Securities and Exchange Commission
                             Washington, D.C. 20549


                                   FORM 10-KSB

                   Annual Report under Section 13 or 15 (d) of
                        the Securities Exchange Act 1934:
                       Fiscal Year Ended DECEMBER 31, 2002


                         Commission File Number: 0-31527


                            CERTIFIED SERVICES, INC.
                 (Name of Small Business Issuer in its Charter)

             477 Madison Avenue, 12th Floor, New York, NY 10022-5839
           (Address of Principal executive Offices including Zip Code)

                                 (212) 308-8700
                           (Issuer's Telephone Number)

       Securities registered under Section 12(b) of the Exchange Act: NONE

Securities  registered  under Section  12(g) of the Exchange Act:  COMMON STOCK,
$.001 PAR VALUE

Check whether  Registrant (1) filed all reports  required to be filed by Section
13 or 15 (d) of the  Securities  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  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. [ ]

Registrant's revenues for the year ended December 31, 2002: $40,406,261

The aggregate  market value of Common Stock held by  non-affiliates  at February
28, 2003 was $4,036,439

Shares of Common  Stock,  $.001 par,  outstanding  at March 3,  2003:  8,447,811
shares

Documents incorporated by reference:  None

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


                                TABLE OF CONTENTS



                                     PART I

ITEM 1.       Description of Business


ITEM 2.       Description of Properties

ITEM 3.       Legal Proceedings

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

                                     PART II

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

ITEM 6.       Management's  Discussion and Analysis of Financial  Condition or
              Plan of Operations

ITEM 7.       Financial Statements

ITEM 8.       Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosure

                                    PART III

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


ITEM 10.     Executive Compensation

ITEM 11.     Security Ownership of Certain Beneficial Owners and Management

ITEM 12.     Certain Relationships and Related Transactions

                                     PART IV

ITEM 13.     Exhibits and Reports on Form 8K

ITEM 14.     Controls and Procedures

                                   SIGNATURES

                                 CERTIFICATIONS



PART I

ITEM 1. DESCRIPTION OF BUSINESS

General

Certified Services,  Inc., a Nevada corporation (the "Registrant") was organized
on September  15,  1999.  The  Registrant  is a holding  company for  businesses
engaged in the professional  employer organization ("PEO") industry. In November
2001,  the  Registrant  entered  the PEO  industry  through the  acquisition  of
America's PEO Holdings,  Inc. In July 2002, the  Registrant  agreed to acquire a
100% equity interest in The Cura Group,  Inc., its wholly owned subsidiary,  The
Cura Group II, Inc., and The Cura Group, Inc.,  respectively,  two PEO's located
in New Jersey and Florida. In addition,  in October 2002, the Registrant entered
into an agreement to acquire Staff America, Inc. and its affiliated PEO's. There
can be no assurance  that this  transaction  will be completed.  Since 1996, the
Registrant's  subsidiaries  have provided clients with a broad range of services
encompassing  payroll and benefits  administration,  employee record keeping and
regulatory  compliance,  health and workers compensation insurance programs, and
worksite  safety  management.  As of December 31, 2002,  the  Registrant  served
approximately 824 clients with approximately  32,000 active worksite  employees.
The  Registrant's  clients are typically  small to medium-size  businesses  with
between 10 and 200 employees.

The Registrant's  address is 477 Madison Avenue, 12th Floor, New York, NY 10022,
and its telephone and facsimile  numbers are (212) 308-8700 and (212)  308-3949,
respectively.  The  Registrant's  registered agent in the State of Nevada is The
Corporation  Trust  Company and its  transfer  agent is Pacific  Stock  Transfer
Company of Las Vegas,  Nevada. The Registrant's common stock trades on the OTCBB
market under the symbol CSRV.

The Registrant's operating subsidiaries provide services to the client employees
who work at the  clients'  workplace.  The  services  include  human  resources,
payroll processing and outsourcing, and are designed to improve the productivity
and profitability of its clients' businesses by:

     o    Allowing clients to focus on revenue-producing activities by relieving
          them  of  the  time-consuming  and  complex  burdens  associated  with
          employee administration, payroll processing and human resources;

          Enabling  clients to attract and retain  employees,  reduce work force
          turnover  and promote  long-term  customer  satisfaction  by providing
          employment policies and practices,  and health and retirement benefits
          to worksite

     o    employees with human  resources  services  commensurate  to those only
          available in larger  organizations on a cost-effective  and convenient
          basis;

     o    Improving   the  cash   management   of   clients   with   respect  to
          payroll-related expenses; and

     o    Helping  clients to better manage  certain  employment-related  risks,
          including   those   associated  with  workers'   compensation,   state
          unemployment taxes, effective worksite safety and claims management.

In  providing  these  services,  the  Registrant  becomes a  co-employer  of the
worksite employees.  Employment-related  liabilities are contractually allocated
between the Registrant and the client. The Registrant assumes responsibility for
and  manages  the risks  associated  with:  (i) the  administration  of worksite
employee  payroll;  (ii) workers'  compensation  insurance  coverage;  and (iii)
compliance with certain employment-related  governmental regulations. The client
retains the worksite employees' services in its business and remains responsible
for compliance with other  employment-related  governmental regulations that are
more closely related to worksite employee  supervision.  The Registrant  charges
its clients a service fee to cover the cost of certain employment-related taxes,
workers' compensation  insurance coverage and administrative and field services.
This service fee is invoiced to the client  together with the salaries and wages
of the  worksite  employees  and the client's  portion of health and  retirement
benefit plan costs.

The  Registrant  targets  small and medium  sized  businesses  in  strategically
selected markets,  throughout the US with concentrations  within Florida and New
Jersey.

Recent Developments

Acquisition One - Entry into the PEO Business

As previously indicated, and as reported in the Registrant's Form 10-KSB for the
fiscal  year ended  December  31,  2001,  the  Registrant  entered  into the PEO
industry in November  2001,  through the  acquisition of America's PEO Holdings,
Inc., a Delaware corporation, and its wholly owned subsidiaries.

Risk Management Agreement

On January 1, 2002, the Registrant entered into a Risk Management Agreement with
Midwest Merger  Management,  LLC, a Kentucky limited  liability  company and the
Registrant's  principal and  controlling  stockholder  ("Midwest"),  wherein the
Registrant engaged Midwest to assume all responsibility for managing the cost of
workplace  accidents that occur during the five year term of the  agreement.  In
consideration for a negotiated percentage of the Registrant's gross payroll (the
"Service Fee") and reimbursement for expenses, Midwest agreed to: (i) retain and
service such Workers Compensation Insurance coverage as Midwest deems reasonable
and prudent at its sole cost and expense;  (ii) establish such deductible levels
as Midwest deems  reasonable and prudent;  (iii) assume  responsibility  for and
promptly  make all required  payments  below the  applicable  deductibles;  (iv)
engage  and  utilize  the  services  of  a  reputable  independent  third  party
administrator  to timely pay all approved  workers claims;  and (v) arrange with
such third party administrator for CSRV's examination and copying, during normal
business hours and on reasonable  advanced written notice,  of the agent's books
and records.

For the first year of the term of the agreement,  Midwest's Service fee is three
and one half percent (3.5%),  payable weekly. For the four succeeding years, the
Service Fee shall be equal to the greater of three and one-half percent of gross
payroll or one and one-third times the  Registrant's  weighted average of annual
claims paid for the preceding  five years,  at Midwest's  sole  discretion  (the
"Claims  History").  The Claims  History shall be determined on the basis of the
Registrant's  integrated quarterly Claims Reports prepared and maintained by the
Registrant in the ordinary course of its business.

Lock Up Agreements

On January  29,  2002,  and as reported  in the  Registrant's  Form 8-K filed on
February 5, 2002, the Registrant  entered into Lock-Up Agreements with 24 of its
shareholders  owning an aggregate of 688,800 shares of the  Registrant's  common
stock.  Pursuant  to the  Lock-Up  Agreements,  and  in  consideration  for  the
Registrant's agreement not to call a special meeting of its stockholders for the
purpose  of voting on a reverse  split of the  Registrant's  common  stock,  the
shareholders  agreed not to sell any of the "locked"  shares for a period of one
year. The lock up period expired in February 2003.

As a result thereof,  the Registrant did not consummate the reverse split of its
common stock required by the October 22, 2001,  Stock Purchase  Agreement  among
the Registrant,  Midwest Merger  Management,  LLC, (as  purchaser),  and Michael
Zuliani,  Martin  Bothmann,  Colin Fidler,  St. Andrews Venture  Capital,  Brian
Paradis  and  Christine  Recarey,  the six then  principal  stockholders  of the
Registrant, as sellers.

Acquisition Two - The Cura Group, Inc.

On July 27,  2002,  and during  the fiscal  year  covered  by this  Report,  the
Registrant  executed a Stock Purchase  Agreement (the "Agreement") with The Cura
Group,  Inc. The Cura Group II, Inc. and The Cura Group III, Inc.,  each Florida
corporations (collectively "CURA") and Alan B. Willard and Danny L. Willard, the
sole  shareholders of CURA  (collectively,  the  "Shareholders").  CURA provides
professional  employee  staffing  and  personnel  services  in the manner of the
Registrant's  wholly owned subsidiary,  America's PEO Holdings,  Inc, a Delaware
corporation ("APEO").  The transaction was reported in the Registrant's Form 8-K
dated October 30, 2001 and filed on October 31, 2001. Pursuant to the Agreement,
the Registrant agreed to acquire all of issued and outstanding  shares of CURA's
common stock (the "Cura Shares")  effective  July 1, 2002, in two closings.  The
Registrant obtained effective control of CURA on July 1, 2002.

Pursuant to the  Agreement,  the purchase price for the Cura Shares was: (i) two
million  (2,000,000)  shares of the Registrant's  common stock, $.001 par value,
representing a 24% equity interest in the Registrant, (ii) cash in the amount of
$136,111;  and (iii) two promissory  notes to the  Shareholders in the aggregate
amount of  $2,313,889  with  interest at the rate of six percent (6%) per annum,
payable in thirty-four  (34) equal monthly  installments  commencing  January 2,
2003. In addition,  if CURA's  EBITDA (based upon the original  business of CURA
that was acquired by the Registrant) equals or exceeds $3,000,000 for the period
of July 1,  2002,  to June 30,  2003,  then the  Shareholders  shall  receive an
additional number of the Registrant's shares equal to $1,000,000, divided by the
average closing sale price of the Registrant's  common stock for the thirty (30)
days prior to delivery of those shares.

The Change of Management

Effective  August 7, 2002,  as  reported in the  Registrant's  Form 8-K filed on
August  16 and  pursuant  to the  Written  Consent  to  Action  by the  Board of
Directors  and a  Majority  of  the  Stockholders,  the  Registrant's  Board  of
Directors  was expanded  from three to five  members.  William  Kewan and Judson
Wagenseller, two of the Registrant's three interim directors,  resigned and were
replaced with O. Ray McCartha,  Thomas  Cunningham,  Anthony R. Russo,  and Ivan
Dobrin.  Scott Zoppoth,  the third interim director,  was elected as a full term
director. Each of the Registrant's directors was elected to serve until the next
annual meeting of the Registrant's  stockholders or until respective  successors
are duly elected.

On the same day,  and  pursuant to a separate  Written  Consent to Action by the
Registrant's Board of Directors,  the following action was taken: (i) Anthony R.
Russo was  elected  as the  Registrant's  Chief  Executive  and Chief  Financial
Officer;  (ii) Danny L. Pixler was elected as the  Registrant's  Chief Operating
Officer and as President to replace William Kewan;  (iii) Peter  Campitiello was
elected as the Registrant's Secretary to replace Scott Zopoth; and Michele Brown
was elected as the Registrant's  Assistant  Secretary.  Each of the Registrant's
new  officers  was  elected  to serve  until  the  next  annual  meeting  of the
Registrant's  Board of Directors or until their  respective  successors are duly
elected.

On November 20, 2002, Thomas Cunningham resigned as a director of the Registrant
and was replaced by Danny L. Pixler.

Sale of Preferred Stock - Series A

From  September 30, 2002 through  December 31, 2002,  pursuant to a Subscription
Agreement,  the  Registrant  sold  1,577.6 of its Series A  Preferred  Stock for
$1,000,000 of cash and  $18,720,000 of additional  consideration  in the form of
irrevocable  letters  of credit,  to  Brentwood  Capital  Corp.,  an  affiliated
privately owned New York business development company ("Brentwood") and Midwest.
Pursuant  to the terms of the  Subscription  Agreement  irrevocable  letters  of
credit in favor of an  unrelated  third party  insurer  (the  "Insurer")  of the
Registrant  issued by a member bank of the United States Federal  Reserve System
that are  accepted  by the  Insurer in lieu of cash,  are  deemed  consideration
acceptable to the Registrant.  The Subscription  Agreement further provides that
should the issuing  financial  institution of any letter of credit  presented by
Midwest  fail to  automatically  renew a letter of credit,  Midwest must replace
such  letter  of  credit  with  one  equally  acceptable  to CSRV  or with  cash
forthwith, for as long a period as the Registrant requires. In consideration for
the cash and additional consideration, the Registrant agreed to issue to Midwest
and Brentwood an aggregate of 1,497.6 and 80 shares of the Registrant's Series A
Preferred  Stock,  $.001  par  value  per  share,  respectively  (the  "Series A
Shares").


The following is a summary of the principal rights and preferences of the Series
A Shares:

1.   Voting: The Series A Shares, which vote together as a single class with the
     shares of the  Registrant's  common stock on all  matters,  are entitled to
     10,000  votes for each  share of Series A held by  Brentwood  and  Midwest.
     Accordingly, the Series A Shares are entitled to 15,776,000 votes;

2.   Liquidation:  Upon  any  liquidation,  dissolution  or  winding  up of  the
     Registrant,  whether voluntary or involuntary,  the holders of the Series A
     Shares  shall  be  entitled  to  a  priority  return  of  their  respective
     investment or reimbursement therefore, on a dollar for dollar basis.

3.   Dividend Provisions:

     (i)  Merger, Etc. In the event of any merger, consolidation, combination or
          other transaction in which shares of common stock are exchanged,  each
          Series A Share  will be  similarly  exchanged  in an amount  per share
          equal to an amount and type of  consideration  two times that entitled
          to be received per share of Common Stock.  The rights of the Shares as
          to  dividends  and  liquidation,  and  in the  event  of a  merger  or
          consolidation, are protected by anti-dilution provisions; and

     (ii) Preferential  Right.  So long as any Series A Shares are  outstanding,
          the  Registrant  shall not  declare,  pay or set apart for payment any
          dividend or make any distribution on any outstanding  shares of common
          stock or any other equity securities of the Registrant.

Adjustment of Purchase Price of Acquisition One

During November 2001, the Registrant  acquired all of the issued and outstanding
shares of APEO for 406,667  shares of preferred  stock (which were  subsequently
converted into 850,000 common shares),  $1,100,000  cash, and notes  aggregating
$4,200,000.  The transaction was accounted for as a reverse merger. On September
29, 2002, the Registrant and the selling stockholders of APEO agreed that due to
unforeseen changes in industry and economic conditions since the date of merger,
the original  agreement did not reflect the intent of the parties.  Accordingly,
the parties  cancelled  the  406,667  preferred  shares in exchange  for 850,000
common shares,  cancelled  $3,200,000 of the notes  payable,  and lengthened the
payment term of the remaining note balances by twelve months.

Prospective Acquisition Three - StaffAmerica, Inc.

On October 31, 2002, The Cura Group III, Inc., ("CURA III"), a subsidiary of the
Registrant, executed a Stock Purchase Agreement with BACE International, Inc., a
privately  owned  Delaware  corporation,  to  purchase  all  of the  issued  and
outstanding  shares of common  stock (the  "Shares") of Staff  America,  Inc., a
Delaware  corporation  licensed as a PEO in the state of North  Carolina and its
subsidiaries representing all of the PEO operations of BACE International,  Inc.
("Staff  America").  Staff America provides  professional  employee staffing and
personnel services to approximately 1,000 clients with 30,000 worksite employees
throughout  28 states.  The  acquisition  of Staff  America is  expected  to add
approximately $40,000,000 to the Registrants' revenues on an annual basis.

The  purchase  price for the  Shares  is to be  determined  by mutual  agreement
between  the  parties  upon  completion  of  the   Registrant's   due  diligence
investigation  of Staff  America,  CURA III and Staff  America  also  executed a
Management Agreement and Addendum (collectively,  the "Management Agreement") on
October 31, 2002.  Pursuant to the terms of the Management  Agreement,  CURA III
and senior  management  of Staff  America  agreed to co-manage  Staff  America's
customer accounts and business operations until the acquisition of Staff America
is completed  or the parties  agree not to  consummate  the  acquisition  or the
Management Agreement is terminated by CURA III.

At March 28,  2003,  the  Registrant  had  commenced  its due  diligence  effort
regarding Staff America and anticipated completing its valuation and purchase by
May 1, 2003.

Risk Factors

The following risks with respect to the  Registrant's  operations,  business and
financial   condition   should  be   carefully   considered.   These  risks  and
uncertainties  are not the only ones  facing  the  Registrant.  Other  risks and
uncertainties  that have not been  predicted or assessed by the  Registrant  may
also adversely  affect the  Registrant.  Some of the  information in this report
contains   forward-looking   statements  that  involve   substantial  risks  and
uncertainties.  These statements can be identified by forward-looking words such
as "may," "will," "expect,"  "anticipate,"  "believe," "intend," "estimate," and
"continue" or other similar words. Statements that contain these words should be
carefully read for the following reasons:

     -    the statements may disclose the Registrant's future expectations;

     -    the statements  may contain  projections  of the  Registrant's  future
          earnings or of the Registrant's financial condition; and

     -    the statements may state other "forward-looking" information.

The  Registrant's  Financial  Condition  May Be Affected by  Increases in Health
Insurance Premiums, Unemployment Taxes and Workers' Compensation Rates.

Health insurance premiums,  state unemployment taxes, and workers'  compensation
rates are in part determined by the Registrant's  claims experience and comprise
a  significant  portion of the  Registrant's  direct  costs.  If the  Registrant
experiences a large increase in claim activity,  the  Registrant's  unemployment
taxes, health insurance premiums or workers' compensation  insurance rates could
increase.  Although the Registrant employs internal and external risk management
procedures  in an  attempt  to manage  its  claims  incidence,  estimate  claims
expenses, and structure its benefits contracts to provide as much cost stability
as  possible,  the  Registrant  may not be able to  prevent  increases  in claim
activity,  accurately  estimate  its claims  expenses,  or pass the cost of such
increases on to its clients.  Since the Registrant's ability to incorporate such
increases  into the  service  fees it  charges  its  clients is  constrained  by
contractual  arrangements  with clients,  a delay could result in the Registrant
incurring  significant  expenses before such increases could be recouped through
service fees. As a result,  such increases could have a material  adverse effect
on the Registrant's financial condition or results of operations.

If the  Registrant  Is Not Able to Renew All of the  Insurance  Plans that Cover
Worksite Employees, its Business Would be Adversely Impacted.

The maintenance of health and workers'  compensation  insurance plans that cover
worksite  employees is a significant part of the Registrant's  business.  If the
Registrant were unable to secure such renewal  contracts,  its business would be
adversely affected.  The current health and workers' compensation  contracts are
provided by vendors with whom the Registrant has an established relationship and
on terms that the  Registrant  believes to be  favorable.  While the  Registrant
believes that renewal  contracts  could be secured on competitive  terms without
causing  significant  disruption to its  business,  there can be no assurance in
this regard.

Significant  Growth Through  Acquisitions  May Adversely Affect the Registrant's
Management and Operating Systems.

The Registrant has completed two significant  acquisitions  during the two years
ended  December  31,  2002,  and may  continue to pursue a strategy of acquiring
compatible  businesses in the future. The Registrant's growth places significant
demands on the  Registrant's  management,  operations and  resources,  including
working capital. If the Registrant is not able to effectively manage its growth,
its  business  and  operations  will be  materially  harmed.  To  manage  growth
effectively,  the  Registrant  will be  required  to  continue  to  improve  its
operational, financial and managerial systems, procedures and controls, and hire
and train new employees  while  managing its current  operations  and employees.
While the Registrant's cash flow from operations has been sufficient to fund the
expansion of its  operations to date,  there can be no assurance  that such cash
flow will continue to be sufficient in the future.

