Securities
          and Exchange CommissionWashington, D.C. 20549FORM
          10-K
        Annual
          Report under Section 13 or 15 (d) of the Securities Exchange Act 1934:Fiscal Year
          EndedDECEMBER 31, 2003
        Commission
          File Number:  0-31527
        CERTIFIED
          SERVICES, INC.(Exact name of registrant as specified in
          its charter) Nevada
      
      88-0444079State
	   or other jurisdiction of incorporation
      
      (I.R.S.
	   Employer Identificationor
	   organization)
      
      Number)5101
	   N.W. 21st Avenue, Suite 350Fort
	   Lauderdale, Florida
      
      33309(Address
	   of Principal executive offices)
      
      (Zip
	   Code) (Registrants
          Telephone Number Including Area Code):(954) 315-2300Securities
          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
        Indicate
          by checkmark 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
          o
        Indicated
          by checkmark 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-K or any amendment to this Form 10-K. x
        Indicate
          by checkmark whether the Registrant is an accelerated filer (as defined
          in Exchange Act Rule 12b-2). o
        Registrants revenues for the year ended December 31, 2003: 
          $78,510,210
        The
          aggregate market value of Common Stock held by non-affiliates (based
          upon the March 17, 2004 closing bid price for the common stock on the
          Bulletin Board of $1.00) at March 17, 2004 was approximately $5,482,811
        The
          number of shares of the Registrants common stock, $.001 par, outstanding
          as of March 17, 2004 was 9,547,811 shares.
        Documents
          incorporated by reference:  The Registrants Form 10-QSB
          for the quarterly period ended September 30, 2003 and filed with the
          Commission on November 18, 2003
        Transitional Small Business Disclosure Format (check one): Yes o
          No x




TABLE
	   OF CONTENTSPART
	   IITEM
	   1.
	 Description of BusinessITEM
	   2.
	 Description of PropertiesITEM
	   3.
	 Legal ProceedingsITEM
	   4.
	 Submission of Matters to a Vote of Security HoldersPART
	   IIITEM
	   5.
	 Market for the Registrants Common Equity
	   and Related Stockholder MattersITEM
	   7.
	 Managements Discussion and Analysis of
	   Financial Condition and Results of OperationITEM
	   7A.
	 Quantitative and Qualitative Disclosures About
	   Market RiskITEM
	   8.
	 Financial Statements and Supplementary DataITEM
	   9.
	 Changes in and Disagreements with Accountants
	   on Accounting and Financial DisclosureITEM
	   9A.
	 Controls and ProceduresPART
	   IIIITEM 10.
	 Directors and Executive Officers of the RegistrantITEM 11.
	 Executive CompensationITEM 12.
	 Security Ownership of Certain Beneficial Owners
	   and ManagementITEM 13.
	 Certain Relationships and Related TransactionsITEM 14.
	 Principal
	   Accounting Fees and ServicesPART
	   IVITEM 15.
	 Exhibits, Financial Statement Schedules and
	   Reports on Form 8KSIGNATURES -1- CERTIFICATIONSPART
        ICautionary
          Note Regarding Forward-Looking Statements
        In
          connection with the safe harbor provisions of the Private Securities
          Litigation Reform Act of 1995 (the Reform Act), Certified
          Services, Inc. (Certified or the Registrant)
          is hereby providing cautionary statements identifying important factors
          that could cause the Registrants actual results to differ materially
          from those projected in forward-looking statements (as such term is
          defined in the Reform Act) made by or on behalf of the Registrant herein,
          in other filings made by the Registrant with the Securities and Exchange
          Commissions, in press releases or other writings, or orally, whether
          in presentations, in response to questions or otherwise. Any statements
          that express, or involve discussions as to, expectations, beliefs, plans,
          objectives, assumptions or future events or performance (often, but
          not always, through the use of words or phrases such as will result,
          are expected to, anticipated, plans,
          intends, will continue, estimated, and
          projection) are not historical facts and may be forward-looking
          and, accordingly, such forward-looking statements involve known and
          unknown risks, uncertainties and other factors that may cause the actual
          results or performance of the Registrant to be materially different
          from any future results or performance expressed or implied by such
          forward-looking statements. Such known and unknown risks, uncertainties
          and other factors include, but are not limited to, the following:  (i)
      Volatility
        of costs of workers compensation insurance coverage and profits
        generated from the workers compensation component of the Registrants
        service offering under the Registrants loss sensitive workers
        compensation programs;(ii)
      volatility of state
        unemployment taxes;(iii)
      the uncertainties
        relating to the collateralization requirements related to as well as availability
        and renewal of the Registrants medical benefit plans, general insurance
        and workers compensation insurance programs for the worksite employees;(iv)
      uncertainties as to
        the amount the Registrant will pay to subsidize the costs of medical benefit
        plans;(v)
      possible adverse application
        of certain federal and state laws and the possible enactment of unfavorable
        laws or regulation;(vi)
      litigation and other
        claims against the Registrant and its clients including the impact of
        such claims on the cost, availability and retention of the Registrants
        insurance coverage programs;(vii)
      impact of competition
        from existing and new businesses offering human resources outsourcing
        services;(viii)
      risks associated with
        expansion into additional markets where the Registrant does not have a
        presence or significant market penetration;(ix)
      risks associated with
        the Registrants dependence on key vendors and the ability to obtain
        or renew benefit contracts and general insurance policies at rates and
        with retention amounts acceptable to the Registrant;(x)
      an unfavorable determination
        by the Internal Revenue Service or Department of Labor regarding the status
        of the Registrant as an employer; -
          2 -




(xi)
      the possibility
        of client attrition due to the Registrants decision to increase
        the price of its services, including medical benefits;(xii)
      risks associated with
        geographic market concentration;(xiii)
      the financial condition
        of clients;(xiv)
      the effect of economic
        conditions in the United States generally on the Registrants business;(xv)
      the failure to properly
        manage growth and successfully integrate acquired companies and operations(xvi)
      risks associated with
        providing new service offerings to clients(xvii)
      the ability to secure
        outsides financing at rates acceptable to the Registrant(xviii)
      risks associated with
        third party claims related to the acts, errors or omissions of the worksite
        employees; and(xix)
      other factors
        which are described in further detail in this Annual Report on Form 10-K
        and in other filings by the Registrant with the Securities and Exchange
        Commission.  The
          Registrant cautions that the factors described above could cause actual
          results or outcomes to differ materially from those expressed in any
          forward-looking statements made by or on behalf of the Registrant. Any
          forward-looking statement speaks only as of the date on which such statements
          is made, and the Registrant undertakes no obligation to update any forward-looking
          statement or statements to reflect events or circumstances after the
          date on which such statement is made or to reflect the occurrence of
          unanticipated events. New factors emerge from time to time, and it is
          not possible for management to predict all of such factors. Further,
          management cannot assess the impact of each such factor on the business
          or the extent to which any factor, or combination of factors, may cause
          actual results to differ materially from those contained in any forward-looking
          statements.
        ITEM
          1. DESCRIPTION OF BUSINESS
        The Company
        Certified
          Services, Inc. (Certified, Company, or Registrant)  is
          a holding company owning subsidiaries engaged in the professional employer
          organization (PEO) industry. Since 1995, the Registrants
          subsidiaries have provided clients with a broad range of human resources
          (HR) services encompassing payroll and benefits administration,
          employee record keeping and regulatory compliance, health and workers
          compensation insurance programs, risk management and worksite safety
          management. The Registrant services its client base from six locations
          with a staff of 200 internal employees. The Registrants clients
          are typically small and medium-size businesses having between 10 and
          500 employees. Currently, the Registrant, through its wholly-owned subsidiaries,
          serve approximately 1,900 clients as measured by individual client Federal
          Employer Identification Numbers (FEIN) with approximately 53,000 active
          worksite employees in 32 states.
        Company
          Milestones:  
      November
        1, 2001
      Control
        of Registrant Acquired
      November
        21, 2001
      Acquired
        Americas PEO
      June 12,
        2002
      Established
        Jacksonville Sales Center
      July 1,
        2002
      Acquired
        The Cura Group, Inc.
      September
        1, 2002
      Established
        Tampa Service Center
      April 1,
        2002
      Acquired
        The PEO Operations of BACE International
      February
        17, 2004
      Established
        Orange, California Service Center -
          3 -




