;

(f) Maintained the Company's books and record keeping; and

(g) Developed the Company's strategy for expansion based on her contacts in
the business community.

- *Laura L. Larsen* has served as our Secretary since April 1, 2002.
Her career began at Raymond James Financial where she stayed for four years.
Independent project assignments, vendor liaison, and support services were her
primary responsibilities. Ms. Larsen left Raymond James in October 1996 when she
became employed by Anderson, Marois & Associates, a St. Petersburg, Florida
social security benefits consulting firm. Here she worked as an office manager
and then as a claims representative until January 2001. In addition to managing
the general office, Ms. Larsen was responsible for assisting with the
preparation of court cases. Since January 2001 she has been an office
manager/staff accountant for Godels, Solomon, Barber & Company, LLC Ms.
Larsen has her background specifically in administrative functions. She is
finishing her education at the University of South Florida now.

- *Jay D. Solomon*, C.P.A., is a licensed Florida certified public
accountant with over 23 years of experience. Since January of 1994 to the
present Mr. Solomon has been a partner/CPA in the firm of Godels, Solomon,
Barber & Company, LLC. Mr. Solomon's broad experience in public accounting
and financial services includes traditional audit and tax services. Health care,
cooperative, and medical start-ups are his areas of expertise.

- *Brian Bell*, whose experience spans 18 years in the hospitality
industry, became C.E.O. of Capitol Marketing Concepts in 1998 after being their
Controller since May of 1995. The Buford, Georgia native graduated from North
Georgia College in 1989 with a degree in Accounting. His position in finance
with Stouffer, Renaissance and the Marriott took him to Atlanta, Houston, and
Los Angeles prior to coming to St. Petersburg, Florida to negotiate the purchase
of the historic Vinoy Resort in 1995. The $93 Million spent restoring the Vinoy
to full operation provided jobs for a staff of six hundred. Capitol Marketing
Concepts, which had experienced explosive growth, first engaged Mr. Bell to
restructure its finance operations. Having completed the task he was named
C.E.O./President of Capitol Marketing Concepts, Inc. and its related companies.
Consolidating three company locations to a new Capitol owned building, 32,000
square feet, at One Capitol Center was completed on September 30, 2000. The
Greater St. Petersburg Chamber of Commerce and the Tampa Business Journal named
the Company Outstanding Business of the Year on May 16, 2001.

-*Dale Salmon* has been with the U.S. Postal Service since June 1990.
While working for the U.S. Postal Service he also became a licensed real estate
broker in Florida specializing in relocations and new housing developments,
working part-time for the Premier Group as a realtor. Mr. Salmon's long tenure
with the federal government is where he developed his administrative skills.

***Compliance with Section 16(a) of the Securities Exchange Act of
1934.*****

Section 16(a) of the Securities Exchange Act of 1934 (the "34 Act") requires
every person who is an officer, director, or a person owning more than ten
percent of our Common Stock, to file, at the time of the registration of such
Common Stock on a national securities exchange, or by the effective date of a
registration statement filed pursuant to section 12(g) of the 34 Act, or within
ten days after he becomes an officer director or person owning more than ten
percent of our Common Stock, initial reports of ownership and changes in
ownership with the Securities and Exchange Commission. Additionally, Item 405 of
Regulation S-B under the 34 Act requires us to identify in its Form 10-KSB and
proxy statement those individuals for whom one of the above referenced reports
was not filed on a timely basis during the most recent fiscal year or prior
fiscal years. Given these requirements, we have the following report to make
under this section: No filings were required in the last fiscal year.

**Item 10.  Executive
Compensation**

The following table sets forth information concerning the annual and
long-term compensation of our Chief Executive Officer, and the most highly
compensated employees and/or executive officers who served at the end of the
fiscal years December 31, 2001 and 2002, and whose salary and bonus exceeded
$100,000 for the fiscal years ended December 31, 2001 and 2002, for services
rendered in all capacities to us. The listed individuals shall be hereinafter
referred to as the "Named Executive Officers."