The Registrant's  Business May be Adversely Affected Due to Economic  Conditions
in Specific Geographic Markets.

While  the  Registrant's  business  serves  multiple  industry  segments  in  26
different states,  the majority of the Registrant's  revenues are derived within
Florida, New Jersey and Pennsylvania.  Although the Registrant believes that its
industry  segment  diversification  strategy tends to mitigate the effects of an
economic downturn within one or more of its major geographic markets,  there can
be no  assurance  that the  Registrant  will be able to  reproduce  the  revenue
growth, industry diversification, and operating results that it has historically
experienced in Florida, New Jersey and Pennsylvania in other markets.

If  Government  Regulations  Regarding  PEOs  Are  Implemented,  or  if  Current
Regulations Are Changed, the Registrant's Business Could be Harmed.

The Registrant's  operations are affected by numerous  federal,  state and local
laws and regulations  relating to labor, tax, insurance and employment  matters.
By entering into an employment  relationship  with  employees who work at client
locations,  the  Registrant  assumes  obligations  and  responsibilities  of  an
employer under these laws. Uncertainties arising under the Internal Revenue Code
of 1986, include, but are not limited to, the qualified tax status and favorable
tax  status of  certain  benefit  plans  provided  by the  Registrant  and other
alternative  employers.  There can be no assurance that the  Registrant  will be
able to  comply  with  any  such  regulations,  which  may be  imposed  upon the
Registrant  now or in the future.  In addition,  there can be no assurance  that
existing  laws  and  regulations  which  are  not  currently  applicable  to the
Registrant  will not be  interpreted  more broadly in the future to apply to the
Registrant's  existing  activities or that new laws and regulations  will not be
enacted with respect to the  Registrant's  activities.  Either of these  changes
could have a material  adverse effect on the  Registrant's  business,  financial
condition, results of operations and liquidity.

Health Care or Workers'  Compensation  Reform Could Impose Unexpected Burdens on
the Registrant's Ability to Conduct its Business.

Regulation  in the health care and  workers'  compensation  fields  continues to
evolve, and the Registrant cannot predict what additional government regulations
affecting the Registrant's business may be adopted in the future. Changes in any
of  these  laws  or  regulations  may  adversely   impact  the  demand  for  the
Registrant's  services,  require  that the  Registrant  develop  new or modified
services to meet the demands of the marketplace,  or require that the Registrant
modify the fees that the  Registrant  charge for its services.  Any such changes
may adversely impact the Registrant's competitiveness and financial condition.

The  Registrant  Bears the Risk of Nonpayment  from its Clients and the Possible
Effects of Bankruptcy Filings by Clients.

The Registrant may be obligated,  as an employer,  to pay the gross salaries and
wages of the client's  worksite  employees and the related  employment taxes and
workers'  compensation  costs,  whether or not the Registrant's  client pays the
Registrant  on a  timely  basis,  or at  all.  A  significant  increase  in  the
Registrant's  uncollected account receivables may have a material adverse effect
on the Registrant's  earnings and financial  condition.  Although the Registrant
believes that its client  service  agreements  should be terminable by it once a
client enters bankruptcy,  there is a risk that a bankruptcy court may not agree
and would  require  the  Registrant  to continue  to perform  services  for such
client,  thereby  increasing  the risk  that the  Registrant  would be unable to
collect  funds  from the  client.  Therefore,  the filing  for  bankruptcy  by a
significant  client, or a number of clients,  may have a material adverse effect
upon the Registrant's financial condition.

The  Registrant  May be Liable for the  Actions  of PEO  Worksite  Employees  or
Clients and the Registrant's  Insurance  Policies May Not be Sufficient to Cover
Such Liabilities.

The  Registrant's  PEO  client  services  agreement  establishes  a  contractual
division of responsibilities  between the Registrant and each client for various
human resource  matters,  including  compliance with and liability under various
governmental  laws and  regulations.  However,  the Registrant may be subject to
liability  for  violations  of these or other  laws  despite  these  contractual
provisions,  even if the Registrant does not participate in such violations.  As
an   employer,   the   Registrant   may  be  subject   to  a  wide   variety  of
employment-related   claims   such   injuries,   wrongful   death,   harassment,
discrimination, wage and hour violations and other matters.

Although the Registrant's  client  agreements  generally provide that the client
indemnify the Registrant for any liability  attributable to the client's failure
to comply with its contractual  obligations and to the  requirements  imposed by
law,  the  Registrant  may  not  be  able  to  collect  on  such  a  contractual
indemnification   claim,  and  thus  may  be  responsible  for  satisfying  such
liabilities.  Although the Registrant carries liability insurance, the insurance
the  Registrant  purchases  may  not  be  sufficient  to  cover  any  judgments,
settlements  or  costs  relating  to any  present  or  future  claims,  suits or
complaints.  In  addition,  sufficient  insurance  may not be  available  to the
Registrant in the future on  satisfactory  terms or at all. If the insurance the
Registrant  carries` is not  sufficient to cover any  judgments,  settlements or
costs  relating  to any  present  or future  claims,  suits or  complaints,  the
Registrant's business,  financial condition, results of operations and liquidity
could be materially adversely affected.

If the Registrant Is Unable to Renew or Replace Client Companies,  its Financial
Condition and Results of Operations will be Adversely Affected.

The Registrant's standard PEO client service agreement is subject to non-renewal
on 60 days  notice by either the  Registrant  or the  client.  Accordingly,  the
nature of the  client  service  agreement  makes the  Registrant  vulnerable  to
potential   cancellations  by  existing  clients,  which  could  materially  and
adversely affect the Registrant's financial condition and results of operations.
In addition,  the Registrant's  results of operations are dependent in part upon
the Registrant's  ability to retain or replace the Registrant's client companies
upon the termination or cancellation  of the client service  agreement.  Clients
may  determine to cancel their  relationship  with the  Registrant  for numerous
reasons,  including economic factors. It is possible that the number of contract
cancellations will increase in the future.

Since the  Registrant  Has Not Paid  Dividends  on its Common  Stock,  Investors
Cannot Expect  Dividend  Income from an Investment  in the  Registrant's  Common
Stock.

The  Registrant  has not  paid any  dividends  on its  common  stock  since  the
Registrant's  inception  and,  in  connection  with the rights  and  preferences
extended to the holders of the Series A Preferred  Shares sold by the Registrant
during 2002, dividends may not be declared on any of the Registrant's securities
while the Series A Preferred Shares are outstanding. Also, potential lenders may
prohibit the Registrant from paying dividends without their prior consent in the
future. Therefore,  holders of the Registrant's common stock may not receive any
dividends on their  investment  in the  Registrant  in the  foreseeable  future.
Earnings,  if any,  will be  retained  and used to finance the  development  and
expansion of the Registrant's business.

The Registrant Has Outstanding  Shares of Restricted Stock, Which If Sold in the
Open Market, May Adversely Affect its Stock Price.

Of the 8,447,811 shares  outstanding as of February 28, 2003, the Registrant has
outstanding  5,956,666 shares,  which may be deemed  "restricted  stock." All of
these "restricted shares" are presently eligible for resale under Rule 144 or in
connection with  registration  statements that may be filed in the future by the
Registrant to allow for the resale of the securities.  These  restricted  shares
include  the  shares  owned  by the  former  stockholders  of APEO  and Cura who
acquired their shares in connection  with the  Registrant's  acquisition of APEO
and Cura.  Possible  or actual  sales of the  Registrant's  common  stock by its
present  shareholders  under  Rule  144 or  registration  statements  may have a
depressing  effect on the  price of the  Registrant's  common  stock in the open
market.

The Registrant Has Issued and May Continue to Issue  Preferred Stock with Rights
Senior to its  Common  Stock,  Which May  Adversely  Impact the Voting and Other
Rights of the Holders of the Registrant's Common Stock.

The Registrant's  certificate of incorporation authorizes the issuance of "blank
check" preferred stock with such designations,  rights and preferences as may be
determined  from time to time by the  Registrant's  board of  directors up to an
aggregate of 5,000,000  shares.  In connection with its acquisition of APEO, and
the  subsequent  financing of its risk  management  program,  the Registrant has
issued 1,100 Series B and 1,597.6 Series A preferred shares, leaving 4,997,302.4
preferred shares available for issuance.  The Registrant's board of directors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation,  conversion,  voting or other rights,  which would adversely affect
the voting  power or other  rights of the  holders of its common  stock.  In the
event of  issuance,  the  preferred  stock  could  be  utilized,  under  certain
circumstances,  as a method of discouraging,  delaying or preventing a change in
control of the Registrant,  which could have the effect of discouraging bids for
the Registrant's  common stock thereby  preventing  stockholders  from receiving
maximum value for their shares. Although the Registrant has no present intention
to issue any additional  shares of its preferred stock in order to discourage or
delay a change of control of the  Registrant,  the  Registrant  is free to issue
additional preferred stock in connection with its future capital requirements.

The Registrant has a Limited Operating History

Although  incorporated in 1995, the Registrant's present management only assumed
operational   control  in  October  2001,  and  did  not  consummate  its  first
acquisition  until November 21, 2001,  when it acquired APEO and entered the PEO
industry.  Accordingly,  the  Registrant  may be  deemed  to have only a limited
operating  history in its intended  field of endeavor.  Although the  Registrant
acquired  another  PEO  in  July  2002,  and  contracted,   subject  to  certain
conditions,  to acquire a third in October 2002,  there can be no assurance that
the  Registrant  will be  successful  in building  its PEO  business or that its
acquisition driven business model will prove to be successful.

The Registrant has Material Future Financing Needs

The  Registrant's  business  model  requires  additional  financing  in order to
consummate  acquisitions  of existing PEOs and to fund its workers  compensation
insurance  needs.  No assurance can be given that  additional  financing will be
available to the  Registrant on acceptable  terms,  if at all. If the Registrant
raises  additional  funds  by  issuing  additional  equity  securities,  further
dilution to existing equity holders will result.  If adequate  additional  funds
are not available,  the Registrant may be required to curtail  significantly its
long-term business  objectives and its results from operations may be materially
and adversely affected.

The  Registrant is  Economically  Dependent  Upon Its Principal and  Controlling
Stockholder.

Midwest  Merger  Management,  LLC,  is  a  Kentucky  limited  liability  company
("Midwest") that is the record and beneficial owner of 24.2% of the Registrant's
presently  issued and outstanding  common stock.  Midwest is also the record and
beneficial  owner of 1,100 shares of the  Registrant's  Series B Preferred Stock
that have the voting  rights of  11,000,000  shares of the  Registrant's  common
stock; and 1,497.6 shares of the Registrant's Series A Preferred Stock that have
the  voting  rights of  14,976,000  shares  of the  Registrant's  common  stock.
Accordingly,  Midwest may be deemed to own and control 80% of the Registrant. In
addition, and pursuant to separate agreements, Midwest is the sole administrator
of the  Registrant's  risk  management  program,  as well as  arranging  for the
letters of credit upon which the  Registrant  relies in managing  its  workplace
risk. The loss of either or both of the services performed by Midwest would have
a material adverse effect upon the Registrant's ability to continue in business.
In  the  opinion  of  management,   the  Registrant  would  experience  material
difficulty  in replacing  Midwest in either or both of the functions it performs
for or on behalf of the Registrant.

Safe Harbor Statement.

Certain  statements  contained herein  constitute  "forward-looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995. The
Registrant  desires to avail itself of certain "safe  harbor"  provisions of the
1995 Reform Act and is therefore  including this special note to enable it to do
so.  Forward-looking  statements  included in this Report on Form 10-KSB involve
known and unknown risks, uncertainties,  and other factors which could cause the
Registrant's   actual   results,   performance   (financial   or  operating)  or
achievements  to differ from the  Registrant's  best estimate of future results,
performance  (financial or operating)  or  achievements  expressed or implied by
such  forward-looking  statements.  These risks include, but are not limited to,
risks  related  to  recently   consummated   acquisitions   as  well  as  future
acquisitions,  the Registrant's ability to increase its revenues and produce net
income,  effects of  competition  and  technological  changes,  risks related to
exposure to personal  injury and workers'  compensation  claims,  risks that the
Registrant's  insurers may not provide adequate coverage,  risks associated with
compliance with government regulations such as ERISA, state and local employment
regulations and dependence upon key personnel.

The Registrant  believes it is important to communicate its  expectations to its
investors.  There may be events in the future,  however,  that the Registrant is
not able to accurately predict or over which it has no control. The risk factors
listed  below,  as well as any  cautionary  language  in  this  report,  provide
examples  of risks,  uncertainties  and events  that may cause the  Registrant's
actual results to differ  materially  from the  expectations it described in the
Registrant's  forward-looking  statements.  Before any investment is made in the
Registrant's  securities,  awareness  that the  occurrence  of any of the events
described in the risk factors below,  elsewhere in this report, and other events
that the Registrant has not predicted or assessed could have a material  adverse
effect on the Registrant's  earnings,  financial condition or business.  In such
case, the price of the  Registrant's  securities  could decline and any investor
may lose all or part of the investor's investment.

                        NARRATIVE DESCRIPTION OF BUSINESS

Overview of Client Services

The Registrant offers a broad range of services including payroll processing and
reporting, payroll tax remittance and reporting, human resources administration,
employee benefit services administration,  risk management, workers compensation
services, as well as optional retirement and health care programs.

To begin the relationship with a client, the Registrant  requires all clients to
enter into the Shared Employment  Agreement  ("SEA").  The SEA is for an initial
term of one-year  subject to  termination  by the  Registrant or the client upon
thirty  days  written  notice,  and  subject  to  immediate  termination  by the
Registrant for non-payment by the client for payroll services, fees or taxes. In
some  cases,  the  Registrant  may  require  the  owners  of a client  to either
personally  guarantee  the  client's  obligation  under the SEA,  or  maintain a
security deposit with the Registrant.

The   Registrant   charges  a  service  fee  that  includes  a  mark-up  on  its
administrative  cost. The service fee is billed  concurrently  with the clients'
periodic invoice for gross payroll,  payroll tax, workers compensation  coverage
and cost of benefits. The client's portion of health and retirement benefit plan
costs is charged separately and is not included in the weekly fee. If the client
has requested additional  consulting on specific matters not covered by the SEA,
that charge would be added as a separately  invoiced item. The fee is determined
by and between the Registrant and the client on a client by client basis and the
components  of the pricing  include:  number of  work-site  employees,  workers'
compensation risk and historical losses of the client,  credit checks,  industry
type, extent of services provided and gross profit impact.

The  SEA  also  establishes  the  Registrant's  responsibility  to  include  the
"business of employment," by  establishing an employment  relationship  with the
work-site employees. Thereby, the client is provided with the manpower, time and
other  resources  necessary to better  manage the  "business of  business."  The
Registrant assumes the responsibility of personnel administration, liability for
payment  of wages and their  related  tax  payments,  compliance  with rules and
regulations  governing  the reporting as well as the filing of state and federal
payroll  tax returns and  providing  the  administration  of  benefits,  workers
compensation compliance and unemployment claims.

The  client  maintains  responsibility  for the  direction  and  control  of the
activities  at the  workplace,  equity-based  compensation  and for  severances,
bonuses  and  commissions,  although  payment  is  generally  made  through  the
Registrant.

As part of the SEA, the  Registrant  requires each of its clients to acknowledge
that  it  is  the  financially   responsible  party  in  those  aspects  of  the
relationship  where the  client  has  retained  exclusive  control.  The  client
promises to indemnify and hold harmless the Registrant  for claims,  damages and
costs  associated  with the following:  damage to client's  property by a leased
employee  under the  direction  and  control of the client;  claims  against the
Registrant  relating  to any  person  employed  by the  client  outside  the PEO
relationship;   regulatory   violations   associated   with  EEOC,   OSHA,  ADA,
discrimination  and other such laws,  where the client has exclusive  control of
the  workplace;  employee  benefit  matters  where the client has  provided  the
benefit outside the SEA;  misappropriation  of any employee funds by the client;
theft by a leased  employee  engaged  in the  client's  business  and  under the
direction  and  control of the  client  and  matters  pertaining  to  collective
bargaining agreements to which the Registrant is not a party.

Once the client is aboard  with an  executed  SEA,  the client is  assigned to a
`Client Response Specialist' or ("CRS") within the Registrants' customer service
department. The role of the CRS is to support the client as their first point of
contact  for  questions,   problem  resolution  and  to  facilitate  orders  for
non-recurring  services. The CRS undergoes extensive internal training regarding
the products and services of the client to manage the needs of the client.

With respect to those service requests that are beyond the scope of the CRS, the
CRS  will  forward  the  request  to  the  appropriate   individual  within  the
organization using a proprietary  software product named Curalogics.  Curalogics
is a powerful software platform that automates the assignment,  status reporting
and resolution of client service  requests.  The system assigns service requests
to the  appropriate  representative  of the  Registrant  with the  creation of a
service order ticket.  The CRS will follow the service ticket to insure that the
service order has been completed in a manner that is timely and  satisfactory to
the client.

The following PEO services are offered by the Registrant:

     o    Risk Management and Claims Management Services
     o    Payroll and Tax Administration Services
     o    Human Resources Services
     o    Employee Benefit Services

Risk Management and Claims Management Services

The  Registrant  offers risk  management  services  that are designed to control
incidence, frequency and severity of work related injuries.

The  Registrant's  worksite safety  department is highly  motivated to implement
innovative and effective  safety programs  designed to contain the incurrence of
and the cost of workers  compensation claims. The safety department is comprised
of safety specialists at the Registrants' Ft. Lauderdale general offices and its
Tampa and Cherry  Hill  service  centers.  The  Registrants'  safety  department
performs the following specific claim cost containment services:

     o    Customized return to work programs that fit the customer's worksite;

     o    Developing a customized safety manual;

     o    Assist the underwriting of prospective new business by identifying and
          quantifying  the risk  profile of the client  through an  analysis  of
          historical claim loss,  commitment to safety by client  management and
          performing on site inspections of worksite safety conditions;

     o    Jobsite  inspections  to  identify  the  risk  of loss  and/or  unsafe
          conditions with recommendations for improvements;

     o    Assisting  with OSHA, DOT and other  regulatory  compliance and record
          keeping; o Establishing a Drug-free workplace  programs;

     o    Developing restricted duty return to work programs;

     o    Providing  complimentary   consultation  regarding  property,  general
          liability and miscellaneous  risk exposure;

     o    Providing an ergonomics review where appropriate;

     o    Provide  workplace  safety training to client  management and worksite
          employees with emphasis on incentive based safety rewards.

The claims management  department  performs key functions to control the cost of
incurred claims.  The claims  department is located in the Tampa service center.
Plans are  underway at the Tampa data  center to  implement  the Prognos  claims
management software platform.  Prognos is designed to automate the entire claims
process  from the first  report of injury  through  final  closure of the claim.
Prognos is a recognized leader in claims management software capable to meet the
full needs of a large  organization.  The system is  scheduled  to be online for
claims  processing  May 1, 2003 and will  efficiently  facilitate  the following
functions:

     o    Investigating accidents;

     o    Tracking  and  reporting of client  claims  experience  to  facilitate
          corrective measures of existing worksite safety programs if necessary.

     o    Review billing and statutory limitations for medical claims to prevent
          overpayment to providers;

     o    Assure  that  injured   employees   receive   appropriate  and  timely
          treatment;

     o    Follow-up with doctors and injured employees;

     o    Reviewing losses and offering recommendations to prevent reoccurrence;

     o    Post accident drug testing.

The  comprehensive  approach  of the  risk  management  department  through  its
underwriting process of new business,  proactive worksite safety engineering and
active claims management ensures that costs related to the Registrants' workers'
compensation program are managed and minimized.