The
          Registrants principal executive offices are located at 5101 N.W.
          21st Avenue, Suite 350, Ft. Lauderdale, FL 33309. The Registrants
          common stock trades on the OTCBB market under the symbol CSRV.The
          Registrants registered agent in the State of Nevada is National
          Registered Agents of Nevada, Inc. and its transfer agent is Pacific
          Stock Transfer Company of Las Vegas, Nevada.
        General
        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 regulatory compliance,  productivity and profitability
          of its clients businesses by: 
      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 employees along with human
        resources services commensurate to those only available in larger organizations
        on a cost-effective and convenient basis;
      Improving the cash
        management of clients with respect to payroll-related expenses; and
      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 service s. 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.Recent
          Developments
        Name
          Change of Operating Companies
        On
          March 11, 2004, the Registrants Board of Directors unanimously
          approved the change of the names of the Registrants operating
          subsidiaries to Certified HR Services, Inc. or such similar
          names. The Registrants Board also approved the consolidation and
          reorganization of the Registrants subsidiaries in order to reduce
          the number of the Registrants wholly owned subsidiaries to eliminate
          redundancies in filing regulatory compliance and promote paperwork reduction. -
          4 -   Brean
          Murray &Co., Inc.
        In
          January 2004, the Registrant retained Brean Murray & Co., Inc.,
          a New York Stock Exchange Member (BMCI), as a corporate
          finance adviser, underwriter and investment banker for the purpose of
          locating potential acquisition, merger or business combination candidates.
          Among other monetary and compensatory fees, BMCI is entitled to receive
          5% of the market capitalization, in cash and common stock, of the surviving
          entity for which BMCI was engaged to consummate a transaction.
        Restructure
          of Obligations of Acquisition Two
        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). The transaction was reported
          in the Registrants Form 8-K dated October 30, 2001 and filed on
          October 31, 2001. The Registrant agreed to acquire all of issued and
          outstanding shares of Curas common stock (the Cura Shares).
          For the purchase price of: (i) two million (2,000,000) shares of the
          Registrants common stock, $.001 par value, (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 (the Cura Notes). On January
          27, 2004, in an effort to reduce the amount of its debt servicing obligations,
          the Registrant and the Shareholders agreed to extend the terms of payment
          of the Cura Notes. Pursuant to this extension, the due dates of the
          Cura Notes were extended from October 2, 2005 to August 15, 2008.
        Change
          of Management
        In
          December 2003, Anthony R. Russo resigned as the Registrants Director,
          Chief Financial Officer and Treasurer. Pursuant to Written Consent to
          Action by the Board of Directors, Mr. Russo was replaced on the Registrants
          Board of Directors by Judson Wagenseller. Richard M. Steen will serve
          as the Registrants Chief Financial Officer on an interim basis
          and act as the Registrants Treasurer.
        As
          reported in the Registrants Form 8-K filed on January 23, 2004,
          and pursuant to the Written Consent to Action of the Board of Directors,
          O. Raymond McCartha resigned as a member of the Registrants Board
          of Directors and was replaced by Eugene M. Weiss.
        Sale
          of Series B Preferred Stock
        From
          September 30, 2003 to December 31, 2003, pursuant to a Subscription
          Agreement, the Registrant sold 350 shares of its Series B Preferred
          Stock, par value $.001 per share (the Series B) to Midwest
          Merger Management, LLC (Midwest) for $3,500,000 in the form
          of an irrevocable letter of credit. 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 350 shares
          of Series B Preferred Stock, $.001 par value per share (the Series
          B Shares).
        The
          principal rights and preferences of the Series B Shares are set forth
          in Item 12. Security Ownership of Certain Beneficial Owners and Managers. -
          5 -




Sale
          of Series D Preferred Stock
        From
          September 30, 2003 to December 31, 2003, the Registrant sold 300 shares
          of its Series D Preferred Stock for $3,000,000 in cash capital contributions
          from Midwest. The Registrants risk manager executed a Marketing
          Organization Agreement with Central Leasing Management (CLM).
        The
          following is a summary of the principal rights and preferences of the
          Series D Shares:
        1.
          Voting: The Series D 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 D held by Brentwood.
          Accordingly, the Series D Shares are entitled to 3,000,000 votes;
        2.
          Liquidation: Upon any liquidation, dissolution or winding up
          of the Registrant, whether voluntary or involuntary, the holders of
          the Series D Shares shall be entitled to a priority return of their
          respective investment or reimbursement therefore, on a dollar for dollar
          basis.
        3.Dividend Provisions: The holders of the Series
          D are not entitled to receive any dividends.
        4.
          Conversion: The holders of the Series D after one (1) year from
          the date of issuance, are able to convert the shares of Series D on
          the basis of 12,500 shares of the Registrants common stock for
          each share of Series D.
        5.
          Redemption:  After ten (10) years from the date of
          issuance of the Series D (the Anniversary Date), the Registrant
          may (i) redeem all of the Series D at a price per share of 75% of the
          closing price for the 20 days immediately prior to the Anniversary Date
          each for 12,500 shares of the Registrants common stock; (ii) exchange
          12,500 shares of the Registrants common stock for each share of
          Series D; (iii) renew the conversion terms for an additional five (5)
          years; or (iv) any combination of the above.
        Sale
          of Series E Preferred Stock:
        From
          September 30, 2003 to December 31, 2003, the Registrant sold 100 shares
          of its Series E Preferred Stock to Midwest for $1,000,000 in the form
          of a surplus loan agreement with Providence Property and Casualty Insurance
          Company (Providence) for the benefit of the Registrants
          subsidiaries workers compensation coverage in various states.
        The
          following is a summary of the principal rights and preferences of the
          Series E Shares:
        1.
          Voting: The Series E 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 E held by Midwest.
          Accordingly, the Series E Shares are entitled to 1,000,000 votes;
        2.
          Liquidation: Upon any liquidation, dissolution or winding up
          of the Registrant, whether voluntary or involuntary, the holders of
          the Series E Shares shall be entitled to a priority return of their
          respective investment or reimbursement therefore, on a dollar for dollar
          basis.
        3.Dividend Provisions:The holders of the Series E are
          not entitled to receive any dividends.
        4.
          Conversion: The holders of the Series E after one (1) year from
          the date of issuance, are able to convert the shares of Series E on
          the basis of 12,500 shares of the Registrants common stock for
          each share of Series E.
        5.
          Redemption:  After ten (10) years from the date of
          issuance of the Series E (the Anniversary Date), the Registrant
          may (i) redeem all of the Series E at a price per share of 75% of the
          closing price for the 20 days immediately prior to the Anniversary Date
          each for 12,500 shares of the Registrants common -
          6 -  stock;
          (ii) exchange 12,500 shares of the Registrants common stock for
          each share of Series E; (iii) renew the conversion terms for an additional
          five (5) years; or (iv) any contribution of the above.
        Re-Measurement
          of Obligations of Acquisition Three
        As
          reported in the Registrants Form 8-K dated July 10, 2003, the
          Registrant acquired all of the professional employer, staff leasing,
          payroll and human resources services companies with the exception of
          StaffAmerica (the PEO Operations) from BACE International,
          Inc., a North Carolina corporation (BACE). Subsequent to
          the consummation of the acquisition of the PEO Operations, the Registrant
          determined that the liabilities of the PEO Operations exceeded the assets
          reported in the audited and interim financial statements of the PEO
          Operations by the amount of $14,300,000. Pursuant to the Stock Purchase
          Agreement by which the Registrant acquired the PEO Operations, the Registrant
          is entitled to offset these liabilities against any payments of the
          purchase price to BACE. Accordingly, since the undisclosed liabilities
          of the PEO Operations exceed the amounts due to BACE under the acquisition
          debt and promissory note by approximately $3,000,000, the Registrant
          has re-measured the nature of the liability so that $6,856,000 is to
          be stated as a contingent liability. Moreover, on November 24, 2003,
          the Registrant commenced an action against BACE and its sole shareholder,
          William L. Baumgardner, to seek the determination of an offset against
          the purchase price for PEO operations. For more information, see Item
          3 Legal Proceedings. -
          7 -