**Table 6.0 Executive Compensation**

|                                                                               |          |                               |               |                                           | **Long-Term Compensation**              |                                                    
|------------------------------------------------------------------------------ | -------- | ----------------------------- | ------------- | ----------------------------------------- | --------------------------------------- | ---------------------------------------------------
|                                                                               |          | **Annual
      Compensation** | **Awards**    | **Payouts**                               |                                        
|**(a)**                                                                        | **(b)**  | **(c)**                       | **(d)**       | **(e)**                                   | **(f)**                                 | **(g)**                                            
|**Name and principal
      position**                                          | **Year** | **Salary ($)**                | **Bonus ($)** | **Other Annual Compen- sation
      ($)** | **Restricted Stock Award(s)
      ($)** | **Securities Under- lying Options/
      SARs (#)**
|Marguerite Godels (1), President, Chairman of the Board of
      Directors (6) | 2000     | -0-                           | -0-           | 40,625.00                                 | -0-                                     | -0-                                                
|2001                                                                           | -0-      | -0-                           | 36,000.00     | -0-                                       | -0-                                     | -0-                                                
|2002                                                                           | -0-      | -0-                           | 36,000.00     | -0-                                       | -0-                                     | -0-                                                
|2003                                                                           | -0-      | -0-                           | 32,890.48     | -0-                                       | -0-                                     | -0-                                                
|Laura L. Larsen (2), Secretary                                                 | 2000     | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2001                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2002                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2003                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|Jay D. Solomon (3), Treasurer                                                  | 2000     | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2001                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2002                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2003                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|Brian Bell (4), Director                                                       | 2000     | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2001                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2002                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2003                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|Dale Salmon (5), Director                                                      | 2000     | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2001                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2002                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                
|2003                                                                           | -0-      | -0-                           | -0-           | -0-                                       | -0-                                     | -0-                                                

|(1)
      There is no employment contract with Ms. Godels at this time. Nor are
      there any agreements for compensation in the future. A salary and stock
      options and/or warrants program may be developed in the
  future.                                                                                                                                                                                                                                                                                                                                                                                                                                 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) There is no employment contract with
      Ms. Larsen at this time. Nor are there any agreements for compensation in
      the future. A salary and stock options and/or warrants program may be
      developed in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) There is no employment contract with
      Mr. Solomon at this time. Nor are there any agreements for compensation in
      the future. A salary and stock options and/or warrants program may be
      developed in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(4) There is no employment contract with
      Mr. Bell at this time. Nor are there any agreements for compensation in
      the future. A salary and stock options and/or warrants program may be
      developed in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|(5) There is no employment contract with
      Mr. Salmon at this time. Nor are there any agreements for compensation in
      the future. A salary and stock options and/or warrants program may be
      developed in the future.                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(6) The amount in 2000 represents
      $4,625.00 in stock dividends paid to Ms. Godels and $36,000.00 in
      compensation that was foregone as contributed capital. The amount in 2001
      represents $7,507.13 in paid compensation to Ms. Godels and $28,492.87 in
      compensation that was foregone as contributed capital. The amount in 2002
      represents $5,208.21 in paid compensation to Ms. Godels and $30,791.79 in
      compensation that was foregone as contributed capital. The amount in 2003
      represents $3,109.52 in paid compensation to Ms. Godels and $32,890.48 in
      compensation that was foregone as contributed
capital.



***Additional Compensation of Directors*****

All of our directors are unpaid. Compensation for the future will be
determined when and if additional funding is obtained.

***Board of Directors and Committees*****

Currently, our Board of Directors consists of Ms. Godels, Ms. Larsen, Mr.
Solomon, Mr. Bell and Mr. Salmon. We are not actively seeking additional board
members. At present, the Board of Directors has not established any
committees.

***Employment Agreements*****

Currently, we have no employment agreements with any of our Directors or
Officers.

**Item
11.  Security Ownership of Certain Beneficial Owners and
Management.**

The following table sets forth information concerning the beneficial
ownership of shares of our common stock with respect to stockholders who were
known by us to be beneficial owners of more than 5% of our common stock as of
December 31, 2003, and our officers and directors, individually and as a group.
Unless otherwise indicated, the beneficial owner has sole voting and investment
power with respect to such shares of common stock.

Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission ("SEC") and generally includes voting or
investment power with respect to securities. In accordance with the SEC rules,
shares of our common stock which may be acquired upon exercise of stock options
or warrants which are currently exercisable or which become exercisable within
60 days of the date of the table are deemed beneficially owned by the optionees,
if applicable.

**Table 7.0 Beneficial Ownership**

|                                 |                                                     | **Amount and Nature of Beneficial
      Ownership** | **Percent of
      Class** (1)
|-------------------------------- | --------------------------------------------------- | --------------------------------------------------- | ------------------------------
|**Title of Class**               | **Name and Address of Beneficial
      Owner**      | **Before Offering**                                 | **After Offering**            
|Common Stock                     | Marguerite Godels (2)                               | 600,000                                             | 600,000                       
|5950 Bikini Way North            |                                                     |                                                     |                               
|St. Petersburg, FL 33706         |                                                     |                                                     |                               
|Common Stock                     | Laura L. Larsen                                     | 24,000                                              | 24,000                        
|7524 17th Lane North             |                                                     |                                                     |                               
|St. Petersburg, FL 33702         |                                                     |                                                     |                               
|Common Stock                     | Jay D. Solomon, P.A.                                | 24,000                                              | 24,000                        
|770 First Avenue North           |                                                     |                                                     |                               
|St. Petersburg, FL 33701         |                                                     |                                                     |                               
|Common Stock                     | Brian Bell                                          | 24,000                                              | 24,000                        
|696 First Avenue North, Ste. 400 |                                                     |                                                     |                               
|St. Petersburg, FL 33701         |                                                     |                                                     |                               
|Common Stock                     | Dale Salmon                                         | 24,000                                              | 24,000                        
|5171 98th Avenue North           |                                                     |                                                     |                               
|St. Petersburg, FL 33782         |                                                     |                                                     |                               
|Common Stock                     | All Executive Officers and Directors as a Group (1) | 696,000                                             | 696,000                       



(1) The percentages are based on a
Before-Offering total of 1,036,900 shares of common stock issued and outstanding
as of the date of this filing and assumes an After-Offering sale of all the
additional 10,000,000 shares of common stock available for sale under our Form
SB-2 Registration Statement (effective December 3, 2002) and none of the
1,036,900 shares of our selling security holders' shares.