Payroll and Tax Administration Services

The Registrant  handles the entire payroll  process for the worksite  employees.
The Registrant is centralizing  the processing of payroll to the Ft.  Lauderdale
service center to maximize  productivity.  The Ft. Lauderdale payroll center has
current  processing  capacity  of 60,000  pay checks  per week.  The  Registrant
employs the `ScorPEO'  payroll  system for  processing.  The ScorPEO system is a
leading  payroll  software  designed  specifically  to meet the needs of the PEO
industry.

The primary strategic objective of payroll delivery to the client is to maximize
the velocity of the payroll process. To achieve maximum velocity, the Registrant
offers and encourages clients to submit payroll data via electronic transmission
to  the  Ft.   Lauderdale   center.   Clients   can   utilize   one  of  several
technology-based  tools such as spreadsheet  interface,  time clock import, file
transfer and web based entry. These methods offer several advantages to both the
client and Registrant over the traditional  `fax in'/ manual  keystroke entry of
payroll.  Electronic  transmission greatly reduces the processing time dedicated
to the payroll and  eliminates  most if not all errors  related to manual entry.
The strategy  increases the satisfaction of the payroll customer by knowing that
their payroll is delivered quickly and accurately.  The Registrant benefits from
reduced processing time and reduced post payroll error correction.

To deliver web based payroll processing, the Registrant offers a ScorPEO.Web, an
Internet  payroll  delivery  platform.  ScorPEO  Web allows  customers  to enter
payroll and print reports via the Internet. To access ScorPEO Web, customers log
on to the Registrants  website,  CuraGroup.com.  Once at the website,  customers
enter into a client only password  protected portion of the site and gain access
their customized web portal for payroll processing.

As a part of the  payroll  service,  the  Registrant  delivers  to the  client a
complete  payroll tax deposit and filing service.  Functionally,  the Registrant
collects  the full amount of payroll  taxes from the client  with each  invoice.
Once  collected,  the payroll  taxes are  transferred  by the  Registrant to Pay
Systems of America,  a nationally  recognized third party payroll tax processor.
Federal,  state and local  payroll  taxes are  remitted  by Pay Systems to their
respective government  authority,  and payroll tax returns are then prepared and
filed.

Additional  services  offered  by the  payroll  department  include:  employment
verifications,  employee benefits reports, direct deposit,  maintaining vacation
or sick pay accruals,  providing payroll reports such as labor  distribution and
overtime reports, workers compensation reporting,  unemployment claim processing
and overall maintenance of payroll records.

Human Resources Services

The Registrant handles many human resource (`HR') functions for the client as it
relates to  unemployment  matters,  personnel  matters and  compliance  with the
ever-changing  federal and state laws. HR  representatives of the client perform
and process  requests for HR services on the powerful  ScorPEO  human  resources
platform.

The  Registrant  provides  guidance  on  employment  related  matters,  such  as
substance abuse awareness, sexual harassment awareness, employment law training,
wage and hour compliance,  employment  discrimination awareness and civil rights
awareness.  Also  provided  by  the  Registrant's  professional  human  resource
managers is the  administration of human resources records and the management of
unemployment claims.

At the request of the client,  the  Registrant  provides  customized  consulting
services  on  such  focused  issues  as  workplace  safety,  non-discrimination,
employer liability and payroll reporting compliance matters. Additional services
offered on a request basis include:  customizing  employee handbooks specific to
the client, creating job descriptions,  performing background checks, screening,
recruiting  and hiring new employees,  providing  performance  appraisal  forms,
recommending  out-placement  services,  offering  compensation,  wage and salary
guidance,  drug testing,  providing  procedures  for discipline and discharge of
employees and  assisting  clients with employee  relations,  from  counseling to
grievance administration.

The Registrant's  unemployment  services department processes state unemployment
claims as they relate to the work-site employees.  The Registrant,  from time to
time,  determines  unemployment  claims to be unwarranted.  In those cases,  the
Registrant  will file the  necessary  protest as allowed in the  various  states
regulatory procedures.

Employee Benefit Services

The Registrant is able to offer affordable employee benefits programs that would
be otherwise  unavailable to the client and work-site employees.  The Registrant
is able to provide this due to its  collective  size,  which  provides a certain
level of buying power that the clients cannot achieve themselves.

Additional  products offered by the Registrant's  benefits  department  include:
dental insurance,  short and long-term  disability  insurance,  life insurances,
accidental death and dismemberment insurance, group medical and health insurance
options such as PPO,  POS and HMO health  plans,  prescription  card and vision,
employee  assistance plans, job counseling and educational  benefits,  and group
rates for legal services.

The  benefits  department  offers  to  its  clients  a  comprehensive   benefits
administration service on behalf of benefit plans sponsored by the Registrant or
the client. As administrators,  benefits representatives maintain all aspects of
the clients' benefit plans on the ScorPEO platform. Benefits specialists located
at the  Registrants'  three service centers  perform the following  benefit plan
services:

     o    Benefits enrollments and terminations on behalf of worksite employees;

     o    Monthly reconciliation and payment of benefit provider invoices;

     o    Cobra administration.

The Registrant offers a multiple employer 401(k) deferred  compensation plan. As
a multiple employer plan, the Registrant's work-site employees can customize the
plan  characteristics  such  as  rules  of  eligibility  and  employer  matching
contributions to suit their needs.  Dependent care spending account and flexible
care spending accounts, along with Section 125 cafeteria plans, are also offered
to employees.  There may be certain risks associated with the  administration of
client-based  plans that the Registrant  considers to be in the normal course of
business and not a material  exposure to its operations.  Each individual  small
business's cost of establishing and  administering  this range of plans would be
prohibitive.  However,  due to  economies  of scale,  PEOs can sponsor and offer
these plans at an affordable cost.

Participation  in any  Registrant  benefit plan is based on  eligibility  of the
employee.  The  Registrant  is the plan  sponsor,  and as such  pays  costs  and
premiums, negotiates the plans, maintains the plans in accordance with local and
federal guidelines and is the interface for enrolled employees.

Alternative Products and Services

The Registrant is consistently  searching for new  opportunities and services to
offer to its client companies and worksite employees.  These additional services
enhance  the  employer/employee  relationship  and  provide  additional  revenue
sources for the Registrant.  Current and future additional products and services
include:  web banking services,  checking  accounts,  savings  accounts,  credit
cards, payroll secured credit cards,  electronic bill payments,  consumer loans,
residential   lending,   insurance  services,   auto/home  and  life  insurance,
investment services,  company store purchasing power concept,  payroll deduction
services,  payroll  lay-away  plans,  and payroll  deduction  purchases for poor
credit members.

Sales and Marketing

The  Registrant  markets  its  services  through an  internal  sales force and a
commission-based  sales force located throughout the United States. The internal
sales group is comprised of approximately 15 persons throughout the Registrant's
three service centers.  The  commission-based  sales associates  include several
insurance  agencies and several PEO consulting firms, which provide leads to the
Registrant on a commission  basis. At this time, the Registrant does not require
its various commissioned sales associates to be exclusive agents,  although some
of the larger producers have signed exclusivity  agreements with the Registrant.
In addition,  the Registrant initiates oversight and marketing meetings with all
of its commission-based associates at its headquarters several times each year.

Any leads  generated  from the  Registrant's  sales  efforts are then  qualified
through the sales call process.  Those calls that are successful  progress to an
underwriting process that includes the following key items about the prospect:

     o    Workers  compensation  claims loss history for the  previous  five (5)
          years;
     o    Credit evaluation;
     o    Payroll and jobsite functional analysis including workers compensation
          class code analysis and current workers compensation declaration page;
     o    Benefits under consideration by the client;
     o    Proposed client pricing.

Once the prospect has met the underwriting  criteria,  the director of sales and
marketing will approve the preparation of a Shared Employment Agreement (`SEA').
Final  approval  of the client is  required  by the  President  or the  Managing
Director  of  Insurance  Services  to  confirm  that  the  client  has  met  the
Registrants'  client selection  guidelines.  Once the final approval is granted,
the SEA is delivered to the customer for execution.

E-Commerce and Advertising

The Registrant  anticipates expanding the use of its technology in the very near
future.  As a  marketing  tool,  the  Registrant  plans  to use  its  web  site,
CuraGroup.com,  to be a showcase  of the  prowess of the  Registrant's  software
systems,  as well as the ability to deliver payroll and human resource  services
directly  to  a  customer's  desktop.  At  CuraGroup.com,  customers  and  their
employees can access employment training courses, make benefit changes,  perform
payroll  processing as well as gain access to employer  forms and  publications.
The Registrant's near term plans are to implement  additional  on-line services,
product and services purchase capacity with a browser of integrated services

The Registrant does not engage in significant advertising activities.

Information Technology

The Registrant has invested in the development and maintenance of its integrated
and comprehensive software system with its high-end hardware and facilities. The
Tampa,  FL service center with its state of the art data facility  serves as the
hosting site for the Registrant's office and production  software programs.  The
software  applications  are delivered  from Tampa to the other  locations of the
organization  via `Terminal  Server'  technology  over a wide area network.  The
Tampa data facility features fire control systems,  redundant power supplies and
temperature  controls to maintain overall system  integrity.  The investment has
provided  the  Registrant  with a hosted  information/software  delivery  system
capable servicing its current needs as well as future expansion.

The  Registrant  recently  upgraded the client  server  hardware for the ScorPEO
system to dual Dell Poweredge 8450 client servers with four (4) Pentium III Xeon
microprocessors  each (upgradeable to 8  microprocessors  each). Also added were
Dell  Powervault 220S disk storage array  enclosures  that hold 14,  73-gigabyte
(`GB')  disk  drives  for a total  of 1022 GB of  disk  storage.  This  hardware
configuration  can scale to meet the growth  plans of the  Registrant  by safely
processing in excess of 500,000 paychecks per month.

The  Registrant  has selected  Great Plains  Edition on MS SQL as the  financial
information  system.  Great Plains will provide the Registrant  with a scaleable
and  technologically  sophisticated  accounting and financial reporting platform
that  integrates  well  to  ScorPEO.  The  scheduled  completion  date  for  the
integration of the Great Plains system which replaces the  Registrant's  current
Platinum G/L software is July 1, 2003.

The PEO Industry

The PEO  industry  has grown  significantly  since its start in the late 1980's,
with the last decade showing  significant  growth due to the number of small and
medium size client businesses purchasing the diverse services offered by the PEO
industry.

Over the past 18 months,  the industry has seen a  significant  evolution of the
manner in which a  successful  PEO conducts  its  business.  The PEO of 2003 and
beyond  will  become  the  provider  of value  added  services  rather  than the
traditional wholesaler of inexpensive insurance products. Today's successful PEO
is  a  marketplace   of  services   related  to  human   resource  and  benefits
administration, employer regulatory compliance and risk management.

The Registrant believes the growth trend of the industry will continue.  Several
key factors it believes are driving the demand for PEO growth include:

     o    The  increasing  need for  companies  to attract  and retain  superior
          workers by providing a greater amount of employee  benefits  products,
          services and insurance at affordable prices.

     o    The increasing  complexity of state and federal  taxation  filings and
          regulatory issues.

     o    The  increased  recognition  and  acceptance  of PEO's  by  regulatory
          authorities.

     o    The increasing expense associated with employee  litigation and safety
          in the workplace.

     o    The increasing  technical  expertise required to manage human resource
          departments.

The Small  Business  Administration  estimates  there  are  nearly  six  million
businesses  with fewer than 100  employees.  These small to mid-size  businesses
employ more than 52 million  workers  with an aggregate  annual  payroll of more
than $1.1 trillion.  As PEOs are currently  serving just 2% of that market,  the
growth  potential for PEO services appears  significant.  With an average annual
growth rate of 20%,  more  business  owners are  turning to the PEO  industry to
provide them with the tools necessary to increase productivity and profits.

The  industry  has  benefited  from The  National  Association  of  Professional
Employer  Organizations  (NAPEO),  which was  formed  in 1985 and is the  oldest
association  representing the interests of professional employer  organizations.
Serving  more than two  million  employees,  this  organization  has  helped set
standards for fiscal responsibility of its member PEO's.

Competition

According to NAPEO,  the PEO industry  currently  has about 800  companies  with
between 2-3 million worksite employees with annual payrolls of $43 billion.  The
Registrant  believes  that there are several  large  national  PEO's with annual
client  payrolls  exceeding $500 million.  The Registrant  considers its primary
competition  to be national and regional PEO  providers,  independent  insurance
agencies and the human resource departments of potential customers.

At an estimated 2% market penetration,  the PEO industry overall has significant
room for all participants to advance.  The Registrant does experience some price
and product  competition  from other  national and regional PEO's in the Florida
marketplace  where the PEO  penetration  is  greater.  National  PEO's  that are
considered the Registrant's competition include Administaff,  Gevity HR, ADP and
TeamStaff.

In other  areas of the  country  where  the PEO  penetration  is  closer  to the
industry  average,  the Registrant has a far lower incidence of competition with
other companies of its kind. In these areas, the sales and marketing  department
competes with traditional human resource departments of potential customers.  In
these  instances,  the Registrant  must educate and convince the prospect of the
inherent benefits of the PEO relationship.

Since  the  Registrant  is  a  provider  of  workers   compensation   insurance,
competition  also comes in the form of  independent  insurance  agents.  In some
cases,  sales prospects have a valued  relationship  with their insurance agent.
The PEO  relationship  would  represent a  discontinuance  of service with their
agent for purposes of workers compensation  coverage. In cases such as these the
Registrant must convince the sales prospect that value added services of the PEO
relationship would represent a sound business decision.

Insurance Vendor Relationships

Insurance  coverage's and programs play a pivotal role in the PEO industry.  The
Registrant  provides  benefits  and  coverage to its  clients and its  work-site
employees  under various  arrangements  and among several key vendors.  The most
significant insurance relationships are as follows:

Workers Compensation Insurance

Pursuant to a Risk  Management  Agreement  dated January 1, 2002, the Registrant
engaged Midwest to manage the cost of the Registrant's  workplace accident risk.
As such, the Registrant,  with Midwest's  assistance,  carries several insurance
policies in connection  with the management of worksite  risk. The  Registrant's
current  coverage in  non-monopolistic  states has  primarily  been with the CNA
Group of Companies  for several  years.  The CNA coverage  includes a $1,000,000
deductible  per  occurrence,  and the  Registrant  has  accordingly  invested in
several key persons and systems to monitor and  mitigate  its  participation  in
this risk. In addition, the Registrant  participates in the workers compensation
funds of the States of Ohio, West Virginia,  Washington, and of the Commonwealth
of Puerto Rico.

Health Insurance

The  Registrant  offers HMO and PPO health  insurance  products to its  worksite
employees from insurance carriers including Physicians Health Choice (`PHS') and
Multiplan.

Prior to December  31,  2001,  APEO  sponsored  a  self-insured  health  program
applicable  to employees in those  states where such a plan could  operate.  The
plan, named America's  PEO/OmniStaff Health Benefit Plan had a limited per-claim
monetary  exposure,  with costs  exceeding the loss cap insured with a policy of
re-insurance  issued by ING Employee  Benefits.  Claims were  processed  through
Consolidated  Claims,  Inc. and Healthchoice,  Inc., which jointly served as TPA
and claims  administrator  for the program.  The plan was  terminated  effective
January 1, 2002,  and replaced  with  first-dollar  insurance  coverage  through
Physicians' Health Choice (PHS) and Blue Cross/Blue Shield.

At December 31,  2002,  dental  benefits  were  available  to employees  through
ReliaStar  Life  Insurance  Company.  The plan offers  choice  between a regular
dental plan and one providing orthodonture  coverage.  This is a voluntary plan,
and employees may enroll without  participating in APEO's offered health benefit
plan.

Market Segments and Customer Selection

The  Registrant  is oriented to becoming a full service PEO focused on providing
value added  employer  and employee  services to the  customer.  The  Registrant
believes  that this  strategy  provides a  long-term  approach  to success  with
controlled risk. With the recent acquisition of CURA, the Registrant has added a
complement of human resource and benefits  administration services that were not
present  prior to the  acquisition.  The  addition of CURA has also  reduced the
dependence on the transportation industry, which has traditionally comprised 50%
of its revenues.  The Registrant is subject to downturns in economic  conditions
of  the  transportation,  services  and  construction  industries,  which  could
negatively impact operations.

Market Segments

The Registrant's client base by industry grouping for the year-ended December
31, 2002 is:

CATEGORY                              % OF CLIENT REVENUE PER INDUSTRY
-------------------------------------------------------------------------------
Transportation                                         30.3
Services (1)                                           13.6
Construction                                           13.2
Hospitality                                             9.5
Manufacturing                                           8.9
Retail                                                  5.9
Longshoreman                                            4.4
Professional                                            4.2
Agricultural                                            3.2
Healthcare                                              2.7
Other                                                   2.2
Warehousing                                             1.9
                                                      ------
                                                      100.0


(1)  Services  consist  primarily of businesses in the following:  Non-Emergency
     Medical, Building Maintenance,  Janitorial,  Plumbing, Tow Truck Operation,
     Driver Training Instruction, and Home Nursing.

Customer Selection

The  Registrant  typically  markets  its  service to  mid-size  businesses  with
work-site's  averaging  thirty nine (39)  employees.  The  Registrant  generally
avoids  marketing to clients with 5 work-site  employees or less. The Registrant
avoids  marketing to industries it feels have a high risk of injury,  including:
occupations  that  require  exterior  work  performed  in excess of two stories,
transportation  companies  that  specialize  in hazardous  materials,  amusement
parks, circuses, occupations that pose a significant occupational disease hazard
(such as asbestos  removal),  construction of dams or bridges,  firemen,  police
officers or armed security guards, and any occupation that requires working with
munitions, explosives,  fireworks, fuses, dynamite,  nitroglycerine or any other
product used in the construction of these devices.  The Registrant rejects sales
prospects  with  poor to  marginal  credit  and/or  high  incidence  of  workers
compensation claim count or losses.

The Registrant  reviews all of its clients on a weekly basis. The review process
includes noting workers compensation risk or loss activity,  the client's actual
gross profit compared to plan and the client's  payment  status.  In addition to
these standard reviews, the payroll and human resources  departments provide the
review  committee with details of any peculiar  problems that might pertain to a
client.

The Registrant  reviews  pricing on a regular basis and may increase or decrease
prices to a client from time to time,  based on the overall review of the client
and on the  business  model the  Registrant  has  established.  In  addition  to
possible increases or decreases in price, the Registrant may choose to terminate
the co-employer  relationship  if, in the regular  reviews of operations,  major
changes or problems  have become the norm or if the desired  gross profit margin
is in jeopardy.

The  Registrant  estimates  its  retention  since  inception  in 1997  has  been
approximately  90%. The Registrant has enjoyed this estimated high retention due
to its high level of service and controlled growth. A detailed "account-tracking
recap" is being  established  to keep  accurate  records  of new  customers  and
terminated or lost  customers,  as well as the reasons  therefore which include:
cost of service,  sale,  merger,  client business failure,  and competition from
other PEO's or business service firms.

Government  Regulation

Numerous federal and state laws and regulations  relating to employment matters,
benefit plans, tax payments and tax filings affect the Registrant's  operations.
By entering into a co-employer  relationship  with its clients,  the  Registrant
assumes  certain  obligations  and  responsibilities  as an employer under these
laws.  The  Registrant  relies  on the  guidance  of  outside  legal  and  other
professionals to remain in compliance with laws at the federal,  state and local
levels.

Various state  governments  have enacted laws to regulate the PEO industry.  The
Registrant  maintains a compliance  department to actively  review PEO licensing
and  registration  requirements  of each state within  which it  operates.  This
compliance department manages the following activities:

o    Prepare and file  applications for initial license or registration as a PEO
     to a new state that the Registrant wishes to operate.

o    Maintain  compliance with existing  regulatory  requirements  for states in
     which the Registrant has an active license or registration.

o    Prepare and file quarterly and/or annual reports as required.

The Registrant offers a multiple employer 401(k) deferred  compensation plan and
a multiple  employer  section 125 cafeteria  benefit plan.  Both plans have been
drafted to conform to all tax  qualification  provisions of the Internal Revenue
Code.  The Registrant is expecting to receive a favorable  determination  letter
from the IRS in the near term.