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
          of 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, cost of benefits including health and retirement benefit plan
          costs. 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
          its 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 the Registrants proprietary software.  -
          8 -




The
          Registrants customer service software platform 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:  
      Risk
        Management and Claims Management Services
      Payroll
        and Tax Administration Services
      Human Resources
        Services
      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 Registrants safety department performs the following specific
          claim cost containment services:  
      Customized
        return to work programs that fit the customers worksite;
      Developing a customized
        safety manual;
      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;
      Jobsite inspections
        to identify the risk of loss and/or unsafe conditions with recommendations
        for improvements;
      Assisting with OSHA,
        DOT and other regulatory compliance and record keeping;
      Establishing a Drug-free
        workplace programs;
      Developing restricted
        duty return to work programs;
      Providing complimentary
        consultation regarding property, general liability and miscellaneous risk
        exposure;
      Providing an ergonomics
        review where appropriate;
      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. During 2003, the Tampa data center implemented the Prognos claims
        management software platform. Prognos is a recognized leader in claims
        management software capable of meeting the full needs of a large organization.
        Prognos is designed and functions to automate the entire claims process
        from the first report of injury through final closure of the claim and
        will efficiently facilitate the following functions:  
      Investigating
        accidents;
      Tracking
        and reporting of client claims experience to facilitate corrective measures
        of existing worksite safety programs if necessary.
      Review
        billing and statutory limitations for medical claims to prevent overpayment
        to providers;
      Assure
        that injured employees receive appropriate and timely treatment;
      Follow-up
        with doctors and injured employees;
      Reviewing
        losses and offering recommendations to prevent reoccurrence;
      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. -
          9 -




Payroll
          and Tax Administration Services
        The
          Registrant handles the entire payroll process for the worksite employees.
          The Registrant is centralizing the processing of payrolls to the Ft.
          Lauderdale general headquarters to maximize productivity. The Ft. Lauderdale
          payroll center has current processing capacity in excess of 200,000
          paychecks per week. The Registrant utilizes the HR Pyramid, formerly
          known as ScorPEO, payroll software system for processing
          internal and external payrolls. 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 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 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 Registrants website,ScorPEO.teamcura.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 entry.
        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. During 2003 the Registrant implemented the industry
          leading Mastertax software platform to facilitate payroll
          tax compliance by the Registrant.
        All
          of the above systems are backed-up at our Tampa, FL facility with both
          processing and systems software capabilities. Should a natural disaster
          occur at either facility, no stoppage of processing would occur and
          the client would never suffer from such an event.
        Additional
          services offered by the payroll department include: employee benefits
          reports, direct deposit, maintaining vacation or sick pay accruals,
          providing payroll reports such as labor distribution and overtime reports,
          workers compensation reporting,  and overall maintenance
          of payroll records.
        Human
          Resources Services
        The
          Registrant handles 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.
        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 human
          resource department is the administration of human resource 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, 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 -
          10 -




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:  
      Benefits
        enrollments and terminations on behalf of worksite employees;
      Monthly
        reconciliation and payment of benefit provider invoices;
      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.
        Other
          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.
        New
          Business Development
        The
          Registrant segregates the Business Development Department into Business
          Development Communities (BDCs). Each of these BDCs will
          be accountable for gross profit margins (net profit as the model matures),
          quality and growth. The five BDCs are: -
          11 -





      Professional
        Employer Organization BDC
      Small Business Success
        BDC
      Human Resources Outsourcing
        (HRO) BDC
      Global Services BDC
      Supplemental Community
        Support Services BDC The
          Registrant builds a community that will provide services for the Registrantss
          clients and their employees that will not be easily replaced by a single
          provider. Clients will be extremely reluctant to move to multiple providers.
          Over the years, the most critical component of the Registrants
          services has proven to be the seamless, single source provision of human
          resource services.
        Sales
          and Marketing
        The
          Registrant markets its services through an internal sales force, a commission-based
          sales force and through several customized market arrangements. The
          internal sales group and commission-based sales associates provide leads
          to the Registrant. 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.
        Submissions
          generated from the Registrants sales efforts are then qualified
          through the New Business Development department. A thorough
          evaluation of each submission includes the following:  
      Workers
        compensation claims loss history for the previous five (5) years;
      Credit
        evaluation;
      Payroll
        and jobsite functional analysis including workers compensation class
        code analysis and current workers compensation declaration page;
      Benefits
        under consideration by the client;
      Proposed
        client pricing.  Once
          the prospect has met the underwriting criteria and accepted the service
          pricing, the Vice President of Sales will approve the preparation of
          a Shared Employment Agreement (SEA). Final approval of the
          client is required by the President and the Chief Risk Officer 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 TeamCura.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 -
          12 -




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
          of servicing its current needs as well as anticipated future expansion.
        The
          Registrant delivers the payroll processing system via dual Dell Poweredge
          8450 client servers with four (4) Pentium III Xeon microprocessors each
          (upgradeable to 8 microprocessors each) with Dell Powervault 220S disk
          storage array enclosures that hold 14, 73-gigabyte disk drives for a
          total of 1022 gigabytes of disk storage.This configuration does scale
          to meet the growth plans of the Registrant by processing in excess of
          800,000 paychecks per month.
        The
          Registrant has implemented Great Plains Edition on MS SQL as its financial
          information system and reporting software platform. Great Plains provides
          the Registrant with a scaleable and technologically sophisticated accounting
          and financial reporting platform which integrates with the Registrants
          licensed payroll processing system.
        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.
        The
          industry has seen a significant evolution of the manner in which a successful
          PEO conducts its business. The PEO of 2004 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:  
      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.
      The increasing
        complexity of state and federal taxation filings and regulatory issues.
      The increased
        recognition and acceptance of PEOs by regulatory authorities.
      The increasing
        expense associated with employee litigation and safety in the workplace.
      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. -
          13 -  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. The PEOs that are considered the Registrants
          national and regional competition include Administaff, Inc., Gevity
          HR, Inc.. and Presidion Solutions, respectively.
        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.
        EMPLOYEE
          BENEFIT PLANS
        The Company provides coverage under various regional medical benefit
          providers. These plans are all fully insured plans in the various client
          companies name. The Company assumes no liability for any of these products.
        Other
          Health Benefit Plans
        The Companys dental plans, which include both a PPO and HMO offering,
          are primarily provided by Aetna for all client employees who elect coverage.
          All dental plans are subject to guaranteed cost contracts that cap the
          Companys annual liability.
        In
          addition to dental coverage, the Company offers various other guaranteed
          cost insurance programs to client employees such as vision care, life,
          accidental death and dismemberment, short-term disability and long-term
          disability. The Company also offers a flexible spending account for
          healthcare and dependent care costs.
        401(k)
          PLANS
        The Company offers a 401(k) retirement plan, designed to be a multiple
          employer plan under the Internal Revenue Code of 1986, as amended
          (the Code) Section 413(c). This plan design enables owners
          of clients and highly-compensated client employees, as well as highly-compensated
          internal employees of the Company, to participate. Generally, employee
          benefit plans are subject to provisions of both the Code and the Employee
          Retirement Income Security Act (ERISA). -
          14 -