**Item 12. 
Certain Relationships and Related Transactions.**

To the best of our knowledge there are no transactions involving any
director, executive officer, any nominee for election as a director or officer
or any security holder who is a beneficial owner or any member of the immediate
family of the same other than the following:

-Marguerite Godels, is our President and a Director. She is the President of
this corporation as well as the President of Avalon Development Enterprises,
Inc. ("Avalon"). She controls 59.50% of the stock in MCG as well as 50% of the
stock in Avalon. Avalon has no employees other than Ms. Godels and owns the
building which currently houses our corporate office. MCG provides property
management services to Avalon, in an arm's length transaction, at the rate of
$300.00 per month for property management services. This is a fair market value
of the services in the Tampa Bay area.

-Charles Godels, a selling security holder, is the husband of our President,
Marguerite Godels. Mr. Godels owns 50% of the stock of Avalon, but is not an
employee of Avalon. Mr. Godels has sole voting and dispositive rights over his
shares.

-Larry D. Larsen, a selling security holder, is the husband of the current
Secretary of the Corporation, Laura L. Larsen. Mr. Larsen has sole voting and
dispositive rights over his shares.

**Item 13. 
Exhibits and Reports on Form 8-K.**

a.  *Exhibits*

|**Exhibit No.** | **Description**                                                                                                
|--------------- | ---------------------------------------------------------------------------------------------------------------
|3.1             | Articles of Incorporation of MCG Diversified, Inc.                                                             
|3.2             | Amended and Restated Articles of Incorporation of MCG
      Diversified, Inc.                                  
|3.3             | By-Laws of MCG Diversified, Inc.                                                                               
|31.1            | Certification of CEO pursuant to Section 302 of the
      Sarbanes-Oxley Act                                   
|31.2            | Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act                                         
|32.1            | Certification of CEO pursuant to Section 906 of the
      Sarbanes-Oxley Act                                   
|32.2            | Certification of CFO pursuant to Section 906 of the Sarbanes-Oxley Act                                         
|99.2            | Independent Contractor's Agreement Between MCG
      Diversified, Inc. and Avalon Development Enterprises, Inc.

b.  *Reports on Form 8-K.*

No reports on Form 8-K were filed during the last quarter of the period
ending December 31, 2003.

**Item
14.** **Principal Accountant Fees and
Services.**

*a. Audit Fees.*

During the fiscal years ended December 31, 2002 and 2003, MCG's principal
auditor billed fees of approximately $2,750.00 and $3,625.00, respectively, for
professional services rendered in connection with the audit of MCG's annual and
quarterly financial statements for the respective fiscal periods. MCG's
principal accountant did not bill any other audit-related fees during the
respective time periods.

*b. Tax Fees.*

During the fiscal years ended December 31, 2002 and 2003, MCG's principal
auditor did not charge any fees related to tax services.

*c. All Other Fees.*

During the fiscal years ended December 31, 2002 and 2003, MCG's principal
auditor did not bill any other fees for professional services.

**SIGNATURES**

In accordance with Section 13 or 15D of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

MCG Diversified, Inc.

(Registrant)

By: /s/ MARGUERITE GODELS

Marguerite Godels, President, Chairman of the Board of Directors, Chief
Executive Officer

Date: March 30, 2004



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

|/s/ MARGUERITE GODELS                                                                           | March 30, 2004
|----------------------------------------------------------------------------------------------- | --------------
|Marguerite Godels, President, Chairman of the Board of Directors,
      Chief Executive Officer | (Date)        
|                                                                                                |               
|/s/ LAURA LARSEN                                                                                | March 30, 2004
|Laura Larsen, Secretary                                                                         | (Date)        
|                                                                                                |               
|/s/ JAY D. SOLOMON                                                                              | March 30, 2004
|Jay D. Solomon, P.A., Treasurer, Chief Financial Officer, Principal
      Accounting Officer    | (Date)        
|                                                                                                |               
|/s/ BRIAN BELL                                                                                  | March 30, 2004
|Brian Bell, Director                                                                            | (Date)        
|                                                                                                |               
|/s/ DALE SALMON                                                                                 | March 30, 2004
|Dale Salmon, Director                                                                           | (Date)