As a co-employer,  the Registrant  assumes  responsibility and liability for the
payment of federal and state employment taxes with respect to wages and salaries
paid to  worksite  employees.  There  are  essentially  three  types of  federal
employment tax obligations:  (i) withholding of income tax requirements governed
by Code Section 3401, et seq.;  (ii)  obligations  under FICA,  governed by Code
Section  3101,  et seq.;  and (iii)  obligations  under  FUTA,  governed by Code
Section 3301, et seq. Under these Code  sections,  employers have the obligation
to withhold and remit the employer portion and, where  applicable,  the employee
portion of these taxes. The Registrant assumes liability for the withholding and
remittance of state and local income tax withholding as well as the employer and
employee portion of state tax related unemployment and disability insurance.

Employment-related   regulatory   compliance   is  either   shared   jointly  or
individually by the Registrant and the client.  Joint  responsibility  is shared
for compliance with the Fair Labor Standards Act (FLSA), the Employee Retirement
Income  Security Act (ERISA),  the Family and Medical  Leave Act of 1993 (FMLA),
the Drug-Free Workplace Act and state unemployment insurance laws.

The  Registrant  assumes  responsibility  for compliance  with the  Consolidated
Omnibus  Budget  Reconciliation  Act  of  1986  (COBRA),  the  Health  Insurance
Portability and  Accountability Act (HIPAA),  state worker's  compensation laws,
the Federal Income  Contribution  Act (FICA),  the Federal  Unemployment Tax Act
(FUTA), all federal, state and local income tax withholding provisions.

The client assumes  responsibility  for compliance with the Occupational  Safety
and  Health  Act  (OSHA),   the  Americans  with  Disabilities  Act  (ADA),  the
Immigration  Reform and Control Act (IRCA), the Worker Adjustment and Retraining
Notification  Act  (WARN),  Title  VII  (Civil  Rights  Act of  1964),  the  Age
Discrimination in Employment Act (ADEA), certain Internal Revenue Code sections,
any professional licensing, government contracting, intellectual property rights
laws and laws regarding hazardous materials.

The Registrant  mandates a review of the many and  sometimes-complex  compliance
matters as is  applicable  with  Federal  and state  statutes  and  regulations.
Whether  or  not  a  state  has  licensing,  registration  or  other  compliance
requirements, the Registrant faces a number of other state and local regulations
that could  impact  its  operations.  The PEO  industry's  legal and  regulatory
foundation  is not codified in all 50 states.  Because of that,  the  Registrant
engages   outside   licensing   professionals   to  help  maintain  its  working
relationships with the state regulatory  authorities in states where it operates
as well as  keeping  the  Registrant  abreast  of the  on-going  changes  in the
licensing, registration and regulatory matters.

Worksite Employees

As of December 31, 2002,  the Registrant  served an estimated 824 clients,  each
with an average of approximately  39 employees,  for a total of 31,967 work-site
employees. The Registrant had oversight of approximately $542 million of payroll
and related costs,  throughout 34 states,  Puerto Rico and  Washington,  DC. The
Registrant operates three service centers, located in Ft. Lauderdale, FL; Tampa,
FL and Cherry Hill,  NJ each staffed with  personnel to perform  payroll,  human
resources, information processing, sales, service and general administration.

Internal Employees

As of December  31,  2002,  the  Registrant  had 146 direct  employees;  65 were
located at its Ft.  Lauderdale  general  offices,  38 were  located at its Tampa
service center,  39 were at the Cherry Hill service center, 3 were at the Orange
Park  (Jacksonville)  sales  office,  and 1 was at  the  Registrant's  New  York
headquarters.  None  of  the  Registrant's  direct  employees  is a  party  to a
collective bargaining agreement.  The Registrant believes its relationships with
its direct employees are good.

ITEM 2. DESCRIPTION OF PROPERTY

On June 27, 2002,  the Registrant  subleased  15,000 square feet of office space
from a non-affiliated  prime tenant pursuant to a sublease  expiring March 2008.
At the same  time  the  Registrant  purchased  all of the  furniture,  fixtures,
telephone system and equipment  (collectively  the  "Furniture")  located in its
office from the prime tenant in consideration for $350,000. On November 4, 2002,
the  Registrant  assigned  all of its right and  interest  under the sublease to
Brentwood with the understanding that the Registrant was to have access to up to
300 square feet of the available space and facilities in  consideration  for the
pro-rata   payment  of  monthly  rent.  In  addition  and  in  consideration  of
Brentwood's agreement to assume the cost therefore,  the Registrant assigned all
of its right and interest in the Equipment to Brentwood.

The  Registrant's  executive  office  space and  facilities  in New York City is
adequate for the purposes  for which they were  intended and provide  sufficient
capacity  to  accommodate  the  Registrant's  short-term  expansion  plans.  The
Registrant  maintains  other  offices  in  Tampa,  FL;  Cherry  Hill,  NJ;  Fort
Lauderdale, FL and Jacksonville, FL. The following is summary information on the
Registrant's offices:


Location                      Square Footage   Expiration Date   Renewal Option

477 Madison Ave., 12th Floor
NY, NY  10022                      300           3/27/08            None

5050 West Lemon St.
Tampa, FL 33609                 16,000            9/3/10            Ten years

200 Lake Dr. East - Suite 110
Cherry Hill, NJ 08002            8,906          11/19/05            Five years

5101 NW 21st Avenue - Suite 350
Ft. Lauderdale, FL 33309        11,235          10/15/03            Three years

1847 Wells Road - Suites 1A & 1B
Orange Park, FL 32073            1,800           01/31/0            Five years

The Registrant  also leases  postage  meters,  computer  equipment and software,
furniture,  copiers and telephone  equipment from various vendors at competitive
commercial lease rates.

ITEM 3.  LEGAL PROCEEDINGS

The Registrant  from time to time is party to certain  pending claims which have
arisen from the normal course of doing  business,  none of which, in the opinion
of the Registrant's management, is expected to have a material adverse effect on
the  consolidated  financial  position or the results of operations if adversely
resolved.

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

Neither  during the fourth  quarter of the fiscal year ended  December 31, 2002,
nor at any time since becoming a publicly  owned company in September  2000, did
the  Registrant  conduct  an Annual  Meeting  of its  stockholders  pursuant  to
definitive proxy materials under Regulation 14 A under the 34 Act, or otherwise.

                                     PART II

ITEM 5.  MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

(a) Market Information.

Since approximately November 1996, the Registrant's common stock, its only class
of trading  equity  securities,  has been traded on the NASD OTC Bulletin  Board
("OTCBB")  under the symbol "CSRV".  The following table sets forth the range of
high and low bid price  information for the common stock for each fiscal quarter
for the past  two  fiscal  years  as  reported  by the  OTCBB.  High and low bid
quotations  represent  prices  between  dealers  without  adjustment  for retail
mark-ups,  markdowns or commissions  and may not  necessarily  represent  actual
transactions.  There was no active  trading  market for the Common  Stock before
November 14, 2000.


                                                     HIGH BID         LOW BID
Year Ended December 31, 2002:

    Fourth Quarter                                    $1.01            $0.52
    Third Quarter                                      1.37             0.51
    Second Quarter                                     1.35             0.65
    First Quarter                                      1.80             0.38

Year Ended December 31, 2001:
    Fourth Quarter                                     0.40             0.03
    Third Quarter                                      0.16             0.04
    Second Quarter                                     0.25             0.12
    First Quarter                                      0.31             0.12


Since the Registrant's  shares began trading in the  over-the-counter  market on
the OTCBB, the prices for its shares have fluctuated  widely.  There may be many
factors that may explain these  variations.  The  Registrant  believes that such
factors include (a) the demand for its common stock, (b) the number of shares of
the  Registrant's  common stock available for sale, (c)  developments in the PEO
industry,  and (d) changes in the  performance  of the stock  market in general,
among others.

In recent  years,  the stock  market has  experienced  extreme  price and volume
fluctuations  that have had a  substantial  effect on the market prices for many
small  and  emerging  growth  companies  such as the  Registrant,  which  may be
unrelated  to  the  operating  performances  of  the  specific  companies.  Some
companies  that have  experienced  volatility in the market place of their stock
have been the objects of securities class action  litigation.  If the Registrant
became the object of  securities  class  action  litigation,  it could result in
substantial  costs and a diversion of its  management's  attention and resources
and have an adverse effect on the Registrant's ability to implement its business
plan.  In  addition,  holders of shares of the  Registrant's  common stock could
suffer substantial losses as a result of fluctuations and declines in the market
price of the Registrant's common stock.

The trading of shares of the Registrant's common stock is subject to limitations
set forth in Rule 1 Sg-9 of the Securities Exchange Act. This rule imposes sales
practice  requirements on  broker-dealers  who sell so-called  "penny stocks" to
persons other than established customers,  accredited investors or institutional
investors. For any transaction involving a penny stock, unless exempt, the rules
require that a broker or dealer: (i) approve a person's account for transactions
in penny stocks;  and (ii) receive from the investor a written  agreement to the
transaction,  setting  forth the  identity and quantity of the penny stock to be
purchased.  In order to approve a person's  account  for  transactions  in penny
stocks,  the  broker  or dealer  must:  (i)  obtain  financial  information  and
investment  experience and objectives of the person;  and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient  knowledge and experience in financial matters to
be capable of evaluating the risks of transactions  in penny stocks.  The broker
or dealer  must also  deliver,  prior to any  transaction  in a penny  stock,  a
disclosure  schedule  relating to the penny stock  market,  which,  in highlight
form,  (i)  sets  forth  the  basis on  which  the  broker  or  dealer  made the
suitability determination; and (ii) that the broker or dealer received a signed,
written  agreement from the investor prior to the  transaction.  Disclosure also
has to be made  about  the risks of  investing  in penny  stocks in both  public
offerings and in secondary  trading,  and about commissions  payable to both the
broker-dealer  and the  registered  representative,  current  quotations for the
securities  and the rights and  remedies  available  to an  investor in cases of
fraud in penny stock transactions.  Finally,  monthly statements have to be sent
disclosing  recent price information for the penny stock held in the account and
information on the limited market in penny stocks.

(b) Holders

As of December 31, 2002, the  approximate  number of holders of record of shares
of the  Registrant's  Common Stock,  $.001 par value per share, the Registrant's
only class of trading securities, was believed by management to be as follows:

            Title of Class                         Number of Record Holders

            Common Stock, $.001 par                             46

Management  believes there are many  shareholders  whose  securities are held in
street name with various brokerage  houses.  The exact number of shareholders is
unknown to the Registrant.

(c) Dividends

The Registrant has paid no dividends  during the fiscal years ended December 31,
2001 and 2002. In  connection  with the rights and  preferences  extended to the
holders of the Series A Preferred  Shares sold by the  Registrant  during  2002,
dividends may not be declared on any of the  Registrant's  securities  while the
Series  A  Preferred   Shares  are  outstanding.   Therefore,   holders  of  the
Registrant's  common stock may not receive any dividends on their  investment in
the Registrant in the foreseeable future. Earnings, if any, will be retained and
used to finance the development and expansion of the Registrant's business.

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

(a)   Full Fiscal Years Ended December 31, 2002, and 2001

Revenues

The  Registrant  has adopted a new revenue  recognition  policy  under which the
salaries,  wages and certain payroll taxes of worksite  employees will no longer
be recognized as revenue  components  (`net  method').  The change in policy was
made in response to an industry wide SEC comment letter requesting the change to
the net method of revenue  recognition which was based in part on the collective
weight of the indicators included in Emerging Issues Task Force Issue No. 99-19,
Reporting  Revenues Gross as a Principal  versus Net as an Agent ("EITF 99-19").
The policy has been applied to the current financial statement and retroactively
applied to the previous  year's  financial  statement.  Accordingly  the company
netted $502 million of payroll and related taxes for the year ended December 31,
2002 and $166 million for the year ended  December 31, 2001. The new policy will
have no effect on the gross profit,  net income or shareholders'  equity amounts
previously  reported by the Registrant in its public filings.  CURA  contributed
$247 million of payroll and payroll taxes of the Year 2002 amount.

Revenue  was $40.4  million for Year 2002,  compared  to $13.7  million for Year
2001,  representing an increase of $26.7 million or 195%.  Significant growth of
the revenue base was  provided by the  Registrant's  acquisition  of CURA during
Year 2002. CURA  contributed  revenue of $18.4 million  representing  69% of the
overall  revenue  increase for Year 2002. In addition to the growth  provided by
CURA, the Registrant  achieved  increased  sales through organic growth from its
commission sales agents located in the Southeastern  portion of the country.  In
addition,  the  Registrant  began to target new markets  which  realized  higher
billing rates for service fees.

During Year 2002, the number of clients  increased to 824 compared to 168 during
Year 2001,  representing  an increase of 490%. The addition of CURA  contributed
approximately 650 clients or 79% of the overall increase for Year 2002 over Year
2001.  The number of paid worksite  employees at December 31, 2001  increased to
approximately  32,000 from 9,000 at December 31, 2001,  representing an increase
of 23,000 or 256%.  Worksite  employee  growth  exceeded  revenue growth by 60%,
primarily due to acquiring  clients from CURA, which had a lower average payroll
per  employee.   The  lower  average   payroll  per  employee   results  from  a
concentration  of the  CURA  client  base in  hospitality,  service  and  retail
industries.  The lower revenue per employee results in lower service fee revenue
per employee than the average for the previous years.

Cost of Services

Cost of services was $21.8  million for Year 2002,  compared to $9.9 million for
Year 2001,  representing an increase of $11.9 million or 121%. This increase was
due primarily to an increased number of clients and worksite employees resulting
from the CURA  acquisition.  CURA contributed  $11.4 million in cost of services
representing 96% of the overall increase in cost of services for Year 2002. Cost
of  services  was 54% of revenue for Year 2002 and 72% of revenue for Year 2001.
Cost of services as a percentage of revenue was improved in Year 2002  primarily
due to improved cost of benefits in Year 2002.

Gross Profit

Gross Profit was $18.6 million for Year 2002,  compared to $3.8 million for Year
2001, representing an increase of $14.8 million or 385%. Gross profit was 46% of
revenues  for Year  2002 and 28% of  revenues  for Year  2001.  CURA  positively
impacted gross profit by $6.9 million  representing  47% of the overall increase
in gross  profit  for  Year  2002,  compared  to Year  2001.  Gross  profit  was
positively  impacted  by  the  termination  of  the  Registrant's   unprofitable
self-funded health program in December 2001. Additionally revenues were enhanced
by fourth quarter increases in administrative and workers'  compensation billing
rates.

Operating Expenses

Operating Expenses, which include Compensation and Benefits Expenses,  Marketing
and  Selling  Expenses,  and  General and  Administrative  Expenses,  were $15.6
million for Year 2002  compared to $4.6 million for Year 2001,  representing  an
increase of $11.0 million, or 242%.  Operating Expenses were 39% of Revenues for
Year 2002,  compared to 33% for Year 2001.  The  acquisition  of CURA  increased
Operating Expenses by $6.8 million, representing 62% of the overall increase for
Year 2002 over Year 2001.

In addition,  Operating  Expenses  were  increased in Year 2002 from  technology
initiatives.  The  Registrant  has upgraded its core  software  application  for
payroll  processing,  human  resources  and  customer  billing to the  `ScorPEO'
platform.  The ScorPEO  upgrade is expected  to deliver  future cost  savings by
integrating  all  internal  production  departments  on  a  single  company-wide
platform.  The ScorPEO system is expected to also integrate to the  Registrant's
accounting  platform creating  additional cost benefits to the corporate finance
and accounting departments,  which is expected to be completed during the second
quarter of 2003.

Compensation and Benefits  Expenses was $5.0 million for Year 2002,  compared to
$1.5 million for Year 2001,  representing an increase of $3.5 million,  or 238%.
The  acquisition of CURA  increased  Compensation  and Benefit  Expenses by $3.0
million,  representing  85% of the overall  increase for the Year 2002 over Year
2001. The additional  increase was due to corporate  personnel  hired to support
the Registrant's expanded sales growth and information  technology  conversions,
and  additional  sales and sales support  personnel.  Compensation  and Benefits
Expenses were 12% of revenues for Year 2002, compared to 11% for Year 2001.

Marketing and Selling  Expense was $4.2 million for Year 2002,  compared to $1.1
million for Year 2001,  representing  an increase of $3.1 million,  or 300%. The
acquisition of CURA increased selling commissions by $1.0 million,  representing
33% of the overall increase for Year 2002 over Year 2001.  Additional  increases
in selling commissions  occurred,  reflecting an increase in revenue growth from
commissioned  agents.  Marketing  and Selling  Expenses were 11% of revenues for
Year 2002, compared to 8% for Year 2001.

General and Administrative Expenses were $6.3 million for Year 2002, compared to
$2.0 million for Year 2001,  representing an increase of $4.3 million,  or 217%.
The acquisition of CURA increased  General and  Administrative  Expenses by $2.8
million,  representing 64% of the overall increase for Year 2002 over Year 2001.
This  increase  was  primarily  a result of  administrative  expenses to support
expanded sales growth, information technology conversions,  and additional sales
and sales support  personnel.  General and  administrative  Expenses were 16% of
revenues for Year 2002, compared to 15% for Year 2001.

Depreciation  Expense  increased by $229  thousand for Year 2002 compared to $58
thousand  for Year 2001,  representing  an increase of 385%.  This  increase was
primarily the result of the  Registrant's  investment in management  information
systems.

Interest  income on the cash invested  intermittently  was $86 thousand for Year
2002,  compared to $2 thousand  for Year 2001,  representing  an increase of $84
thousand.  The Registrants'  cash management and profit strategies have resulted
in an increase in the cash available for its operating requirements.

Interest expense was $116 thousand for Year 2002 and $34 thousand for Year 2001.
Interest  expense results from capital leases that funded purchases of furniture
and fixtures.

Net Income

Net income was $3.0  million  for Year  2002,  compared  to a net loss of ($734)
thousand  for  Year  2001,   representing  an  increase  of  $3.7  million.  The
acquisition  of CURA  increased  net  income  by  $143  thousand  in Year  2002,
representing 4% of the overall  increase.  Net income was 7% of Revenue for Year
2002,  compared to a loss of (5%) for Year 2001. Net income growth for Year 2002
compared  to  Year  2001  was  favorably  impacted  by  the  elimination  of the
Registrant's   unprofitable   health   insurance  plan  in  December  2001,  and
significant  sales  volume  growth  at  increased  administrative  and  workers'
compensation billing rates.

The operations of CURA are included in the accompanying  consolidated  statement
of operations  from the date of acquisition,  July 1, 2002 through  December 31,
2002. (see Item 7. Financial  Statements)  The pro forma unaudited  consolidated
statements of operations  for the years ended December 31, 2002 and 2001 for the
Registrant, including CURA, appear below:



                                                  (in thousands)
                                                Year Ended December 31,
                                                2002               2001
                                                ----               ----

Revenues                                  $    52,299          $   16,157
Cost of service                               (31,039)            (14,521)
                                               ------              -------
Gross profit                                   21,260               1,636
Operating expenses                            (21,229)             (6,884)
                                               ------               ------
Net income (loss)                          $       31           $  (5,248)
                                               ======               =====

b.  Liquidity and Capital Resources

The  Registrant  had $3.3  million in cash and  restricted  cash at December 31,
2002.

The Registrant periodically evaluates its liquidity requirements,  capital needs
and  availability  of  capital  resources  in view of its plans  for  expansion,
including  potential  acquisitions,  anticipated  levels of health  benefit plan
subsidies and other  operating  cash needs.  The  Registrant  has  terminated an
unprofitable  self-funded  health plan as of December 31, 2001.  The  Registrant
believes  that its  current  balances  and cash  flow  from  operations  will be
sufficient to meet its  requirements  through 2003.  The  Registrant may rely on
these same sources, as well as public or private debt and/or equity financing to
meet its long-term capital needs.