WORKERS
          COMPENSATION PLANS
        The Company has had a loss sensitive Workers Compensation insurance
          program since December 31, 1996. The program was insured by CNA Financial
          Corporation (CNA) from December 31, 1998 through June 30,
          2003. Under the guidance of the Companys Risk Manager (Midwest),
          the Company has diversified its  programs consisting of several
          carriers including Union American Insurance Company, Providence Property
          and Casualty Company, Imperial Casualty and Indemnity Company and Cascade
          National Insurance Company. Through this diversification, the Company
          has achieved a spread of risk. The insured loss sensitive programs provides
          fully funded insurance coverage for claims incurred in each plan year
          but which may be paid out over future periods. In states where private
          insurance is not permitted, client employees are covered by state insurance
          funds.
        The
          insured loss sensitive programs provide a sharing of risk between the
          Company and the respective Carriers. As part of these programs, the
          Company has individual stop loss coverage at $1.0 million per occurrence.
          In addition, the Company had aggregate stop loss coverage for individual
          claims though June 30, 2003. The actual premium payable is determined
          based on the industries serviced by the Company, estimated wages and
          the losses incurred under the programs.
        The
          2003 Workers Compensation insurance program provides for a sharing
          of risk between the Company and its Carriers whereby the Carriers assume
          risk in a least two areas within the program: (i) individual claim stop
          loss insurance risk; and (ii) premium payment credit risk.
        With
          respect to the individual claim stop loss insurance risk, the Company,
          through its Risk Manager (Midwest), is responsible for paying to its
          Carriers claim amounts related to the first $1.0 million per occurrence.
          Claim amounts in excess of $1.0 million per occurrence are insured through
          the Carriers. The Company remits weekly premium and incurred loss payments
          through its Risk Manager (Midwest) to its Carriers.
        Finally,
          with respect to the premium payment credit risk, this program is a fully
          insured policy written by the Carriers. If the Company were to fail
          to make premium payments to the Carriers as scheduled, then the Carriers
          would be responsible for the payment of all losses under the terms of
          the policy. The Carriers require the Company to provide adequate collateral
          related to premium payment credit risk. The required collateral is provided
          in a form of cash, short-term investments and letters of credit placed
          into a trust account.
        The
          company, through payments to its Risk Manager, has provided collateral
          to each of the insurance carriers based on the carriers total
          projected claims covered under each program. The payment of first year
          claims by the Company and premium payments to fund claims to be paid
          by the carriers reduce the total collateral required to be provided
          by the Company.
        The
          2003 program year is subject to final audit of 2004, and may be subject
          to further collateral adjustments at that time.
        Market
          Segments and Customer Selection
        The
          Registrant is oriented to becoming a full service HR management company
          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. The Registrant is subject
          to downturns in economic conditions but believes that through its diversification
          of risk and industries, such downturns would have minimal economic impact
          on the Company.
        Market
          Segments
        The
          following table displays the Registrants client base by industry
          grouping for the year-ended December 31, 2003: -
          15 -




CATEGORY
      PERCENTAGETransportation
      20.30Services(1)
      18.60Professional
      12.21Hospitality
      12.48Construction
      10.19Manufacturing
      9.87Retail
      6.94Agricultural
      4.23Healthcare
      2.69Other
      2.49Total
      100.00  (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 services to small to mid-size businesses.
          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 for 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. -
          16 -




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:  
      Prepare
        and file applications for initial license or registration as a PEO to
        a new state that the Registrant wishes to operate.
      Maintain
        compliance with existing regulatory requirements for states in which the
        Registrant has an active license or registration.
      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. -
          17 -




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, 2003, the Registrant served an estimated 1,700 clients,
          each with an average of approximately 40 employees, for a total of approximately
          47,000 work-site employees. The Registrant had oversight of approximately
          $933 million of payroll and related costs, throughout 32 states, Puerto
          Rico and Washington, DC. The Registrant operates two primary service
          centers, located in Ft. Lauderdale, FL and Tampa, FL each staffed with
          personnel to perform payroll, human resources, information processing,
          sales, service and general administration. The Registrant operates sales
          and customer support offices in Cherry Hill, NJ, Dallas, TX Apopka,
          FL and Orange, CA.
        Internal Employees
        As
          of December 31, 2003, the Registrant had approximately 200 direct employees.
          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 PROPERTIES
        The
          Registrants primary operations, including all cash management,
          treasury and finance, are conducted from its 17,000 square foot headquarters
          located in Fort Lauderdale, Florida. The Registrants current lease
          expires in October, 2008. In addition, the Registrant leases a 16,000
          square foot facility Tampa, Florida service center to provide secondary
          support as well as primary Information Technology functions. This lease
          expires in September, 2010.
        As
          of December 31, 2003, the Registrant also leases space as required in
          Texas, New Jersey and New York. The Registrant believes that its branch
          office leases, which typically have terms of 1 to 5 years, can either
          be renewed under acceptable terms or that replacement properties, under
          acceptable terms can be based without significant cost to the Registrant.
          The Registrant believes that its current facilities are adequate for
          the purposes for which they are intended and that they provide sufficient
          capacity to accommodate the Registrants current and prospective
          expansion plans.
        The
          Registrant also leases company vehicles and housing, postage meters,
          computer equipment and software, furniture, copiers and telephone equipment
          from various vendors at competitive commercial lease rates. -
          18 -




ITEM
          3.  LEGAL PROCEEDINGS
        American HR Holdings,
          Inc. v. BACE International, et al.
        On
          November 24, 2003, the Registrants wholly-owned subsidiary, American
          HR Holdings, Inc., (AmerHR), filed a Demand for Arbitration
          with the American Arbitration Association located in Miami, Florida
          against BACE International, Inc. (BACE) and BACEs
          sole shareholder William L. Baumgarder. The claim stems from the Registrants
          acquisition of BACEs PEO operations and an understatement in liabilities
          set forth within the financial statements provided by BACE in the amount
          of $14,300,000. AmerHR seeks indemnification from BACE and Baumgardner
          from any losses resulting from these misstatements and to offset the
          purchase price of the PEO operations in the amount of $14,300,000 as
          provided within the Stock Purchase Agreement for PEO operations. BACE
          and Baumgardner filed applications to cease arbitration the proceedings
          which applications were denied by AAA. A panel has been selected by
          the parties.
        Continental
          Casualty Company et al v. The Cura Group, Inc.
        On
          October 9, 2003, an action entitled Continental Casualty Company
          et al. v. The Cura Group, Inc. was served against The Cura Group,
          Inc., the Registrants operating subsidiary (Cura).
          The action was filed in the United States District Court, Southern District
          of Florida. The plaintiffs allege that the letters of credit provided
          to satisfy Curas workers compensation collateral obligations
          in the amount of $37,720,000 were not authentic and demand replacement
          of the collateral. On November 11, 2003, the plaintiffs withdrew their
          motions for injunctive relief against Cura. The parties have since stipulated
          to a stay of the proceedings. The Registrant and Cura filed their answer,
          affirmative defenses and counterclaims against the plaintiffs on October
          31, 2003. The counterclaims allege that CNA imposed arbitrary and falsely
          inflated premiums and collateral requirements on Cura and that CNA misrepresented
          Curas payroll, status of operation and client base in order to
          increase premiums and collateral requirements. The Registrant believes
          that it will resolve the forgoing matter without a materially adverse
          affect upon its financial condition.
        Prairie
          Capital Mezzanine Fund, L.P., et al. v. BACE International Corporation,
          et al.
        On
          November 10, 2003, the Registrant and its subsidiaries, American HR
          Holdings, Inc. (AmerHR) and The Cura Group II, Inc. (Cura
          II), were served with a citation and petition in a suit entitled
          Prairie Capital Mezzanine Fund, L.P., et al. v. BACE International
          Corporation, et al. in the Texas District Court, Tarrant County.
           Also named in the action was William L. Baumgardner, the sole
          shareholder of BACE International, Inc. (BACE). The Plaintiffs
          are seeking repayment ofpromissory notes in the aggregate amount of
          $6,905,946, with interest, made by BACE in connection with BACEs
          prior acquisition of American Staff Resources Corporation, and its affiliates
          (ASR), which are currently operating subsidiaries of the
          Registrant. The Registrant asserts that the obligations set forth within
          the Plaintiffs' complaint were never assumed by the Registrant, AmerHR
          or Cura II and that BACE's misstatements of liabilities in the approximate
          amount of $14,300,00 exceed the relief the Plaintiffs are seeking. The
          Registrant, AmerHR and Cura II intend to defend the action vigorously
          and have filed a motion to dismiss the action for lack of personal jurisdiction.
        Injured
          Workers Insurance Fundv. Americas PEO, Inc./Omni
          Financial Services, Inc.
        The
          Injured Workers Insurance Fund of the State of Maryland commenced
          an action in the Circuit Court of Baltimore for the collection of outstanding
          premiums against the Registrants inactive wholly-owned subsidiaries
          Americas PEO, Inc. and Omni Financial Services, Inc. in the amounts
          of $308,463 and 95,410 respectively. The companies have opposed the
          basis of the plaintiffs audit and the amounts sought therein.
          The action is currently in the discovery process. The Registrant believes
          that this matter falls within the coverage it procures from Midwest.
        Continental
          Casualty Company, et al. v. Omni Financial Services, Inc.
        The
          Registrants inactive subsidiary Omni Financial Services, Inc.
          (Omni) was served as a defendant in the action entitled
          Continental Casualty Company v. Omni Financial Services, Inc.
            CNA, on behalf of the New Jersey Assigned Risk Plan, has
          alleged that Omni owes CNA $734,459 for premiums on workers compensation
          coverage. Omni has filed an answer and the action is currently in the
          discovery process. The Registrant believes that this matter falls within
          the coverage it procures from Midwest. -19
          -