Net cash used by operating  activities was $1.4 million for Year 2002,  compared
to cash  provided  from  operating  activities  of $1.4  million  for Year 2001,
representing  in a decrease of $2.8 million.  In addition,  from  September 2002
through  December,  2002, the Registrant sold 1,578 shares of Series A Preferred
Stock in exchange for cash and cash  equivalents  of  $19,720,000  to be used to
support the Registrant's risk management program and general working capital.

c. Forward Looking Statements:

This report includes "Forward-Looking  Statements" within the meaning of Section
27A of the  Securities  Act and Section 21E of the Exchange Act. Any  statements
that express or involve  discussions with respect to predictions,  expectations,
beliefs,  plans,  projections,  objectives,  assumptions  or  future  events  or
performance (often, but not always,  using words or phrases such as "expects" or
"does not  expect",  "is  expected",  "anticipates"  or "does  not  anticipate",
"plans",  "estimates" or "intends",  or stating that certain actions,  events or
results  "may",  "could",  "would",  "might"  or "will"  be  taken,  occur or be
achieved) are not statements of historical  fact and may be considered  "forward
looking  statements".  Such statements are included,  among other places in this
Form 10-KSB,  in the sections entitled  "Management's  Discussion and Analysis,"
"Description  of  Business"  and  "Description  of  Property."   Forward-looking
statements are based on expectations,  estimates and projections at the time the
statements are made that involve a number of risks and uncertainties which could
cause  actual  results  or events  to differ  materially  from  those  presently
anticipated. Although the Registrant believes that the expectations reflected in
such  forward-looking  statements  are  reasonable,  the  Registrant can give no
assurance that such expectations will prove to have been correct.


ITEM 7. FINANCIAL STATEMENTS

                    Certified Services, Inc. and Subsidiaries
    Index to the Consolidated Financial Statements December 31, 2002 and 2001




Independent Auditor's Report

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statement of Stockholder's Equity (Impairment)

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements


<page>

                          Independent Auditors' Report


To the Board of Directors and Stockholders of Certified
Services, Inc. and Subsidiaries


We have  audited  the  accompanying  consolidated  balance  sheets of  Certified
Services, Inc. and Subsidiaries as of December 31, 2002 and 2001 and the related
consolidated  statements of operations,  stockholders'  equity  (impairment) and
cash flows for the years  ended  December  31,  2002 and 2001.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we 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.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion the consolidated  financial  statements referred to above present
fairly, in all material respects,  the financial position of Certified Services,
Inc. and  Subsidiaries as of December 31, 2002 and 2001 and the results of their
operations,  cash flows and changes in stockholders' equity (impairment) for the
years then ended in conformity with accounting  principles generally accepted in
the United States of America.



Bridgewater, New Jersey
March 21, 2003

/s/ Rosenberg, Rich, Baker, Berman & Company





                    Certified Services, Inc. and Subsidiaries
                           Consolidated Balance Sheets

                                                     December 31
                                               2002            2001
                                               ----------------------

Assets

Current assets
     Cash                                  $  662,327       $ 1,459,576
     Cash, restricted                       2,658,907                --
     Accounts receivable                   17,929,059           857,026
     Insurance deposits                    18,720,000                --
     Related party receivables                 65,340                --
     Other current assets                     516,831                --
                                           ----------         ---------
       Total current assets                40,552,464         2,316,602


    Property and equipment, at cost,
      net accumulated depreciation
      of $774,158 and $160,902,
      respectively                            983,451            223,915
    Excess purchase price over net
      book value of assets acquired        10,607,637          5,058,890
    Other assets                              711,652             31,728
                                           ----------          ---------
             Total Assets                $ 52,855,204        $ 7,631,135
                                           ==========          =========

Liabilities and Shareholders' Equity
Current Liabilities:
     Current portion of notes payable    $  2,153,571        $   213,414
     Accounts payable                       7,088,161          1,195,801
     Accrued expenses                      18,413,810          3,465,969
     Current portion of capital
      lease obligations                       190,648             29,568
                                           ----------          ---------
            Total Current Liabilities      27,846,190          4,904,752

     Long term notes payable                2,070,010          3,373,173
     Long term portion of capital
      lease obligations                       118,309             33,520
                                           ----------          ---------
             Total Liabilities             30,034,509          8,311,445

Commitments and Contingencies
Shareholders' Equity
     Preferred shares, $.001 par,
      5,000,000 authorized, Series A
      (1,578 and 0 issued and outstanding
       in 2002 and 2001, respectively)              2                  -
      Series B (1,100 issued and
       outstanding in 2002
       and 2001, respectively                       1                  1
      Series C (0 and 406.667 issued
       and outstanding
       in 2002 and 2001, respectively)              -                  1
      Common shares, $.001 par, 100,000,000
       authorized, 8,447,811 and 3,421,145
       issued and outstanding in
       2002 and 2001, respectively              8,448              3,421
     Additional paid in capital            22,107,754          1,602,550
     Accumulated earnings                     704,490         (2,286,283)
                                         ------------        ------------
           Total Shareholders' Equity      22,820,695           (680,310)
                                         ------------        ------------
           Total Liabilities and
            Shareholders' Equity       $   52,855,204       $   7,631,135
                                         ============        ============

See notes to the consolidated financial statements.

<PAGE>


                    Certified Services, Inc. and Subsidiaries
                      Consolidated Statements of Operations


                                             For the Years Ended December 31,
                                             2002                       2001
                                             --------------------------------


Revenue (gross billings of $542 million
 and $180 million, less worksite employee
 payroll costs of $502 million and
 $166 million, respectively)                $ 40,406,261          $ 13,711,112
Cost of services                              21,822,214             9,878,578
                                              ----------            ----------
  Gross profit                                18,584,047             3,832,534

Operating expenses
 Compensation and benefits                     4,987,722             1,474,060
     Marketing and selling                     4,248,954             1,062,508
     General and administrative                6,326,964             1,994,367
     Interest, net                                29,634                35,490
                                              ----------             ---------
  Total operating expenses                    15,593,274             4,566,425
                                              ----------             ---------
  Net income (loss)                         $  2,990,773          $   (733,891)
                                              ==========             =========
Net income (loss) per share -
 basic and fully diluted                         $  0.51              $  (0.21)
                                                 =======              =========


Weighted average number of common shares
 outstanding -  Basic and fully diluted        5,815,307              3,421,145
                                               =========              =========

See notes to the consolidated financial statements.

<PAGE>

                                   Preferred Stock A      Preferred Stock B
                                  ---------------------- -------------------
                                    Shares     Amount     Shares    Amount
                                  ------------------------------------------
                                           -   $    -           -   $    -
Balance, January 1, 2001

Issuance of shares for cash                -        -       1,100        1
Issuance of shares for purchase
 of APEO Holdings, Inc.                    -        -           -        -
Reorganization pursuant to
  reverse acquisition                      -        -           -        -
Transitional period net income
 of Omni Financial Services, Inc           -        -           -        -

Net loss                                   -        -           -        -
                                  ------------------------------------------

Balance, December 31, 2001                 -        -       1,100        1

Issuance of shares in completion
   of reorganization in 2001               -        -          -         -
Issuance of shares for services in
   reorganization and acquisitions         -        -          -         -
Issuance of shares for purchase
   The Cura Group, Inc.                    -        -          -         -
Shares issued for cash                     -        -          -         -
Exchange of shares resolving
   purchase of APEO Holdings, Inc.         -        -          -         -
Issuance of shares for cash and
   additional consideration            1,578        2          -         -
Issuance of shares for services            -        -          -         -

Net income                                 -        -          -         -
                                  ------------------------------------------

Balance, December 31, 2002             1,578     $   2      1,100     $  1
                                  ==========================================

(continued)

                                    Preferred Stock C         Common Stock
                                 ------------------------ ----------------------
                                     Shares      Amount      Shares       Amount
                                 -----------------------------------------------
                                          -      $    -    3,421,145     $3,421
Balance, January 1, 2001

Issuance of shares for cash               -           -            -          -
Issuance of shares for purchase
 of APEO Holdings, Inc.             406,667           1            -          -
Reorganization pursuant to
  reverse acquisition                    -            -            -          -
Transitional period net income
 of Omni Financial Services, Inc         -            -            -          -

Net loss                                 -            -            -          -
                                 -----------------------------------------------

Balance, December 31, 2001         406,667            1    3,421,145      3,421

Issuance of shares in completion
   of reorganization in 2001             -            -      725,000        725
Issuance of shares for services i
   reorganization and acquisition        -            -      945,000        945
Issuance of shares for purchase
   The Cura Group, Inc.                  -            -    2,000,000      2,000
Shares issued for cash                   -            -      281,666        282
Exchange of shares resolving
   purchase of APEO Holdings, Inc (406,667)          (1)     850,000        850
Issuance of shares for cash and
   additional consideration              -            -            -          -
Issuance of shares for services          -            -      225,000        225

Net income                               -            -            -          -
                                 -----------------------------------------------

Balance, December 31, 2002        $     -        $    -    8,447,811    $ 8,448
                                 ===============================================

(continued)

                                    Additional
                                     Paid-in       Earnings
                                     Capital       (Deficit)           Total
                                 --------------------- -----------------------
                                    $ 95,885       $(1,688,095)  $   (1,588,789)
Balance, January 1, 2001

Issuance of shares for cash        1,099,999                 -        1,100,000
Issuance of shares for purchase
 of APEO Holdings, Inc.              406,666                 -          406,667
Reorganization pursuant to
  reverse acquisition                      -       (    50,767)       (  50,767)
Transitional period net income
 of Omni Financial Services, Inc           -           186,470          186,470

Net loss                                   -       (   733,891)        (733,891)
                                 -----------------------------------------------

Balance, December 31, 2001         1,602,550        (2,286,283)        (680,310)

Issuance of shares in completion
   of reorganization in 2001          35,525                 -           36,250
Issuance of shares for services i
   reorganization and acquisition     93,555                 -           94,500
Issuance of shares for purchase
   The Cura Group, Inc.              498,000                 -          500,000
Shares issued for cash                91,700                 -           91,982
Exchange of shares resolving
   purchase of APEO Holdings, Inc       (849)                -                -
Issuance of shares for cash and
   additional consideration       19,719,998                 -       19,720,000
Issuance of shares for services       67,275                 -           67,500

Net income                                           2,990,773        2,990,773
                                 -----------------------------------------------

Balance, December 31, 2002       $22,107,754       $  704,490    $   22,820,695
                                 ===============================================



See notes to the consolidated financial statements.

<PAGE>
                    Certified Services, Inc. and Subsidiaries
                      Consolidated Statements of Cash Flows

                                               For the Year Ended December 31,
                                                2002                      2001
                                              ---------------------------------

Cash flows from operating activities
Net income (loss)                             $  2,990,773         $ ( 733,891)
 Adjustments to reconcile net income (loss)
 to net cash provided by operations:
  Transitional net income of acquired subsidiary        -              186,470
  Reorganization pursuant to reverse acquisition        -            (  50,767)
  Depreciation and amortization                   286,655               57,567
  Bad debt expense                                114,217               59,555
  Issuance of stock to employees                   91,982                   --
  Issuance of stock for services                  162,000                   --
  Severance expense                                    --              200,000

Decrease (increase) in assets
  Accounts receivable                         (14,718,796)           ( 493,666)
  Other current assets                        (   878,597)              45,639
  Restricted cash                               5,077,615                   --
  Other assets                                (   488,180)                  --

Increase (decrease) in liabilities
  Accounts payable                              2,838,728            1,335,735
  Accrued expenses                              3,133,903              834,343
                                             ------------           ----------
Net cash provided by (used in)
  operating activities                       (  1,389,700)           1,440,985
                                             ------------           ----------
Cash flows from investing activities
  Purchase of property and equipment         (    565,024)          (    2,437)
  Proceeds from deposits                               --               16,520
  Cash paid pursuant to reverse merger                 --           (1,143,670)
  Proceeds from stockholder                            --               28,918
  Net proceeds from affiliates                         --           (  384,240)
                                             ------------           ----------
Net cash (used in) investing activities      (    565,024)          (1,484,909)

Cash flows from financing activities
 Net proceeds from line of credit                 321,000                   --
 Repayment of notes payable                  (    138,095)          (  139,204)
 Proceeds of long-term debt                        73,430                   --
 Payments of capital lease obligations       (     33,520)          (   41,723)
 Cash outlay for related party note
  receivable                                 (  1,671,215)                  --
 Loan proceeds from related parties             1,605,875                   --
 Issuance of preferred stock                    1,000,000            1,100,000
                                              -----------           ----------
Net cash provided by (used in)
 financing activities                           1,157,475              919,073
                                              -----------           ----------
Net increase (decrease) in cash              (    797,249)             875,149
Cash at beginning of year                       1,459,576              584,427
                                             ------------           ----------
Cash at end of year                         $    662,327           $ 1,459,576
                                             ============            =========

See notes to the consolidated financial statements.


                    Certified Services, Inc. and Subsidiaries
      Supplemental Schedule of Non-cash Investing and Financing Activities


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the year for:         2002                  2001
                                       ----                  ----
    Interest Expense              $  115,997            $  37,466
    Income Taxes                          --                   --

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Capital stock accounts and additional paid in capital were adjusted in 2002 for
the following:

The  Registrant  purchased the CURA Group in an  acquisition  with the following
components:

Liabilities assumed in excess of assets             $5,248,449
Stock issued - 2,000,000 of common stock               500,000
Promissory note                                      2,313,889
Promissory note                                        136,111

Prior to the Registrant's acquisition of CURA, Midwest Merger Management, LLC, a
related party, had advanced to CURA  $6,100,000.  Subsequent to the acquisition,
this   obligation  was  retired  by  the  issuance  of  certain  shares  of  the
Registrant's Series A Preferred Stock.

During 2002 the  Registrant  issued 725,000 shares of common stock in completion
of the reorganization in 2001.

The Registrant and the sellers of APEOH agreed that due to unforeseen changes in
the  industry  and  economic  conditions  since the date of merger in 2001,  the
original  agreement  did not  accurately  reflect  the  intent  of the  parties.
Accordingly,  the parties cancelled $3,200,000 of the notes payable,  lengthened
the payment term of the remaining note balance by twelve  months,  and exchanged
406.667 of Preferred Stock Series C for 850,000 shares of common stock.

Capital stock accounts and additional  paid in capital were adjusted in 2001 for
the following:

In 2001,  the Registrant  purchased  APEO in an  acquisition  with the following
components:

Fair  value of assets  acquired                             $  5,058,890
Cash paid for the  capital  stock                              1,188,781
Liabilities assumed                                            3,471,692
Stock issued - 406.667 shares Preferred Class C                  406,667
Equity of  shareholders                                           (8,250)

A severance agreement entered into during 2001 was converted to a Note Payable.

Additional  paid-in  capital  was  credited  in 2001 upon the  issuance of 1,100
shares of Preferred Stock Series B.

See notes to the consolidated financial statements.


                    Certified Services, Inc. and Subsidiaries
      Supplemental Schedule of Non-cash Investing and Financing Activities


SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES (continued)

Additional paid in capital was credited in 2002 for $18,719,998 and 1,498 shares
of  Preferred  Series A stock  were  issued  at par for  insurance  deposits  of
$18,720,000.


                                              2002                    2001
                                              ----                    ----
 Capitalized lease obligations incurred
  for use of equipment                     $279,389                $     -


<PAGE>


                    Certified Services, Inc. and Subsidiaries
                 Notes to the Consolidated Financial Statements


NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Organization

Certified Services,  Inc. (the "Registrant") was organized on September 15, 1999
under the laws of the State of Nevada. Through December 31, 1999, the Registrant
had been in the  development  stage.  Effective  January 1, 2000 the  Registrant
commenced, albeit insignificant, operations and was no longer considered to be a
development stage enterprise.  With the subsequent acquisitions of America's PEO
Holdings,  Inc. ("APEO"),  and the Cura Group, Inc. ("CURA"),  the Registrant is
organized as a holding company of several  corporations  engaged in the business
of providing employee leasing and related payroll services to its clients.

Basis of Presentation

At December  31, 2002 and for the years ended  December  31, 2002 and 2001,  the
consolidated financial statements include the accounts of the Registrant and its
wholly owned subsidiaries.  All material inter-company transactions and balances
have been  eliminated in  consolidation.  The results of operations of all other
acquired  companies  within the  periods  reflected  have been  included  in the
consolidated financial statements from the date of acquisition.  On November 21,
2001, the Registrant  acquired all of the issued and outstanding shares of APEO.
For accounting  purposes,  the acquisition has been treated as an acquisition of
the  Registrant  by APEO  and a  re-capitalization  of  APEO.  Accordingly,  the
financial statements prior to November 21, 2001, are those of APEO only.

Use of Estimates

The  preparation  of the  financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  effect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and liabilities as of the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Allowance for Doubtful Accounts

The  Registrant  provides  an  allowance  for  doubtful  accounts  equal  to the
estimated losses that will be incurred in the collection of all receivables. The
estimated  losses are based on a review of the  current  status of the  existing
receivables. The allowance for doubtful accounts is $60,000 and $0 for the years
ended December 31, 2002 and 2001, respectively.

Property and Equipment

Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation,  which includes  amortization of assets under capital  leases,  is
calculated using the straight-line method over the estimated useful lives of the
assets  of  5-7  years  for  furniture,  fixtures  and  equipment.  Repairs  and
maintenance  expenditures which do not extend the useful lives of related assets
are expensed as incurred.

Evaluation of Long-Lived Assets

Long-lived  assets are  assessed  for  recoverability  on an ongoing  basis.  In
evaluating  the fair value and  future  benefits  of  long-lived  assets,  their
carrying value would be reduced by the excess,  if any, of the long-lived  asset
over management's estimate of the anticipated undiscounted future net cash flows
of the related long-lived asset. At December 31, 2002,  management believes that
the  carrying  value of  excess  purchase  price  over net book  value of assets
acquired fairly reflects the future cash flows to be derived there from.

Revenue Recognition

The  Registrant  has  adopted  a new  revenue  recognition  policy  under  which
compensation  of  worksite  employees  will no longer be  recognized  as revenue
components  (`net  method').  The  change in policy was made in  response  to an
industry  wide SEC  comment  letter  requesting  the change to the net method of
revenue  recognition  which  was based in part on the  collective  weight of the
indicators  included in Emerging  Issues Task Force Issue No.  99-19,  Reporting
Revenues Gross as a Principal versus Net as an Agent ("EITF 99-19").  The policy
has been applied to the current financial statement and retroactively applied to
the previous year's financial  statement.  The new policy will have no effect on
the gross profit, net income or shareholders' equity amounts previously reported
by the Registrant in its public filings.

The  Registrant  records  revenue as services  are  provided.  The  Registrant's
revenues  consist  of  administrative  fees  paid by its  clients  under  Shared
Employer Agreements, which are based upon each worksite employee's gross pay and
a markup, computed as a percentage of the gross pay. The Registrant includes the
component  of its  comprehensive  service  fees  related to the gross pay of its
worksite  employees  as revenue.  In  consideration  for payment of such service
fees, the Registrant  agrees to pay the following  direct costs  associated with
the worksite employees:  (i) salaries and wages; (ii) employment-related  taxes;
(iii) employee benefit plan premiums;  and (iv) workers' compensation  insurance
premiums.  The  Registrant  accounts for fees and the related direct costs using
the  accrual  method.  Under the  accrual  method,  fees  relating  to  worksite
employees  with earned but unpaid wages at the end of each period are recognized
as unbilled  revenues and the related direct costs for such wages are accrued as
a  liability  during  the  period  in which  wages are  earned  by the  worksite
employee. Subsequent to the end of each period, the related fees are billed.

Advertising Costs

Advertising costs are charged to operations when incurred.  Advertising  expense
was  $28,089  and  $8,518  for the  years  ended  December  31,  2002 and  2001,
respectively.

Income Taxes

Effective November 21, 2001, the Registrant files a consolidated  Federal income
tax return with its wholly owned subsidiaries. Income taxes are provided for the
tax effects of transactions  reported in the financial statements and consist of
taxes currently due plus deferred taxes, as applicable. Deferred taxes are based
on differences  between  financial  reporting and income tax carrying amounts of
assets and  liabilities and are measured using tax rates that are expected to be
in effect when the differences are expected to reverse.  Deferred taxes also are
recognized for operating  losses that are available to offset future federal and
state income taxes.