Granite State Insurance
        Co., et al. v. Ujex, Inc., et al. The Registrants inactive
          subsidiaries Americas PEO, Inc. (APEO) and Omni, and
          the Registrants affiliate shareholder Paul Hopkins were named
          as defendants in a case entitledGranite State Insurance Co., et
          al. v. Ujex, Inc., et al. in the Superior Court of New Jersey, Morris
          County. The plaintiff alleges fraud, conspiracy and breach of contract
          and seeks the denial of all insurance obligations, treble damages for
          any compensatory and consequential damages, punitive damages, plus fees
          and expenses. APEO, Omni and Hopkins have filed a motion to dismiss
          the plaintiffs claims, which is currently pending.Core Employer
          Services, Inc., et al. v. ABP Group, Inc. and William L. BaumgardnerCore Employer Services, Inc. (Core)
          commenced an action against the Registrants wholly owned subsidiary
          ABP Group, Inc. (ABP) in an action captioned Core Employer
          Services, Inc. et al. v. ABP Group, Inc. and William L. Baumgardner.
          Core alleges that ABP and Baumgardner owed Core unpaid commissions in
          the amount of $4,833,823.87. ABP denies all of Cores allegations
          and asserts that Core has failed to meet its contractual obligations
          and intends to vigorously defend the action. The action is currently
          in the discovery stage.The Registrant is a party to certain
          pending claims that have arisen in the normal course of business, none
          of whichin the opinion of management, is expected to have a material
          adverse effect on the consolidated financial position or results of
          operations if adversely resolved.From time to time the Registrant
          is made a party to claims based upon the acts or omissions of its client
          companies work site employees. The Registrant, through its Shared
          Employment Agreements with its client companies, believes that the clients
          are ultimately liable for the acts of these work site employees and
          vigorously defends such claims.ITEM
          4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
        Neither during the fourth quarter of the fiscal year ended December 31, 2003,
          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 three 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. -20
          -  High
        Bid
      Low Bid
      DividendsYear Ended
        December 31, 2003Fourth
        Quarter
      
      0.84
      .78
      .00Third
        Quarter
      
      1.01
      .76
      .00Second
        Quarter
      
      1.55
      .85
      .00First
        Quarter
      
      1.29
      .52
      .00Year Ended
        December 31, 2002Fourth
        Quarter
      
      1.01
      .52
      .00Third
        Quarter
      
      1.37
      .51
      .00Second
        Quarter
      
      1.35
      .65
      .00First
        Quarter
      
      1.8
      .38
      .00Year Ended
        December 31, 2001Fourth
        Quarter
      
      0.4
      .03
      .00Third
        Quarter
      
      0.16
      .04
      .00Second
        Quarter
      
      0.25
      .12
      .00First
        Quarter
      
      0.31
      .12
      .00 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 th e 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) m ake 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 dis closing recent price information
          for the penny stock held in the account and information on the limited
          market in penny stocks. -
          21 -  (b) HoldersAs
        of December 31, 2003, 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
        HoldersCommon
        Stock, $.001 par value
      34 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) DividendsThe
	   Registrant has paid no dividends during the fiscal years ended
	   December 31, 2001 2002 and 2003. 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.
	   Any future determination as to the payment of dividends will
	   be made at the discretion of the full Board of Directors of
	   the Company.ITEM
	   7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
	   AND RESULTS OF OPERATIONS(a)  
	   Full Fiscal Years Ended December 31, 2003 and 2002RevenuesThe
	   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 $866,000,000 of payroll
	   and related taxes for the year ended December 31, 2003 and
	   $502 million for the year ended December 31, 200 2. 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 BACE PEO operations
	   acquisition by the Registrant contributed $300 million of payroll
	   and payroll taxes for the Year 2003. -
          22 -