Income (Loss) Per Common Share

Basic and diluted  income  (loss) per common  share are computed by dividing net
income (loss) by the weighted average number of common shares outstanding during
the year. The number of potential  common shares  outstanding were 5,815,307 and
3,421,145, respectively, for the years ended December 31, 2002 and 2001.

Potential  common  shares were not used in the  computation  of diluted loss per
common share in 2001, as their effect would have been anti-dilutive.

NOTE 2-FAIR VALUE OF FINANCIAL INSTRUMENTS

The  Registrant's   material  financial  instruments  for  which  disclosure  of
estimated fair value is required by certain accounting standards at December 31,
2002,  consist  of  cash,  accounts  receivable,  insurance  deposits,  accounts
payable,  notes  payable  and  capital  lease  obligations.  In the  opinion  of
management,  such items other than certain  notes  payable are carried at values
that  approximate  fair value  because of  liquidity,  short-term  maturities or
interest  rates   equivalent  to  those   currently   prevailing  for  financial
instruments with similar characteristics.

A  non-interest  bearing  note  payable,  in the  original  principal  amount of
$1,000,000,  has  been  subjected  to  an  8%  present  value  discount  in  the
accompanying consolidated balance sheets at December 31, 2002 and 2001.

NOTE 3-CONCENTRATION OF BUSINESS AND CREDIT RISK

At times  throughout the year, the Registrant may maintain certain bank accounts
in excess of FDIC insured limits.

The Registrant provides credit in the normal course of business.  The Registrant
performs  ongoing credit  evaluations of its customers and maintains  allowances
for doubtful  accounts based on factors  surrounding the credit risk of specific
customers, historical trends, and other information.

The  Registrant's   customers  are  primarily  engaged  in  the  transportation,
services,  and construction  industries  located primarily in the eastern United
States. As a result, the Registrant is dependent upon economic conditions within
these industries and geographic areas.

NOTE 4-INSURANCE DEPOSITS

An integral  part of the  relationship  with the entities  participating  in the
Registrant's risk management program involves the retention by those entities of
security deposits,  which the Registrant fulfills with annual, renewable letters
of credit. (See Note 13-Related Party  Transactions).  Insurance deposits in the
form  of  annual  renewable   letters  of  credit  provided  by  Midwest  Merger
Management, LLC (a related party), amounted to $18,720,000 and $0 as of December
31, 2002 and 2001, respectively.



<PAGE>


NOTE 5-RESTRICTED CASH

As of December 31, 2002, the Registrant  maintained  restricted cash deposits of
$2,658,907 at its lending  institution  to  collateralize  its revolving line of
credit (see Note 15-Notes  Payable).  The line of credit became available during
2002. Upon termination of the revolving line of credit,  these funds will become
available for utilization by the Registrant.

Unused  credit  available on this line of credit was  $1,912,000 at December 31,
2002.

NOTE 6-ACQUISITIONS AND MERGERS

In July 2002,  the  Registrant  acquired  control of the issued and  outstanding
shares of CURA.  CURA,  with  offices  in Ft.  Lauderdale  and  Tampa,  FL, is a
Professional Employer Organization comprised of three Florida corporations:  The
Cura Group,  Inc.; its wholly-owned  subsidiary The Cura Group II, Inc.; and The
Cura Group III,  Inc.  The  aggregate  purchase  price of CURA is  comprised  of
2,000,000 shares of the  Registrant's  common stock valued at $.25 per share and
two promissory notes in the amounts of $2,313,889 and $136,111.

In addition,  if the EBITDA of the  original  business of Cura equals or exceeds
$3,000,000  for the period of July 1, 2002, to June 30, 2003,  its former owners
shall receive an additional  number of shares of common stock of the  Registrant
equal  to  $1,000,000,  divided  by  the  average  closing  sale  price  of  the
Registrant's  common stock for the thirty days prior to the required delivery of
those shares.

The operations of CURA are included in the accompanying  consolidated  statement
of operations  from the date of acquisition,  July 1, 2002 through  December 31,
2002.  The pro forma  unaudited  consolidated  statements of operations  for the
years ended December 31, 2002 and 2001 for the Registrant, including CURA, prior
to July 1, 2002, appear below:

                                                      (in thousands)
                                                   Year Ended December 31,
                                                  2002                  2001
                                                 ---------------------------

Revenues                                     $   52,299              $ 16,157
Cost of service                                 (31,039)              (14,521)
                                                --------               ------
Gross profit                                     21,260                 1,636
Operating expenses                              (21,229)               (6,884)
                                                --------               -------
Net income (loss)                            $        31              $(5,248)
                                                ========               =======

<PAGE>


On November 21, 2001,  pursuant to a Share Purchase  Agreement with APEO and its
sole shareholders, the Registrant purchased all of APEO's issued and outstanding
common  stock,  for  406.667  shares of Series C  Preferred  Stock  (which  were
subsequently  converted into 850,000 common shares),  $1,100,000 cash, and notes
aggregating  $4,200,000,  which was  accounted for as a reverse  merger.  During
September  2002  the  Registrant  and the  sellers  of APEO  agreed  that due to
unforeseen changes in industry and economic conditions since the date of merger,
the original  agreement did not reflect the intent of the parties.  Accordingly,
the parties cancelled the 406.667 shares of Series C Preferred Stock in exchange
for 850,000 shares of Common Stock,  cancelled  $3,200,000 of the notes payable,
and lengthened the payment term of the remaining note balance by 12 months to 72
months,  commencing January 10, 2002,  payable in equal monthly  installments of
$13,890.

On May 1, 2001 the  stockholders  of the  following  companies  (American  Labor
Force, Inc., American Labor Services,  Inc., Western American Labor Force, Inc.,
National  Labor Force,  Inc.,  National  Labor Force One,  Inc.,  Omni Financial
Services,  Inc., Mid Atlantic  Equities,  Inc. and Delaware  Valley  Properties,
Inc.) formed APEO.  Effective August 1, 2001, the stockholders  then contributed
their stock in all of the above  companies in exchange for all of the issued and
outstanding stock of APEO.

NOTE 7-PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following:


                                                2002                  2001
                                                ----                  ----
Furniture, fixtures and computer equipment    $1,757,609          $ 384,817
Less: accumulated depreciation                (  774,158)          (160,902)
                                               ---------            -------
  Total                                       $  983,451          $ 223,915
                                               =========            =======

Depreciation  expense charged to operations amounted to $274,538 and $57,567 for
the years ended December 31, 2002 and 2001, respectively.

NOTE 8-EXCESS PURCHASE PRICE OVER NET BOOK VALUE OF ASSETS ACQUIRED

The excess cost over net book value of assets acquired is comprised of:

 APEO Holdings, Inc.                             2002                2001
 -------------------                             ----                ----

Cash                                     $   1,100,000           $ 1,100,000
Non-interest bearing promissory note
 subjected to an 8% present value discount     821,990             3,471,692
Shares of Common Stock                         406,667               406,667
Transaction costs                               88,781                88,781
                                             ---------             ---------
                                             2,417,438             5,067,140
Less: Net assets                            (    8,250)           (    8,250)
                                             ---------             ---------
                                         $   2,409,188           $ 5,058,890
                                            ==========             =========

<PAGE>

The Cura Group, Inc.
6%, three year promissory note               2,313,889                    --
6%, three month promissory note                136,111                    --
Shares of Common Stock                         500,000                    --
                                            ----------           -----------
                                             2,950,000                    --
                                            ----------           -----------
Add: Net Liabilities                         5,248,449                    --
                                            ----------           -----------
                                             8,198,449                    --
                                            ----------           -----------
Total                                      $10,607,637          $  5,058,890
                                            ==========           ===========


NOTE 9-OTHER ASSETS

Other assets consist of the following:

                                              2002                  2001
                                              ----                  ----
Note receivable                             $ 208,919           $       --
Prepaid expenses                              343,833                   --
Acquisition costs                             484,031                   --
Deposits                                      191,700               31,728
                                            ---------            ---------
   Total                                    1,228,483               31,728
Less: current portion                         516,831                   --
                                            ---------            ---------
                                           $  711,652           $   31,728
                                            =========            =========

The note  receivable  is  unsecured,  bears  interest  at 3% and is  payable  as
follows:

          a.   $5,000 on March 22, 2002
          b.   35 monthly payments of $2,000
          c.   remaining balance on November 22, 2005

Acquisition  costs  represent  amounts paid  incidental  to the  acquisition  of
customer  relationships.  Such costs are amortized over sixty months, the period
which  management  believes  represents  the  estimated  life  of  the  customer
relationships.  Amortization  expense for the year ended  December  31, 2002 was
$12,117.

NOTE 10-ACCRUED EXPENSES

Accrued expenses consist of the following:

                                             2002                        2001
                                             ----                        ----
Accrued payroll                        $13,559,310                $        --
Client claims funds                      2,022,977                         --
Workers compensation payable               580,589                    751,570
Employee benefits payable                  685,535                    133,184
Accrued health insurance plan claims       612,592                  1,800,000
Customer Deposits                          384,153                    241,240
Other accrued expenses                     568,654                    539,975
                                        ----------                  ---------
   Total                              $ 18,413,810                $ 3,465,969
                                        ==========                  =========

NOTE 11-EMPLOYEE BENEFIT PLAN

Multiple Employer 401(k) Profit Sharing Plan

The Registrant  sponsors a qualified,  multiple  employer  defined  contribution
prototype  plan.  Client  employers  may adopt the terms and  provisions of this
qualified  plan.  Eligible  employees may elect to contribute up to 15% of their
annual compensation to an investment trust. Participating employers may elect to
make matching or  discretionary  contributions  under the terms of the plan. The
Registrant  contributed  $22,712 and $0,  respectively,  to the  accounts of its
direct employees who were participants in 2002 and 2001.

During 2002,  the  Registrant  terminated a second 401k plan offered to worksite
employees and staff through October 2002. Plan assets were distributed according
to Internal Revenue Code guidelines.

Medical Benefit Plans

The Company  offered  fully-insured  and  self-insured  medical benefit plans to
employees.  Participating  employer customers were able to participate or opt to
offer  their own  insurance  coverage to  employees.  During  2001,  the Company
elected to terminate the  self-funded  employee  welfare  benefit Plan effective
December  31, 2001.  Notice of intention to terminate  the Plan was given to all
participating  client  companies  and COBRA  participants.  Alternative  program
options were offered to clients, however, the Company does not intend to sponsor
another medical benefit program.

Flexible Benefit Plan

The Flexible Benefits Plan, or Internal Revenue Code Section 125 Cafeteria Plan,
is maintained by the Registrant  since 1997 to allow  eligible  employees to use
salary  redirection  amounts to pay for benefit  plan  premiums and other fringe
benefits offered by the Plan.

NOTE 12-EMPLOYEE STOCK OPTION PLAN

The  Registrant's  2002 Stock Option Plan (the "SOP")  provides for options that
may be granted to eligible employees and non-employee  directors and advisors of
the Registrant or its subsidiaries.  An aggregate of 10,000,000 shares of common
stock of the  Registrant  are authorized to be issued under the SOP. At December
31, 2002, 9,400,000 shares of common stock were available for future grants. The
SOP became  effective on September 9, 1998,  and options may be granted  through
its tenth  anniversary  date.  The stock  options  are  intended  to  qualify as
"incentive  stock  options"  within the meaning of Section  422 of the  Internal
Revenue Code, when appropriate. The purposes of the SOP is to retain and attract
persons  of  training,  experience  and  ability  to serve as  employees  of the
Registrant and its  subsidiaries  and as non-employee  directors and advisors of
the Registrant, and to encourage the sense of proprietorship of such persons and
to  stimulate  the  active  interest  of such  persons  in the  development  and
financial success of the Registrant and its subsidiaries.

The SOP is  administered  by the SOP  Committee of the Board of  Directors  (the
"Committee").  The Committee has the power to determine which eligible employees
will  receive  awards,  the timing and manner of the grant of such  awards,  the
exercise  price of stock options (which may not be less than market value on the
date of grant),  the number of shares,  the vesting of the shares and all of the
terms of the awards.  The Registrant may at any time amend or terminate the SOP.
However,  no  amendment  that would impair the rights of any  participant,  with
respect to  outstanding  grants,  can be made  without the  participant's  prior
consent.  Stockholder approval of an amendment to the SOP is necessary only when
required by applicable law or stock exchange rules.

The following summarizes 2002 stock option activity and related information:

                                                             Weighted Average
                                         Shares               Exercise Price
                                         ------             ------------------
Outstanding, beginning of year                0                          --
Granted                                 600,000                       $0.10
Exercised                              (600,000)                      $0.10
Canceled                                      0                          --
Outstanding, end of year                      0                          --
Exercisable, end of year                      0                          --

NOTE 13-RELATED PARTY TRANSACTIONS

Risk  Management  Agreement - On January 1, 2002 the  Registrant  entered into a
Risk Management  Agreement with Midwest Merger  Management,  LLC (Midwest),  its
principal and  controlling  shareholder.  Pursuant  thereto,  Midwest  agreed to
assume all  responsibility  for managing the cost of  workplace  accidents  that
occur  during the five year term of the  Agreement.  For the initial year of the
Agreement,  Midwest  received a Service Fee of  $16,323,144,  an amount equal to
3.5% of the Registrant's gross payroll. Thereafter, the Service Fee shall amount
to the  greater  of  3.5%  of the  Registrant's  gross  payroll  or  1.333 x the
Registrant's  weighted average of accrued worker's  compensation  claims for the
preceding five years.

Insurance  Deposits - In 2002,  Midwest  provided  annual  renewable  letters of
credit  ("LCs") in favor of the  Registrant's  workmens  compensation  insurance
carrier  which,  at  December  31,  2002  amounted  to  $18,720,000.  (See  Note
4-Insurance  Deposits).  Pursuant to a  Subscription  Agreement,  the Registrant
issued  to  Midwest  1,498 of its  Series A  Preferred  Stock,  $.001  par value
pursuant to a Subscription  Agreement  executed with each LC  contributed.  (See
Note 17-Preferred and Common Stock)

Issuance  of  Shares  - In  2002,  pursuant  to a  Subscription  Agreement,  the
Registrant issued 80 shares of its Series A Preferred Stock,  $.001 par value to
Brentwood  Capital Corp.  (Brentwood),  an affiliated  company,  in exchange for
consideration of $1,000,000.

During  February,  2002, the Registrant  also issued 600,000 options to purchase
its Common  Shares at $.10 per share to  Brentwood  in exchange  for services in
connection  with  Midwest's  purchase  of  control  of the  Registrant  and  its
subsequent  identification and negotiation of its first two acquisition targets.
The options were exercised in March, 2002 and the Registrant  recognized expense
of $60,000.

Administrative  Fees - During  the  years  ended  December  31,  2002 and  2001,
administrative fees paid to Brentwood amounted to $250,000 and $0, respectively.

Sublease  Arrangement - On June 27, 2002 the Registrant  subleased 15,000 square
feet of office space from a  non-affiliated  prime tenant pursuant to a sublease
expiring in March of 2008.  On November 4, 2002 the  Registrant  assigned all of
its right and  interest  under the  sublease to  Brentwood  but for the right to
utilize up to 300 square feet of office space in consideration of the payment of
a pro rata monthly rent.

Additionally,  also on June 27, 2002 the  Registrant  purchased  certain  office
furniture and  equipment of the prime tenant for  $350,000.  On November 4, 2002
the  Registrant  in  consideration  of  Brentwood's   agreement  to  assume  the
obligation,  assigned all of its rights and interest in the office furniture and
equipment  to  Brentwood.  The  Registrant  remains  contingently  liable on the
sublease and purchase agreement.

In addition,  there are temporary  advances  made between  related  parties.  On
December 31, 2002,  Midwest had a receivable due to the Registrant in the amount
of $41,414 due with the first quarter of 2003.  On December 31, 2002,  Brentwood
had a receivable  due to the  Registrant in the amount of $23,926 due within the
first quarter of 2003.

Accounts payable at December 31, 2002 included $251,050 due to Midwest.

NOTE 14-CAPITAL LEASES

The Registrant leases certain equipment under capital leases expiring in various
years through 2003. The assets and liabilities under capital leases are recorded
at the lower of the  present  value of the  minimum  lease  payments or the fair
value of the asset at the inception of the lease.  The assets are amortized over
the lower of their  related  lease terms or their  estimated  productive  lives.
Amortization of assets under capital leases is included in depreciation  expense
in 2002 and 2001.

Properties under capital leases are as follows:


                                             2002                    2001
                                             ----                    ----

   Furniture and fixtures              $   239,492             $    91,451
   Computer equipment                      286,102                  13,300
                                          --------                  ------
       Subtotal                            525,594                  104,751
       Less accumulated amortization      (140,784)                ( 42,122)
                                          --------                  -------
      Total                            $   384,810             $     62,629
                                          ========                  =======

The following is a schedule of minimum lease  payments due under capital  leases
as of the:

     Year Ending December 31,
         2002                          $        -              $    40,150
         2003                             226,166                   34,989
         2004                             110,224                    2,916
         2005                              20,265                       --
                                         --------                  -------
Total net minimum capital lease
  payments                                356,655                   78,055
 Less amounts representing interest      ( 47,698)                 (14,967)
                                         --------                  --------

 Present value of net minimum
   capital lease payments                 308,957                   63,088
 Less current maturities of
  capital lease obligations              (190,648)                 (29,568)
                                         --------                  -------
 Obligations under capital leases,
    excluding current maturities       $  118,309              $    33,520
                                         ========                  =======

Interest rates on capitalized  leases vary from 10% to 27% and are imputed based
on the lower of the Registrant's  incremental borrowing rate at the inception of
each lease or the lessor's implicit rate of return.

Amortization of assets under capital leases is included in depreciation  expense
in 2002 and 2001. The capital leases  provide for purchase  options.  Generally,
purchase  options are at prices  representing  bargain values of the property at
the expiration of the lease term.


NOTE 15-NOTES PAYABLE

Notes payable (including acquisition indebtedness) consist of the following:

                                                           2002            2001
                                                           ----            ----
$3,129,000 revolving line of credit, expiring April,
  2003, with interest at prime plus 1% per annum,
  collateralized by cash deposits of $2,658,907       $1,217,000        $    --
Non-interest bearing promissory note of $1,000,000
 payable in equal monthly installments over 72 months
 commencing January 10, 2002 after an 8% present value
 discount                                                685,027        821,990

Non-interest bearing promissory note of $3,200,000
 payable in four equal annual installments commencing
 April 15, 2003 through April 15, 2006 after an 8%
 present value discount; note terms cancelled in 2002         --      2,649,702

6% interest bearing promissory note of $2,313,889
 payable in equal monthly installments over 34
 months commencing January 3, 2003                     2,313,889             --

Installment note payable secured by equipment              7,665             --

Non-interest bearing promissory note payable in 24
    monthly installments beginning April 2001                 --        114,895
                                                    ------------      ---------
                                                       4,223,581      3,586,587
Less: current portion                                  2,153,571        213,414
                                                    ------------      ---------
                                                    $  2,070,010    $ 3,373,173

Total maturities of notes payable are as follows:
  Year Ending December 31,
           2003                                     $  2,153,571
           2004                                          946,204
           2005                                          816,693
           2006                                          147,438
           2007                                          159,675
                                                      ----------
              Total                                 $  4,223,581
                                                      ==========

Acquisition   indebtedness  was  incurred   incidental  to  the  reverse  merger
transaction between the Registrant and APEO and the acquisition of CURA.

NOTE 16-OPERATING LEASE COMMITMENTS

The Registrant rents office space under the following  non-cancelable  operating
leases,  which contain  provisions  for  contingent  rental  payments based upon
increases in taxes, insurance, and common area maintenance expense:

Fort  Lauderdale,  FL: Lease  expiring  October 2003 with renewal  option for an
additional 3 years;

Cherry  Hill,  NJ:  Lease  expiring  November  2005 with  renewal  option for an
additional 5 years;

Tampa,  FL: Lease expiring  September 2010 with renewal option for an additional
10 years;

New York, NY: Lease expiring 2008, no renewal option;

Jacksonville,  FL:  Lease  expiring  January  2005 with  renewal  option  for an
additional 5 years, and

Atlanta,  GA: Lease  expiring May 2005 with renewal  option for an  additional 3
years.

The Registrant also leases various computer and office equipment,  and furniture
expiring over the next five years.

The  following is a schedule of future  minimum  rental  payments  (exclusive of
common area  charges)  required  under  operating  leases  that have  initial or
remaining non-cancelable lease terms in excess of one year as of December 31:

                                                2002                  2001
                                                ----                  ----

           2002                           $       --              $ 374,395
           2003                              806,775                221,889
           2004                              654,041                201,188
           2005                              518,372                174,730
           2006                              266,223                  7,376
           2007                              266,150                     --
           2008                              268,384                     --
           2009                              273,152                     --
           2010                              209,960                     --
                                           ---------                -------
   Total minimum payments required        $3,263,057             $  979,578
                                           =========               ========

Rent  expense  charged to  operations  were  $475,978 and $376,320 for the years
ended December 31, 2002 and 2001, respectively.

NOTE 17-PREFERRED AND COMMON STOCK

The  Registrant  is  authorized  to issue  5,000,000  shares of $0.001 par value
preferred stock in various series.

From September 2002 through December 2002, pursuant to a Subscription  Agreement
the Registrant  issued 1,578 shares of its Series A Preferred  Stock,  $.001 par
value,  to related  parties  in  exchange  for  $19,720,000  consisting  of cash
($1,000,000) and annual renewable  letters of credit  ($18,720,000) see Note 4 -
Insurance  Deposits.  The Series A Preferred  Stock is entitled to 10,000 common
votes per share,  has no  redemption  priorities,  and is entitled to preference
upon the liquidation or sale of substantially all of the Registrant's assets.

Prior to, but as a component  of, the  reverse  merger  transaction  between the
Registrant  and APEO,  the  Registrant  agreed to issue 1,100 shares of Series B
Preferred  Stock,  convertible  into 11,000,000  common shares,  in exchange for
$1,100,000,  or $0.10  per  common  share  equivalent.  The  Series B share  are
entitled to 10,000  common  votes per  preferred  share and are not eligible for
conversion until the Registrant's  common stock price has exceeded $10 per share
for 20 consecutive  trading days.  Conversion  occurs  pro-rata in $5 increments
after the stock  price has  exceeded  $10 per share for 20  consecutive  trading
days.

As a component of the reverse  merger  transaction  between the  Registrant  and
APEO,  the  Registrant  agreed to issue  406.667  shares of Series C Convertible
Preferred Stock  convertible into 4,066,667 common shares of the Registrant.  In
the opinion of management,  the shares of Series C Convertible  Preferred  Stock
also had a value of $0.10 per common share equivalent,  or an aggregate value of
$406,667.  During  September  2002 the parties  exchanged the 406.667  preferred
shares for 850,000 shares of common stock.

The  Registrant is authorized  to issue  100,000,000  shares of $0.001 par value
common stock.

NOTE 18-COST OF SERVICES

Cost of services is comprised of the following:

                                                     2002                 2001
                                                     ----                 ----
Employee benefits                            $   5,499,070          $ 4,299,099
Workers compensation insurance                  16,323,144            5,485,824
Other                                                   --               93,655
                                               -----------            ---------
                                             $  21,822,214          $ 9,878,578
                                               ===========            =========

NOTE 19-INCOME TAXES

The income tax provision (benefit) is comprised of the following:

                                     Federal         State             Total
                                  ------------    ----------     -------------
                                  ------------    ----------     -------------
Year Ended December 31, 2001
   Current                       $     (20,000)   $ (9,000)      $   (29,000)
   Less valuation allowance             20,000       9,000            29,000
                                  ------------    ----------      ------------
                                  ------------    ----------      ------------
                                 $           0   $         0     $           0
                                  ============   ===========      ============

                                     Federal         State            Total
                                  ------------   ------------     ------------
                                  ------------   ------------     ------------
Year Ended December 31, 2002
   Current                       $    (935,000)  $  (145,000)    $  (1,080,000)
   Less valuation allowance            935,000       145,000         1,080,000
                                  ------------    -----------     ------------
                                  ------------    -----------     ------------
                                 $           0   $          0   $            0
                                  ============    ===========    =============

The Company has  available  net operating  loss  carryforwards  as to which full
valuation allowance has been established which may be used to reduce Federal and
State taxable income and tax liabilities in future years as follows:


                                       Federal                  State
                                 ---------------------     ----------------
                                 ---------------------     ----------------
      Available Through
         2017                 $             1,000,000   $        2,250,000
                                 =====================     ================

NOTE 20 - RECLASSIFICATIONS

Certain   amounts  for  2001  have  been   reclassified  to  conform  with  2002
classifications. Such reclassifications had no effect on reported net income.

NOTE 21 - COMMITMENTS AND CONTINGENCIES

Commitments - Prospective Acquisition of Staff America, Inc.

On October 31, 2002, and pursuant to a Stock Purchase Agreement,  CURA agreed to
acquire  all of the  issued  and  outstanding  shares of  common  stock of Staff
America, Inc., a North Carolina based professional employer  organization,  from
BACE  International,  Inc. The parties  agreed that the purchase  price shall be
mutually   determined  upon  completion  of  the   Registrant's   due  diligence
investigation  of  Staff  America.   Simultaneously,   the  parties  executed  a
Management  Agreement,   and  Addendum,   wherein,  CURA  (without  compensation
therefore)  and senior  management  of Staff America  Agreed to co-manage  Staff
America's  customer  accounts and business  operations  until the acquisition of
Staff  America  is  completed,  or  the  parties  agree  not to  consummate  the
acquisition  or the  management  Agreement is terminated by CURA. The Registrant
anticipates completing its due diligence, the valuation and acquisition of Staff
America by May, 2003.

Contingencies - Economic Dependency on Majority Shareholder

Midwest,  the Registrant's  principal and controlling  shareholder,  is the sole
administrator of the Registrant's risk management program. Additionally, Midwest
has  arranged for the placing of letters of credit (in the  aggregate  amount of
$18,720,000 at December 31, 2002) with the Registrant's  insurance carriers upon
which the Registrant  relies in managing its workplace  risk. The loss of either
or both of these  services  performed by Midwest  would have a material  adverse
effect  upon the  Registrant's  ability  to  continue  in  business  in that the
Registrant  would  experience  material  difficulty in obtaining an  alternative
provider of either or both of these functions.

<PAGE>

ITEM  8.  CHANGES  IN AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

During the two fiscal years ended December 31, 2002,  there have been no changes
in or disagreements with the Registrant's  independent accountants on any matter
of accounting or financial statement disclosure.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT

(a) Identify Directors and Executive Officers.

The following table sets forth:  (1) names and ages of all persons who presently
are and who have been selected as directors of the Registrant; (2) all positions
and offices with the Registrant held by each such person; (3) the term or office
of each person named as a director; and 4) any period during which he or she has
served a such:

                 Duration and
                 Date of Expiration    Position & Office         Age and
Name             of Present Term       with Registrant         Director Since
--------------------------------------------------------------------------------

William Kewan      One year           President and Director            58
                   April 27, 2002 (1)                              Nov. 21, 2001

Judson Wagenseller One year           Executive Vice President          49
                   April 27, 2002 (2)                              Nov. 21, 2001

Scott Zoppoth      One year           Secretary, Treasurer              42
                   Aug. 7, 2002   (3)  and Director                Nov. 21, 2001

Anthony R. Russo   One year           Chief Executive and               60
                   May 1, 2003 (4)     Financial Officer
                                       and Director                Aug. 7, 2002

Danny L. Pixler    One year           President, Chief Operating        54
                   May 1, 2003 (5)    Officer and Director         Nov. 20, 2002

Peter Campitiello  One year           Secretary                         33
                   September 1, 2003 (6)

O. Ray McCartha    One year (7)       Director                          53
                                                                  April 27, 2002

Thomas Cunningham  One year           Director                           42
                   November 20, 2002 (8)                          April 27, 2002

Ivan Dobrin        One year (9)       Director                           57
                   May 1, 2003                                    April 27, 2002
--------------------
(1) Mr. Kewan resigned as a director of the Registrant on April 27, 2002.
(2) Mr. Wagenseller resigned as a director of the Registrant on April 27, 2002.
(3) Mr. Zopoth was replaced as an executive officer of the Registrant on 8/7/02,
(4) Mr. Russo was elected as a member of the Registrant's Board of Directors on
    4/27/02, and was elected as the Registrant's Chief Financial and Chief
    Executive Officer on August 7, 2002.
(5) Mr. Pixler was elected as the Registrant's President and Chief Operating
    Officer on August 7, 2002; and as a member of the Registrant's Board of
    Directors on November 20, 2002, to fill the vacancy created by the
    resignation of Mr. Thomas Cunningham.
(6) Mr. Campitiello was elected as the Registrant's Secretary on August 7, 2002.
(7) Mr. McCartha was elected as a member of the Registrant's Board of Directors
    on April 27, 2002, to fill the vacancy created by the resignation of
    Mr. Kewan.
(8) Mr. Cunningham was elected as a member of the Registrant's Board of
    Directors on April 27, 2002, to fill the  vacancy  created  by the
    resignation  of Mr.  Wagenseller.  Mr.  Cunningham  resigned  as a member
    of the Registrant's Board of Directors on  November 20, 2002.
(9) Mr. Dobrin was elected as a member of the Registrant's Board of Directors on
    April    27, 2002.

There is no  understanding  or  arrangement  between any  directors or any other
person or persons pursuant to which such  individual,  was or is to be, selected
as a director or nominee of the Registrant.

Business Experience

Anthony R. Russo became a member of the Registrant's  Board of Director on April
27, 2002; and was thereafter elected as the Registrant's Chief Executive Officer
and Chief Financial  Officer on August 7, 2002.  Simultaneously  therewith since
May 1, 2002, Mr. Russo has served as the President,  Chief Financial Officer and
a member  of the  Board of  Director  of Edgar  Filing.net,  Inc.,  an  inactive
development  stage  Nevada  corporation  with a class of  securities  registered
pursuant to Section 12(g) of the Securities  Exchange Act of 1934 (the "Exchange
Act").  Simultaneously  therewith and since September 1999, Mr. Russo has served
as the President,  Chief Financial Officer and director of Amici Ventures, Inc.,
an  inactive  publicly  owned New York  corporation  with a class of  securities
registered  pursuant  to  Section  15(d)  of the  Exchange  Act.  Simultaneously
therewith  since  March  2000,  Mr.  Russo has  served as the  President,  Chief
Financial  Officer and  director of Momentum  Holdings  Registrant,  an inactive
publicly  owned  and  traded  Delaware  corporation  with a class of  securities
registered  pursuant to Section 12(g) of the Exchange  Act.  Prior thereto since
1990,   Mr.  Russo  served  as  President  and  Chief   Executive  of  Cartilage
Technologies,  Inc.,  a privately  owned  manufacturer  and  marketer of dietary
supplements  headquartered  in Elmsford,  New York. Prior thereto since 1971, he
served as  President  and Chief  Executive of Sherwood  Corporation,  a publicly
owned financial services firm in New York, NY. In his capacity as President, Mr.
Russo  often  served as a member  of the board of  directors  of  several  small
emerging  companies  including Lloyds  Electronics,  Inc. (AMEX:  LLYD) where he
chaired the Audit  Committee and served on the Executive  Committee from 1980 to
1985.  Prior  thereto  since 1966,  he was a member of the audit staff of Arthur
Andersen  LLP in New York,  NY.  Mr.  Russo  received  a  Bachelor  of  Business
Administration  degree in accountancy practice from Pace University in 1967, was
licensed as a certified public  accountant by the State of New York in 1969, and
received a Masters  degree in Business and Policy from the Empire State  College
of the State  University of New York at Saratoga  Springs in 2001. Mr. Russo has
been a member of the American and New York Associations of CPA's since 1969; and
a member of the National Association of Corporate Directors since 1998.

Danny L.  Pixler  became a  member  of the  Registrant's  Board of  Director  on
November 20, 2002; and was thereafter elected as the Registrant's  President and
Chief  Operating  Officer on August 7, 2002.  Prior thereto since May 2002,  Mr.
Pixler has been a member of the Board of Directors of Edgar Filing.net, Inc., an
inactive  development  stage  Nevada  corporation  with a  class  of  securities
registered  pursuant  to  Section  12(g)  of the  Exchange  Act.  Simultaneously
therewith  and since  March 2002,  Mr.  Pixler has been a member of the Board of
Directors of Momentum Holdings Registrant, an inactive publicly owned and traded
Delaware  corporation with a class of securities  registered pursuant to Section
12(g) of the s Exchange Act. Simultaneously therewith and since 1994, Mr. Pixler
was  employed by Logistics  Management  Resources,  Inc.,  a publicly  owned and
traded Colorado  corporation with a class of securities  registered  pursuant to
Section  12(g)  of the  Exchange  Act,  and  its  predecessors  in  increasingly
responsible  positions  including  President since July 1998. Prior thereto from
1993 to 1994,  Mr.  Pixler  served as  President  of Joseph Land Group,  a South
Carolina based  transportation  company with annual sales of approximately  $130
million. Prior thereto from 1989 through 1992, Mr. Pixler served as President of
Apple Lines,  Inc., a South Dakota  based  truckload  refrigerated  carrier with
annual revenues  exceeding $16 million.  Prior thereto from 1983 until 1988, Mr.
Pixler  served  as  Executive  Vice   President  and  General   Manager  of  DFC
Transportation,  a wholly owned  subsidiary of Dean Foods,  Inc. with annualized
sales of approximately $60 million.

William Keywan,  served as the Registrant's  President and a member of its Board
of Director from  February  2002 to August 7, 2002.  Prior thereto since January
2002, Mr. Keywan served as the Chief Executive Officer of Interstate University,
Inc., a privately owned driver  training school located in Evansville,  Indiana.
Prior thereto from 1996 through  August 2001,  Mr. Keywan served as the Director
of Marketing for the Palmer Group, a privately  owned Kenworth truck  dealership
with six locations in the Midwest, where he was primarily responsible for sales,
marketing and public relations. Prior thereto from 1989 through 1995, Mr. Keywan
founded and served as the President of Certified  Transport,  Inc. and Certified
Logistics,  Inc., two privately owned  automotive and airfreight  transportation
companies located in Indiana.

Judson  Wagenseller,  served as Executive Vice President of the Registrant since
February 2002. Simultaneously therewith and since 1983, Mr. Wagenseller has been
engaged in the private  practice of corporate and securities law in the State of
Kentucky.  Mr. Wagenseller received a Bachelor of Arts degree in psychology from
Princeton  University in 1975,  and a Juris Doctor degree from the University of
Virginia School of Law in 1983.

Scott  Zoppoth  has served as a member of the  Registrant's  Board of  Directors
since  November 2001.  Simultaneously  therewith and since 1985, Mr. Zoppoth has
been has been engaged in the private practice of commercial litigation, business
and corporate  law in the States of Texas and Kentucky.  From 1985 through 1991,
Mr.  Zoppoth  practiced  in  Houston,  TX. From 1998 to 2000,  Mr.  Zopoth was a
partner in the  Louisville,  KY firm of  Zoppoth,  Valenti & Hanley,  PPLC,  and
subsequently  as Scott P. Zoppoth,  PLLC in  Louisville.  Mr. Zopoth  received a
Bachelor of Science  degree magna cum laude in 1982 from St. John Fisher College
(Rochester,  NY) in Finance;  and a Juris Doctor degree from South Texas College
of Law (Houston, TX) in 1985.

Ivan Dobrin was elected as a member of the  Registrant's  Board of  Directors on
April 27, 2002. Mr. Dobrin has 15 years of experience in the PEO industry. Since
1999,  Mr. Dobrin has served as President of the CURA Group,  Inc., a subsidiary
of the  Registrant.  Prior thereto from 1992 to 1999, Mr. Dobrin was employed by
Staffing  Concepts,  Inc.,  a Tampa,  Florida  PEO in  increasingly  responsible
positions  including Director of that companies largest division.  Prior thereto
since  1986,  Mr.  Dobrin was a licensee  for Action  Staffing,  Inc.,  a Tampa,
Florida  based PEO. Mr.  Dobrin  received a Bachelor of Arts degree in political
science and history from Hofstra University (Hempstead,  NY) in 1968. Mr. Dobrin
is a member of the National Association of Professional Employer Organizations.

O. Ray McCartha,  was elected as a member of the Registrant's Board of Directors
on April 27, 2002. On August 1, 2002, Mr. McCartha was elected as Executive Vice
President of Brentwood  Capital Corp.,  a New York City based  merchant  banking
corporation.  Mr. McCartha has 30 years of insurance industry experience.  Prior
to joining  Brentwood,  Mr.  McCartha  founded MAI Risk Management and served as
President of SCRMS, a large national  alternatives  risk management  firm. Prior
thereto since 1995, he served as Vice  President  for Florida  Employees  Excess
Insurance  Agency,  a  subsidiary  of FCCI Mutual  Insurance  Registrant.  Prior
thereto since 1986, Mr.  McCartha  served as Vice President for Hewitt Coleman &
Associates, a large national Third Party Administrator firm. Prior thereto since
1973, he served as an all lines agent for AON, formerly known as Frank B. Hall &
Company, a large national  insurance  brokerage firm. Mr. McCartha served on the
Board of a large  multi-state  insurance  company and is currently an instructor
with  Florida  Insurance  Schools,  a  private  continuing  education  school in
Florida.

Peter  Campitiello was elected as the Registrant's  Secretary on August 7, 2002.
Simultaneously  therewith since 1997 Mr.  Campitiello has been employed by Levy,
Boonshoft &  Spinelli,  LLC,  and its  predecessor  law firm as a corporate  and
securities  attorney.  Prior thereto since 1996, Mr.  Campitiello was engaged in
the  private  practice  of law in the  New  York  City  Metropolitan  Area.  Mr.
Campitiello received a Bachelor of Arts degree in political science from LaSalle
University  (Philadelphia,  PA) in 1991;  and a Juris  Doctor  from New York Law
School in 1995.  Mr.  Campitiello  is a member of the  American and the New York
State Bar Associations.

Thomas  Cunningham  served as the  Registrant's  Chief  Financial  Officer and a
member of its Board of  Directors  from April 27,  2002,  to November  20, 2002.
Prior thereto since 1998, Mr. Cunningham was employed by America's PEO Holdings,
Inc., a subsidiary  of the  Registrant  as its Chief  Financial  Officer.  Prior
thereto since 1995, Mr.  Cunningham  served as Vice  President-Finance  for Site
Development,  Inc., a Ft. Lauderdale, Florida commercial real estate development
company.  Prior thereto since 1992,  Mr.  Cunningham  was engaged in the private
practice of accounting in Cherry Hill,  New Jersey.  Mr.  Cunningham  received a
Bachelor of Science in Accounting  from the  University of Delaware in 1983; and
was  licensed as a  certified  public  accountant  by the State of New Jersey in
1992.

ITEM 10. EXECUTIVE COMPENSATION.

(a) General (1) through (7) All  Compensation  Covered.  During the three fiscal
years ended  December 31, 2002, the aggregate  compensation  paid to, accrued or
set aside for all  executive  officer  and  directors  of the  Registrant  was $
60,000.