The
          Registrants subsidiariesGroup revenue was $78.5 million
          for Year 2003, compared to $40.4 million for Year 2002, representing
          an increase of $38.1 million or 94.3%. Significant growth of the revenue
          base was provided by the Registrants acquisitions of the
          PEO operations of BACE International during Year 2003. The BACE PEO
          operations contributed revenue of $31.1 million representing 81.6% of
          the overall revenue increase for Year 2003. In addition to the growth
          provided by the BACE PEO acquisitions, the Registrant achieved increased
          sales through organic sales.
        During
          Year 2003, the number of clients increased to 1,900 compared to 824
          during Year 2002, representing an increase of 130.6%. The addition of
          the BACE PEO operations contributed approximately 650 clients or 60%
          of the overall increase for Year 2003 over Year 2002. The number of
          paid worksite employees at December 31, 2003 increased to approximately
          53,000 from 32,000 at December 31, 2002, representing an increase of
          21,000 or 66%.
        Cost
          of Services
        Cost
          of services was $42.4 million for Year 2003, compared to $21.8 million
          for Year 2002, representing an increase of $20.6 million or 94.5% for
          2003. This increase was due primarily to an increased number of clients
          and worksite employees resulting from the BACE PEO  acquisition.
          BACE PEO operations contributed $17.8 million in cost of services representing
          86.4% of the overall increase in cost of services for Year 2003. Cost
          of services was 51.4% of revenue for Year 2003 and 54.0% for Year 2002.
        Gross Profit
        Gross
          Profit was $36.1 million for Year 2003, compared to $18.6 million for
          Year 2002, representing an increase of $17.5 million or 94.1%. Gross
          profit was 45.9% of revenues for Year 2003 and 46% of revenues for Year
          2002. The BACE PEO acquisition  positively impacted gross
          profit by $13.3 million representing 76.0% of the overall increase in
          gross profit for Year 2003. 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
          $33.7 million for Year 2003 compared to 15.7 million for Year 2002 ,
          representing an increase of $18.0 million, or 114.6%. Operating Expenses
          were 42.9% of Revenues for Year 2003, compared to 38.6% for Year 2002
          . The acquisition of BACE PEO operations increased Operating Expenses
          by $11.3 million, representing 62.8 of the overall increase for Year
          2003 over Year 2002.
        In
          addition, Operating Expenses were increased in Year 2003 from restructuring
          charges which resulted from the conversion of payroll processing and
          customer billing of the BACE PEO entities from their legacy software
          system to the Registrants Scorpeo platform.
        Compensation
          and Benefits Expenses was $11.9 million for Year 2003, compared to $5.0
          million for Year 2002, representing an increase of $6.9 million, or
          138.0%. The acquisition of BACE PEO operations increased Compensation
          and Benefit Expenses by $4.8 million, representing 69.6% of the overall
          increase for the Year 2003 over Year 2002. Compensation and Benefits
          Expenses were 15.2% of revenues for Year 2003, compared to 12.3% for
          Year 2002. -
          23 - Marketing and Selling Expense was 5.8% for Year 2003 compared to $4.2
          million for Year 2002, representing an increase of $1.6 million
          or 38.1%. The acquisition of BACE's PEO Operations increased selling
          commissions by $3.0 million, representing 187.5% of the overall increase
          for Year 2003 compared to 10.4% for Year 2002.
        General and Administrative Expenses were $15.3 million for Year 2003,
          compared to $6.4 million for Year 2002, representing an increase of
          $8.9 million, or 140.8%. The acquisition of BACE PEO operations increased
          General and Administrative Expenses by $3.6 million, representing 40.4%
          of the overall increase for Year 2003 over Year 2002. General and Administrative
          Expenses were 19.5% of revenues for Year 2003, compared to 15.7% for
          Year 2002.
        Depreciation and Amortization Expense was $737 thousand for Year 2003
          compared to $287 thousand for Year 2002, representing an increase of
          156.8%. The acquisition of BACE PEO operations increased Depreciation
          and Amortization Expense by $219 thousand, representing 48.7% of the
          overall increase for Year 2003 over Year 2002. Other increases were
          primarily the result of the Registrant's investment in management information
          systems.
        Interest
          income on the cash invested intermittently was $56 thousand for Year
          2003, compared to $86 thousand for Year 2002, representing a decrease
          of $30 thousand.
        Interest
          expense was $609 thousand for Year 2003 and $116 thousand for Year 2002,
          representing an increase of $493 thousand. The major portion of the
          increase in interest expense is attributable to acquisition financing,
          other interest expense results from capital leases that funded purchases
          of furniture and fixtures.
        Net
          Income
        Net
		income was $2.4 million for Year 2003, compared to $3.0 million
		for Year 2002, representing a decrease of $600 thousand.
		The acquisition of BACE PEO operations contributed net income
		of $1.9 million in Year 2003, representing 79.2% of the net
		income. Net income was 3.0% of Revenue for Year 2003, compared
		to 7.4% for Year 2002.Full
		Fiscal Years Ended December 31, 2002 and 2001
	   ***Revenues***
	   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.
		    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 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          $   29,868
Cost of service                               (31,039)            (24,400)
                                               ------              -------
Gross profit                                   21,260               5,468
Operating expenses                            (21,229)            (11,450)
                                               ------               ------
Net income (loss)                          $       31           $  (5,982)
                                               ======              ======= -
          24 -




b. 
          Liquidity and Capital Resources
        The
          Registrant had $3.1 million and $3.5 million in cash and restricted
          cash at December 31, 2003 and  2002 respectively.
        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.  During
          the first quarter 2004, the Registrant has taken significant measures
          to improve its negative working capital through the consolidation of
          operations and robust new sales revenue. 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 2004. 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 $3.3 million for 2003 and $1.4
          million for Year 2002. .
        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 (the Series A), to related parties in exchange
          for $19,720,000 consisting of cash ($1,000,000) and annual renewable
          letters of credit ($18,720,000). Between April 2003 through June 2003,
          the Registrant issued an additional 1,520 shares of the Series A to
          Midwest in exchange for $19,000,000 in annual renewable letters of credit
          (see Note 4-Insurance Deposits). The Series A 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. As set forth in the Registrants Form
          10-QSB for the quarterly period ending September 30, 2003, Midwest returned
          the 3,098 shares of Series A it received from the Registrant.
        Additional
          Preferred shares were issued in the fourth quarter 2003 raising an additional
          $7,500,000 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. -
          25 - ITEM 7A. QUANTITATIVE AND QUALITATIVE
		DISCLOSURES ABOUT MARKET RISK
        The Registrant is
          exposed to financial market risks due primarily to changes in interest
          rates. We do not use derivatives to alter the interest characteristics
          of our debt securities. We have no holdings of derivative or commodity
          instruments and we do not transact business in foreign currencies.
        The fair value of
          our cash and cash equivalents or related income would not be significantly
          impacted by changes in interest rates since the investment maturities
          are short. Debt from drawdowns on our lines of credit incurs interest
          at the Libor plus 2%, which would change from time to time.
        It is not possible
          to anticipate the level of interest rates going forward. Changes in
          interest rates have little impact as the majority of our debt is at
          a fixed interest rate. ITEM 8. FINANCIAL STATEMENTS AND
		SUPPLEMENTAL DATA
        Certified
          Services, Inc. and SubsidiariesIndex to the Consolidated Financial
          Statements
        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
        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, 2003 and 2002 and the related consolidated
          statements of operations, stockholders equity (impairment) and
          cash flows for the years ended December 31, 2003 and 2002. 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, 2003 and 2002 and the results
          of their operations, changes in stockholders' equity (impairment) and
          cash flows for the years ended December 31, 2003, 2002 and 2001 in conformity
          with accounting principles generally accepted in the United States of
          America.
        Bridgewater, New
          Jersey
          March 24, 2004
        /s/
          Rosenberg, Rich, Baker, Berman & Company -
          26- Certified
        Services, Inc. and SubsidiariesConsolidated
        Balance SheetsDecember
        31,2003
      
      2002AssetsCurrent
        AssetsCash
      $
      432,414
      
      $
      662,327Cash,
        restricted
      
      3,055,686
      
      
      2,658,907Accounts
        receivable
      
      20,906,147
      
      
      17,929,059Insurance
        deposits
      
      8,208,366
      
      
      18,720,000Related
        party receivables
      
      286,385
      
      
      65,340Other
        current assets
      
      1,153,627
      
      
      516,831Total
        Current Assets
      
      34,042,625
      
      
      40,552,464Property
        and equipment, at cost, net accumulateddepreciation
        of $2,029,155 and $774,158, respectively
      
      1,617,837
      
      
      983,451Excess
        purchase price over net book value of assets required
      
      26,466,572
      
      
      10,607,637Other assets
      
      1,639,676
      
      
      711,652Total
        Assets
      $
      63,766,710
      
      $
      52,855,204Liabilities
        and Shareholders EquityCurrent
        liabilitiesCurrent
        portion of notes payable
      $
      5,127,382
      
      $
      2,153,571Accounts
        payable
      
      6,041,231
      
      
      7,088,161Accrued
        expenses
      
      28,442,855
      
      
      18,413,810Current
        portion of capital lease obligations
      
      140,299
      
      
      190,648Total
        Current Liabilities
      
      39,751,767
      
      
      27,846,190Long term
        notes payable
      
      6,227,528
      
      
      2,070,010Long term
        portion of capital lease obligations
      
      83,506
      
      
      118,309Long term
        portion of workers compensation claims
      
      2,753,011
      
      
      --Total
        Liabilities
      
      48,815,812
      
      
      30,034,509Commitments
        and ContingenciesShareholders
        EquityPreferred
        shares, $.001 par, 5,000,000 authorized
      
      5
      
      
      3Common
        shares, $.001 par, 100,000,000 authorized,9,547,811
        and 8,447,811 issued and outstanding in 2003and
        2002, respectively
      
      9,548
      
      
      8,448Additional
        paid in capital
      
      11,825,152
      
      
      22,107,754Accumulated
        earnings
      
      3,116,193
      
      
      704,490Total
        Shareholders Equity
      
      14,950,898
      
      
      22,820,695Total
        Liabilities and Shareholders Equity
      $
      63,766,710
      