(b) Summary Compensation Table.
                                                         Long Term Compensation
                                  Annual Compensation        Awards     Payments
Name and Position      Year   Salary  Bonuses  Other   Stock  Options LTIP Other

Michael L. Zuliani,
President              2000   $16,000      -       -       -      -     -     -
and Director through   2001    16,000      -       -       -      -     -     -
November 21, 2001      2002         -      -       -       -      -     -     -

Martin G. Rothman,
Secretary,             2000         -      -       -       -      -     -     -
Treasurer, and
Director               2001         -      -       -       -      -     -     -
through
November 21, 2001      2002         -      -       -       -      -     -     -

William Keywan,
President              2000         -      -       -       -      -     -     -

Director, (resigned    2001         -      -       -       -      -     -     -
August 7, 2002)        2002         -      -       -       -      -     -     -

Thomas Cunningham,
Chief Financial Officer
and                    2000         -      -       -       -      -     -     -
Director (resigned     2001         -      -       -       -      -     -     -
Nov. 20, 2002)         2002   136,250      -       -       -      -     -     -

Judson Wagenseller,
EVP                    2000         -      -       -       -      -     -     -
and Director
(resigned              2001         -      -       -       -      -     -     -
August 7, 2002)        2002         -      -       -       -      -     -     -

Ray McCartha,
Director               2000         -      -       -       -      -     -     -
since August 7, 2002   2001         -      -       -       -      -     -     -
                       2002   120,000      -       -       -      -     -     -

Ivan Dobrin, Director  2000         -      -       -       -      -     -     -
Since August 7, 2002   2001         -      -       -       -      -     -     -
                       2002   180,000      -       -       -      -     -     -

Scott Zoppoth,
 Director              2000        -       -       -       -      -     -     -
 since
 November 21, 2001     2001        -       -       -       -      -     -     -
                       2002    3,000       -       -       -      -     -     -

Anthony R. Russo, CEO
and CFO since Aug. 7,  2000        -       -       -       -      -     -     -
2002, and Director
since                  2001        -       -       -       -      -     -     -
April 27, 2002         2002   30,000       -       -       -      -     -     -

Danny L. Pixler, President
And COO since
August 7,              2000       -        -       -       -      -     -    -
2002, and Director,
since                  2001       -        -       -       -      -     -    -
November 20, 2002      2002  69,616        -       -       -      -     -    -

Totals                 2000  $16,000       -       -       -      -     -    -
                       2001   16,000       -       -       -      -     -    -
                       2002  538,866       -       -       -      -     -    -

No officer or director was paid any  compensation in 2000 or 2001. No additional
payments were made to our officers that served as directors  during the two-year
period ending December 31, 2002.

(c) Option/SAR Grant Table.

During the fiscal year ended December 31, 2002, the Registrant made no grants of
stock options or freestanding  SAR's to any executive officer or director of the
Registrant.  However,  the following table contains  information  concerning the
only options granted by the Registrant during the fiscal year ended December 31,
2002, under any stock option plan:

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

                   NUMBER OF       PERCENT OF
                    SHARES       TOTAL  OPTIONS
                  UNDERLYING         GRANTED       EXERCISE
                 OPTIONS/SAR's        IN            PRICE            EXPIRATION
    NAME          GRANTED (1)     FISCAL YEAR (2) PER SHARE              DATE
--------------------------------------------------------------------------------
Brentwood
Capital
Corp.                  600,000            100%            $.10         2/15/03
--------------------------------------------------------------------------------

(1) The option was granted  under the  Registrant's  2002 Stock Option Plan (the
"SOP")  at an  exercise  price  equal  to  100%  of  the  market  value  of  the
Registrant's  Common  Stock on the date of grant,  has a one year term and vests
immediately.

The  Registrant's  SOP  provides  for  options  that may be granted to  eligible
employees  and  non-employee  directors  and advisors of the  Registrant  or its
subsidiaries.  An  aggregate  of  10,000,000  shares  of  common  stock  of  the
Registrant  are  authorized  to be issued  under the SOP. At December  31, 2002,
9,400,000 shares of common stock were available for future grants under the SOP.
The SOP became  effective  on  September  9, 1998,  and  options  may be granted
through  the tenth  anniversary  date that the SOP became  effective.  The stock
options are intended to qualify as "incentive  stock options" within the meaning
of Section  422 of the  Internal  Revenue  Code.  The  purposes of the SOP is to
retain and  attract  persons of  training,  experience  and  ability to serve as
employees of the Registrant and its  subsidiaries  and to serve as  non-employee
directors   and  advisors  of  the   Registrant,   to  encourage  the  sense  of
proprietorship  of such  persons and to  stimulate  the active  interest of such
persons in the  development  and  financial  success of the  Registrant  and its
subsidiaries.

The SOP is  administered  by the SOP  Committee of the Board of  Directors  (the
"Committee").  The Committee has the power to determine which eligible employees
will  receive  awards,  the timing and manner of the grant of such  awards,  the
exercise  price of stock options (which may not be less than market value on the
date of grant),  the number of shares,  the vesting of the shares and all of the
terms of the awards.  The Registrant may at any time amend or terminate the SOP.
However,  no  amendment  that would impair the rights of any  participant,  with
respect to  outstanding  grants,  can be made  without the  participant's  prior
consent.  Stockholder approval of an amendment to the SOP is necessary only when
required by applicable law or stock exchange rules.

(2) The  percentage  reflects  the  percent  of  total  options  granted  by the
Registrant during fiscal 2002.

(d) Aggregate  Option/SAR  Exercises and Fiscal Year-End Option/SAR Value Table.
During the fiscal year ended December 31, 2002, no stock options or freestanding
SAR's were  exercised by any  executive  officer or director of the  Registrant.
However,  the following table contains  information  concerning the only options
exercised during the fiscal year ended December 31, 2002, under any stock option
plan:

 AGGREGATE OPTION/SAR EXERCISES IN 2002 AND AT FISCAL YEAR END OPTION SAR VALUES

                                                   NUMBER OF
                                                    SHARES
                                                  UNDERLYING         VALUE OF
                                                  UNEXERCISED      IN-THE-MONEY
              SHARES                          OPTIONS AT FISCAL     OPTIONS AT
             ACQUIRED            VALUE             YEAR-END      FISCAL YEAR-END
NAME            ON                REAL-          (EXERCISABLE/     (EXERCISABLE/
             EXERCISE             IZED          UNEXERCISABLE)    UNEXERCISABLE)
--------------------------------------------------------------------------------
Brentwood
Capital
Corp.         600,000            $60,000               -0-                -0-
--------------------------------------------------------------------------------


(e)  Long-Term  Incentive  Plan ("LTIP")  Awards Table.  During the three fiscal
years ended December 31, 2002, the Registrant made no LTIP awards.

(f) Compensation of Directors.  (1) and (2). During the three fiscal years ended
December  31, 2002,  no director of the  Registrant  received  any  compensation
pursuant to any standard or other arrangement.

(g) Employment  Contracts and Termination of Employment,  and Change-in  Control
Arrangements.  (1) and (2). No executive  officer of the Registrant was employed
pursuant to the terms of an employment agreement with the Registrant.  The April
19,  2002,  transaction  between the six former  principal  stockholders  of the
Registrant and Midwest, previously disclosed in Item 1 and hereinafter disclosed
in Item 12, may be deemed to be a change of control of the Registrant.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

(a) Security Ownership of Certain Beneficial Owner. The information is furnished
as of December 31, 2002, as to the number of shares of the  Registrant's  Common
Stock, $.001 par value per share, owned beneficially, or known by the Registrant
to own beneficially, more than 5% of any class of such security:

Name and Address                         Amount and Nature         Percentage
of Beneficial Owner                   of Beneficial Ownership      of Class(1)
--------------------------------------------------------------------------------

Midwest Merger Management, LLC
10602 Timberwood Circle, Suite # 9
Louisville, KY  40223                         2,050,000               24.2%

Alan B. Willard
5101 Northwest 21st St. - Suite 350
Ft. Lauderdale, FL         33309              1,000,000               11.8%

Danny L. Willard
5101 Northwest 21st St. - Suite 350
Ft. Lauderdale, FL         33309              1,000,000               11.8%

Thomas  Cunningham
200 Lake Drive East - Suite 110
Cherry Hill, NJ 08002                           642,984                7.6%
------------------
(1) Based upon an  aggregate  of  8,447,811  shares of
common stock outstanding.  On September 30, 2002, and as previously disclosed in
Item 1,  the  Registrant  issued  an  aggregate  of 80  shares  of its  Series A
Preferred  Stock to  Brentwood.  The Series A Shares  vote as 800,000  shares of
common  stock.  In  addition,  on November  21,  2002,  in  connection  with the
Registrant's  acquisition of APEO, and as reported in the Registrant's  Form 8-K
Current Report dated  November 21, 2001,  the Registrant  issued an aggregate of
1,100  shares of its Series B Preferred  Stock to  Midwest.  The Series B Shares
vote as 11,000,000  shares of common stock.  On various dates between  September
30, 2002,  and December 31,  2002,  and as  previously  disclosed in Item 1, the
Registrant issued an aggregate of 1,497.6 shares of its Series A Preferred Stock
to Midwest. Midwest's Series A Shares vote as 14,976,000 shares of common stock.
Accordingly,  and  giving  effect to the  voting  rights of the two  outstanding
classes of the Registrant's  Preferred Stock, an aggregate of 35,223,811  shares
may be deemed to be outstanding.  Assuming  35,223,811 shares  outstanding,  the
percentage of the  Registrant's  class for the one entity and three  individuals
listed in the foregoing table would be 80%, 2.8%, 2.8% and 1.8%, respectively.

The following is a summary of the principal rights and preferences of the Series
B Shares:

1.   Voting: The Series B Shares, which vote together as a single class with the
     shares of the  Registrant's  common stock on all  matters,  are entitled to
     10,000 votes for each share of Series B held by Midwest.  Accordingly,  the
     Series B Shares are entitled to 11,000,000 votes or 31% of the Registrant's
     voting securities.  In addition, and except as otherwise expressly provided
     by law,  the  holders of Series B Shares  shall be  entitled  to elect such
     number of  directors  of the  Registrant  as shall  equal two thirds of the
     entire Board of Directors;

2.   Conversion:  The holders of the Series B Shares become  eligible to convert
     the  1,100  shares  same  into an  aggregate  of  11,000,000  shares of the
     Registrant's  common  stock (at $.10 per common share at the rate of 10,000
     shares of common stock for each Series B) Share as follows:

A.  10% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $10.00;

B.  20% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $15.00;

C.  30% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $20.00;

D.  40% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $25.00;

E.  50% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $30.00;

F.  60% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $35.00;

G.  70% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $40.00;

H.  80% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $45.00;

I.  90% on or  after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $50.00; and

J.  100% on or after  the  lowest  average  of the  closing  bid  prices  of the
Registrant's  common  stock on any ten  consecutive  trading  days during the 20
trading days immediately preceding the conversion date shall have been a minimum
of $55.00;

3.   Liquidation.  Upon  any  liquidation,  dissolution  or  winding  up of  the
     Registrant,  whether  voluntary  or  involuntary,  the  holders of Series B
     Shares shall be entitled to be paid an amount equal to two times the amount
     payable on each share of common stock;

4.   Dividend Provisions. The holders of the Series B Shares are not entitled to
     receive any dividends;

5.   Stockholder Approval.  The holders of the Series B Shares have the right to
     demand that the Registrant call a special meeting of its  stockholders  for
     the purpose of approving the conversion privileges of the Series B Shares;

6.   Poison  Pill.  If, at any time  during  the first ten years  following  the
     issuance of the Series B Shares,  any of the following  events shall occur,
     then,  on five days  prior  written  notice to the  Registrant,  all of the
     Series B Shares  shall be  convertible  into  11,000,000  shares  of common
     stock; (i) the Registrant shall become the subject of a tender offer by any
     individual,  firm or entity;  (ii) a proxy  contest or any other  effort to
     unseat the Board of Directors of the Registrant as then constituted;  (iii)
     any  consolidation  or merger of the Registrant with or into another entity
     or any  merger  of  another  entity  into the  Registrant  (iv) any sale or
     transfer  of all of the  assets of the  Registrant;  or (v) any  compulsory
     share  exchange,  pursuant  to which any  holders of common  stock shall be
     entitled to receive other securities, cash or other property;

7.   Redemption.  At any time after the tenth anniversary of the issuance of the
     Series  B  Shares  (the  "Anniversary  Date"),  the  Registrant's  Board of
     Directors shall have the right and option, on written notice to the holders
     of the Series B Shares, to either: (i) redeem all of the outstanding Series
     B Shares at a price per Series B Share  equal to 75% of the  average of the
     closing bid and asked  prices of the  Registrant's  common stock on any ten
     consecutive  trading days during the 20 trading days immediately  preceding
     the Anniversary Date times 10,000;  or (ii) exchange ten thousand  (10,000)
     shares of its authorized but unissued  common stock for each Series B Share
     then issued and  outstanding;  or (iii) renewing the  conversion  terms and
     conditions  of  Section  1 for  an  additional  five  years;  or  (iv)  any
     combination of the foregoing.

If the assets of the  Registrant  shall prove  insufficient  under Nevada law to
permit the Registrant to effect redemption,  of all of the Series B Shares which
are  outstanding  at the  time  the  notice  of the  redemption  is  sent by the
Registrant,  the Registrant may redeem,  on a pro rata basis, that percentage of
the Series B Shares, if any, which its Board of Directors elects to redeem;

(b) Security Ownership of Management.  The following information is furnished as
of December  31,  2002,  as to the number of shares of the  Registrant's  Common
Stock,  $.001 par value per share owned  beneficially by each executive  officer
and director of the Registrant and by all executive  officers and directors as a
group:

Name and Address                     Amount and Nature
of Beneficial Owner               of Beneficial Ownership    Percentage of Class

Anthony R. Russo
477 Madison Ave. - 12th Floor
New York, NY 10022                                -                       0.0%

Danny L. Pixler
5101 NW 21st Ave. - Suite 350
Ft. Lauderdale, FL 33309                          -                       0.0%

O. Raymond McCartha                               -                       0.0%
477 Madison Avenue, 12th Floor
New York, NY 10022

Ivan Dobrin                                       -                        0.0%
5101 NW 21st Ave. - Suite 350
Ft. Lauderdale, FL 33309

Scott Zoppoth                                     -                        0.0%
477 Madison Avenue, 12th Floor
New York, NY 10022

All officers and directors as a group
of five persons                                   -                        0.0%
                                             =======                       ====
-------------------------

(c) Changes in Control.  The April 19, 2002,  transaction between the six former
principal  stockholders of the Registrant and Midwest,  previously  disclosed in
Item 1 and  hereinafter  disclosed  in Item 12,  may be deemed to be a change of
control of the Registrant.

(d) Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets forth information as of December 31, 2002, with respect
to compensation plans (including  individual  compensation  arrangements)  under
which the  Registrant's  common stock is authorized for issuance,  aggregated as
follows: (i) all compensation plans previously approved by security holders; and
(ii) all compensation plans not previously approved by security holders.

                      EQUITY COMPENSATION PLAN INFORMATION
--------------------------------------------------------------------------------
                                                         Number of securities
                                                         remaining available for
                                                         future issuance under
         Number of securities to   Weighted average      equity compensation
         be issued upon exercise   exercise price of     plans (excluding
         outstanding options,      outstanding options,  securities reflected
         warrants, and rights (a)  warrants and rights(b)in column (a)(c)
--------------------------------------------------------------------------------

Equity compensation
plans approved by
security holders      -0-                   -0-                   -0-

Equity compensation
plans not approved
by security holders   -0-                   -0-                   -0-
--------------------------------------------------------------------------------

Total                 -0-                   -0-                   -0-
================================================================================


ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

On December 31, 2002, Midwest Merger Management, LLC, the Registrant's principal
stockholder,   executed  and  delivered  a  $210,000   promissory  note  to  the
Registrant.  The note,  which bears interest at the rate of 6% per annum, is due
on January 2, 2004, is payable in four equal  quarterly  installment of $55,550,
and memorializes accommodation advances made during 2002.

                                     PART IV



ITEM 13.          EXHIBITS AND REPORTS ON FORM 8K


  (a) Exhibits:

10   (a) January 1, 2002, Risk Management Agreement

     (b)  Form of January 29, 2002, Lock Up Agreement

     (c)  September 25, 2002 Long Term Capital  Agreement

     (d)  September 29, 2002 Agreement with the selling stockholders of APEO

(b)  Reports  on Form 8K:  During  the last  quarter  of the  fiscal  year ended
December  31,  2002,  the  Registrant  filed one Form 8-K Current  Report  dated
October  31,  2002.  This  Report,  filed on  November  8, 2002,  disclosed  the
Registrant's Stock Purchase Agreement with BACE, Inc. reported in Item 1 of this
Form 10-KSB.

ITEM 14. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The  Registrant  maintains  controls  and  procedures  designed  to ensure  that
information required to be disclosed in the reports that the Registrant files or
submits under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods  specified in the rules and forms of the  Securities and
Exchange  Commission.   Based  upon  their  evaluation  of  those  controls  and
procedures performed within 90 days of the filing date of this report, the Chief
Executive and Chief  Financial  officers of the  Registrant  concluded  that the
Registrant's disclosure controls and procedures were adequate.

(b) Changes in Internal Controls

The Registrant made no significant  changes in its internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the  evaluation of those  controls by the Chief  Executive  and Chief  Financial
officers.

<PAGE>

                                   SIGNATURES

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.

Dated: March 28, 2003


Certified Services, Inc.


By: /s/Danny L. Pixler
       Danny L. Pixler, President,
       Chief Operating Officer
       and Director


By:   /s/Anthony R. Russo
       Anthony R. Russo, Chief
       Executive and Financial
       Officer and Director



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


By: /s/O. Ray McCartha                               Dated:_____________________
    O. Ray McCartha, Director

By: /s/Ivan Dobrin                                   Dated:_____________________
    Ivan Dobrin, Director

By: /s/Scott Zoppoth                                 Dated:_____________________
    Scott Zoppoth, Director


<PAGE>

                                 CERTIFICATIONS

I, Anthony R. Russo, the Registrant's Chief Executive Officer certifies that:

1. I have reviewed this annual report on Form 10-K of Certified Services, Inc.;

2.  Based on my  knowledge,  the  annual  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4.  The  Registrant's  other  certifying  officers  and  I  am  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange  Act Rules  13a-14  and  15d-14)  for the  Registrant  and we have:  a)
designed  such  disclosure  controls  and  procedures  to ensure  that  material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period  in  which  this  annual  report  is being  prepared;  b)  evaluated  the
effectiveness  of the  Registrant's  disclosure  controls and procedures as of a
date  within  90 days  prior  to the  filing  date of this  annual  report  (the
"Evaluation Date"); and c) presented in this annual report our conclusions about
the  effectiveness  of the  disclosure  controls  and  procedures  based  on our
evaluation as of the Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):
a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  Registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  Registrant's
auditors any material weaknesses in internal controls; and b) any fraud, whether
or not  material,  that  involves  management  or  other  employees  who  have a
significant role in the Registrant's internal controls; and

6. The  Registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003

/s/  Anthony R. Russo
Chief Executive Officer


<PAGE>

I, Anthony R. Russo, the Registrant's Chief Financial Officer, certifies that:

1. I have reviewed this annual report on Form 10-K of Certified Services, Inc.;

2.  Based on my  knowledge,  the  annual  report  does not  contain  any  untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
Registrant as of, and for, the periods presented in this annual report;

4.  The  Registrant's  other  certifying  officers  and  I  am  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange  Act Rules  13a-14  and  15d-14)  for the  Registrant  and we have:  a)
designed  such  disclosure  controls  and  procedures  to ensure  that  material
information relating to the Registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period  in  which  this  annual  report  is being  prepared;  b)  evaluated  the
effectiveness  of the  Registrant's  disclosure  controls and procedures as of a
date  within  90 days  prior  to the  filing  date of this  annual  report  (the
"Evaluation Date"); and c) presented in this annual report our conclusions about
the  effectiveness  of the  disclosure  controls  and  procedures  based  on our
evaluation as of the Evaluation Date;

5. The Registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the Registrant's auditors and the audit committee of
Registrant's board of directors (or persons performing the equivalent function):
a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  Registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  Registrant's
auditors any material weaknesses in internal controls; and b) any fraud, whether
or not  material,  that  involves  management  or  other  employees  who  have a
significant role in the Registrant's internal controls; and

6. The  Registrant's  other  certifying  officers  and I have  indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003

/s/  Anthony R. Russo
Chief  Financial Officer