      $
      52,855,204See notes
        to the consolidated financial statements. -
          27- Certified
          Services, Inc. and SubsidiariesConsolidated Statements of Operations For the
        Years Ended December 31,2003
      
      2002
      
      2001Revenue
	   (gross billings of $933 million,$542 millionand $180
        million, less worksite employeepayroll
	   costs of $852 million,$502
        million and $166 million, respectively)
      $
      78,510,210
      
      $
      40,406,261
      
      $
      13,711,112Cost of
        service
      
      42,445,615
      
      
      21,822,214
      
      
      9,878,578Gross profit
      
      36,064,595
      
      
      18,584,047
      
      
      3,832,534Operating
        expensesCompensation
        and benefits
      
      11,914,059
      
      
      4,987,722
      
      
      1,474,060Marketing
        and selling
      
      5,847,286
      
      
      4,248,954
      
      
      1,062,508General
        and administrative
      
      15,300,810
      
      
      6,326,964
      
      
      1,994,367Interest,
        net
      
      590,737
      
      
      29,634
      
      
      35,490Total
        Operating Expenses
      
      33,652,892
      
      
      15,593,274
      
      
      4,566,425Net income
        (loss)
      $
      2,411,703
      
      $
      2,990,773
      
      $
      (733,891
      )Net income
        (loss) per share  basic and fully diluted
      $
      0.27
      
      $
      0.51
      
      $
      (0.21
      )Weighted
        average number of common shares outstanding -Basic
        and fully diluted
      
      8,976,978
      
      
      5,815,307
      
      
      3,421,145See notes
        to the consolidated financial statements. -
          28 -  Certified
          Services, Inc. and SubsidiariesConsolidated Statement of Stockholders
          Equity (Impairment)  Preferred
      
      
      Common
        StockShares
      
      Amount
      
      Shares
      
      Amount
      
      Additional
        Paid-in
        Capital
      
      Retained
        Earnings
        (Deficit)
      
      
      TotalBalance,
        January 1, 2001
      
      
      
      
      
      $
      
      
      
      3,421,145
      
      $
      3,421
      
      
      95,885
      
      $
      (1,688,095
      )
      $
      (1,588,789
      )Issuance
        of shares in completionof
        reorganization in 2001
      
      
      
      
      
      
      
      
      
      725,000
      
      
      725
      
      
      35,525
      
      
      
      
      
      36,250Issuance
        of shares for services inreorganization
        and acquisitions
      
      
      
      
      
      
      
      
      
      945,000
      
      
      945
      
      
      93,555
      
      
      
      
      
      94,500Issuance
        of shares for purchaseThe
        Cura Group, Inc.
      
      
      
      
      
      
      
      
      
      2,000,000
      
      
      2,000
      
      
      498,000
      
      
      
      
      
      500,000Shares
        issued for cash
      
      
      
      
      
      
      
      
      
      281,666
      
      
      282
      
      
      91,700
      
      
      
      
      
      91,982Exchange
        of shares resolvingpurchase
        of APEO Holdings, Inc.
      
      
      
      -406.667
      
      
      -1
      
      
      850,000
      
      
      850
      
      
      (849
      )
      
      
      
      
      Issuance
        of shares for cash andadditional
        consideration
      
      
      
      1,578
      
      
      2
      
      
      
      
      
      
      
      
      19,719,998
      
      
      
      
      
      19,720,000Issuance
        of shares for services
      
      
      
      
      
      
      
      
      
      225,000
      
      
      225
      
      
      67,275
      
      
      
      
      
      67,500Net
        income
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      2,990,773
      
      
      2,990,773Balance,
        December 31, 2002
      
      
      
      2,678
      
      $
      3
      
      
      8,447,811
      
      $
      8,448
      
      $
      22,107,754
      
      $
      704,490
      
      $
      22,820,695Issuance
        of shares for services
      
      
      
      
      
      
      
      
      
      450,000
      
      
      450
      
      
      359,550
      
      
      
      
      
      360,000Issuance
        of shares for Assets
      
      
      
      1,520
      
      
      1
      
      
      
      
      
      
      
      
      18,999,999
      
      
      
      
      
      19,000,000Issuance
        of shares inconnection
        with formingAmerican
        HR Holdings
      
      
      
      
      
      
      
      
      
      650,500
      
      
      650
      
      
      577,850
      
      
      
      
      
      578,500Cancellation
        of shares issued forAssets
      
      
      
      -3018
      
      
      -2
      
      
      
      
      
      
      
      
      (37,719,998
      )
      
      
      
      
      (37,720,000
      )Preferred
        Series B  Issuance
      
      
      
      350
      
      
      1
      
      
      
      
      
      
      
      
      3,499,999
      
      
      
      
      
      3,500,000of
        shares for cash andadditional
        considerationPreferred
        Series D  issuance
      
      
      
      -300
      
      
      1
      
      
      
      
      
      
      
      
      2,999,999
      
      
      
      
      
      3,000,000of
        shares for surplus notePreferred
        Series E  issuance
      
      
      
      -100
      
      
      1
      
      
      
      
      
      
      
      
      999,999
      
      
      
      
      
      1,000,000of
        shares issued for cashNet
        income
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      
      2,411,703
      
      
      2,411,703Balance,
        December 31, 2003
      
      
      
      1,930
      
      
      5
      
      
      9,547,811
      
      
      9,548
      
      $
      11,825,152
      
      
      3,116,193
      
      
      14,950,898See notes
        to the consolidated financial statements. -
          29-




Certified
          Services, Inc. and SubsidiariesConsolidated Statements of Cash
          Flows For
        the Year Ended December 31,2003
      
      
      2002
      
      
      2001Cash
        flows from operating activitiesNet
        income (loss)
      $
      2,411,703
      
      $
      2,990,773
      
      $
      (733,891
      )Adjustments
        to reconcile net income (loss) to netcash
        provided by operations:Transitional
        net income of acquired subsidiary
      
      
      
      
      
      
      
      186,470Reorganization
        pursuant to reverse acquisition
      
      
      
      
      
      
      
      (50,767
      )Depreciation
        and amortization
      
      737,146
      
      
      286,655
      
      
      57,567Bad
        debt expense
      
      775,094
      
      
      114,217
      
      
      59,555Issuance
        of stock to employees
      
      
      
      
      91,982
      
      
      Issuance
        of stock for services
      
      103,333
      
      
      162,000
      
      
      Severance
        expense
      
      
      
      
      
      
      
      200,000Decrease
        (increase) in assetsAccounts
        receivable
      
      7,942,610
      
      
      (14,718,796
      )
      
      (493,666
      )Other
        current assets
      
      249,735
      
      
      (878,597
      )
      
      45,639Restricted
        cash
      
      (396,779
      )
      
      5,077,615
      
      
      Insurance
        Deposits
      
      (2,357,128
      )
      
      
      
      
      Other
        assets
      
      (901,324
      )
      
      (488,180
      )
      
      Increase
        (decrease) in liabilitiesAccounts
        payable
      
      (12,989,652
      )
      
      2,838,728
      
      
      1,335,735Accrued
        expenses
      
      1,096,536
      
      
      3,133,903
      
      
      834,343Net
        cash provided by (used in) operatingactivities
      
      (3,328,726
      )
      
      (1,389,700
      )
      
      1,440,985Cash
        flows from investing activitiesPurchase
        of property and equipment
      
      (499,072
      )
      
      (565,024
      )
      
      (2,437
      )Proceeds
        from deposits
      
      
      
      
      
      
      
      16,520Cash
        paid for business acquisition
      
      (350,000
      )
      
      
      
      
      Cash
        paid pursuant to reverse merger
      
      
      
      
      
      
      
      (1,143,670
      )Proceeds
        from stockholder
      
      
      
      
      
      
      
      28,918Net
        proceeds from affiliates
      
      
      
      
      
      
      
      (384,240
      )Net
        cash (used in) investing activities
      
      (849,072
      )
      
      (565,024
      )
      
      (1,484,909
      )Cash
        flows from financing activitiesNet
        proceeds from line of credit
      
      2,283,000
      
      
      321,000
      
      
      Repayment
        of notes payable
      
      (1,902,186
      )
      
      (138,095
      )
      
      (139,204
      )Proceeds
        of long-term debt
      
      
      
      
      73,430
      
      
      Payments
        of capital lease obligations
      
      (211,884
      )
      
      (33,520
      )
      
      (41,723)Cash
        outlay for related party note receivable
      
      (1,221,045
      )
      
      (1,671,215
      )
      
      Loan
        proceeds from related parties
      
      1,000,000
      
      
      1,605,875
      
      
      Issuance
        of preferred stock
      
      4,000,000
      
      
      1,000,000
      
      
      1,100,000Net
        cash provided by (used in) financingactivities
      
      3,947,885
      
      
      1,157,475
      
      
      919,073Net
        increase (decrease) in cash
      
      (229,913
      )
      
      (797,249
      )
      
      875,149Cash
        at beginning of year
      
      662,327
      
      
      1,459,576
      
      
      584,427Cash
        at end of year
      $
      432,414
      
      $
      662,327
      
      $
      1,459,576 See notes
        to the consolidated financial statements. -
          30-




Certified
          Services, Inc. and SubsidiariesSupplemental Schedule of Non-cash
          Investing and Financing ActivitiesSUPPLEMENTAL
          DISCLOSURE OF CASH FLOW INFORMATION  2003
      
      2002
      
      2001Cash paid
        during the year for:Interest
        Expense
      $
      609,101
      
      $
      115,997
      
      $
      37,466Income
        Taxes
      
      
      
      
      
      
      
       SUPPLEMENTAL SCHEDULE OF NON-CASH
          INVESTING AND FINANCING ACTIVITIES
        Capital stock accounts and additional
          paid in capital were adjusted in 2003 for the following:
        The Registrant purchased the PEO
          operations excluding Staff America of BACE International in an acquisition
          with the following components:


Liabilities assumed in excess
        of assets
      $
      9,204,620Stock issued  650,000
        of common stock
      
      578,500Cash
      
      350,000Promissory note
      
      3,500,000Acquisition indebtedness
      
      2,225,814  In 2003, notes payable for $12,800,000
          were agreed to be assumed in the acquisition of AmerHR. Included in
          the BACE acquisition debt, was a note payable for $6,856,000, which
          has been reclassified against Excess Purchase Price over Net Book Value
          of Assets Acquired as of December 31, 2003, as a result of pending litigation
          and the uncertainty of the outcome. A non-interest bearing note payable
          for $772,578 was assumed from BACE Corporation subsequent to closing
          in 2003, for which a $90,186 present value discount was taken.
        Additionally, an obligation of
          $4,850,000 to a related party was assumed. During the third quarter
          2003, the $4,850,000 note obligation was cancelled.
        Additional paid in capital was
          credited in 2003 for $18,999,999 and 1,520 shares of Preferred Series
          A stock were issued at par for insurance deposits in the form of letters
          of credit of $19,000,000.
        Additional paid in capital was
          debited in 2003 for $37,719,998 and 3,018 shares of Preferred Series
          A stock were returned at par for the removal of all insurance deposits
          in the form of letters of credit of $37,720,000.
        Additional paid in capital was
          credited in 2003 for $3,499,999 and 350 shares of Preferred Series B
          stock were issued at par for insurance deposits of $3,500,000.
        Additional paid in capital was
          credited in 2003 for $359,550 and 450,000 shares of Common stock were
          issued at par for services rendered. As of December 31, 2003, $256,667
          of these services has been deferred until 2004.




-
          31-









Certified Services, Inc. and Subsidiaries

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
      $
      5,248,449Stock issued  2,000,000 of common stock
      
      500,000Promissory note
      
      2,313,889Promissory note
      
      136,000


|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
        945,000 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.
      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.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



2003
      
      
      2002Capitalized lease obligations incurred for use
        of equipment
      $
      102,293
      
      $
      279,389


See notes to the consolidated financial
  statements.



- 32-

---



Certified
          Services, Inc. and SubsidiariesNotes 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),
          the Cura Group, Inc. (Cura), and American HR Holdings, Inc.
          ("Amer HR") 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 throughout the United States.
        Basis of Presentation
        At
          December 31, 2003 and 2002 and for the years ended December 31, 2003,
          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 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.
        Segment Reporting
        The Registrant operates in one reportable segment under Statement of
          Financial Standards ("SFAS") 131, Disclosures about Segments of an Enterprise
          and Related Information.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.
        Cash and Equivalents
        For the purpose of the statements of cash flows, cash equivalents include
          time deposits, certificates of deposit and all highly liquid debt instruments
          with original maturities of three months or less.
        Securities Issued for Services
        The Company accounts for stock issued for services under the intrinsic
          value method. For stock issued for services, the fair market value of
          the company's stock on the date of stock issuance is used. The Company
          has adopted Statement of Financial Accounting Standard (SFAS) No. 123,
          "Accounting for Stock-Based Compensation". The Statement generally suggests,
          but does not require, stock-based compensation transactions to be accounted
          for based on the fair value of the services rendered or the fair value
          of the equity instruments issued, whichever is more reliably measurable.
          Securities issued for services during the period ending December 31,
          2003, consisted of 450,000 common shares issued to consultants to the
          Registrant and during the period ending December 31, 2002 consisted
          of 225,000 common shares issued to vendors of the Registrant. The shares
          issued have been valued at the average fair market value of the common
          stock on the dates of issuance. -
          33 -




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 $894,526,
          $60,000 and $0 for the years ended December 31, 2003, 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 December31, 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.
        Goodwill
        Goodwill represents the excess of the purchase price of
          companies acquired over the fair market value of their net assets at
          the date of acquisition. The Company tests goodwill for impairment on
          an annual basis, relying on a number of factors including operating
          results, business plans and future cash flows. If the carrying value
          of the goodwill of a reporting unit exceeds the fair value of that goodwill,
          an impairment loss is recognized in an amount equal to the excess. At
          December 31, 2003, 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 statements and retroactively applied
          to the previous years financial statement. The new policy will
          have no effect on the gross profit, net income (loss) 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. -
          34 -




Advertising
          Costs
        Advertising
          costs are charged to operations when incurred. Advertising expense was
          $272,339, $28,089 and $8,518 for the years ended December 31, 2003,
          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
          8,976,978, 5,815,307 and 3,421,145, respectively, for the years ended
          December 31, 2003, 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, 2003, 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.
        Non-interest
          bearing notes payable, in the original principal amount of $772,578
          at December 31, 2003 and $1,000,000 at December 31, 2002, have been
          subjected to an 8% present value discount in the accompanying consolidated
          balance sheets at December 31, 2003 and 2002.
        Limitations
        Fair value estimates are made at a specific point in time,
          based on relevant market information and information about the financial
          statement. These estimates are subjective in nature and involve uncertainties
          and matters of significant judgment and therefore cannot be determined
          with precision. Changes in assumptions could significantly affect the
          estimates.
        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.
        NOTE
          4-RESTRICTED CASH
        As
          of December 31, 2003 and 2002, respectively, the Registrant maintained
          restricted cash deposits of $3,055,686 and $2,658,907 at its lending
          institution to collateralize its revolving lines of credit (See Note
          15-Notes Payable). The initial 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. -35
          -




NOTE
          5-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 cash placed in escrow, annual renewable letters of credit and other
          forms of collateral which amounted to $8,208,366 and $18,720,00 as of
          December 31, 2003 and 2002, respectively. Subsequent to December 31,
          2002 the letters of credit of $18,720,000 were alleged to be not valid.
          (See Note 17-Preferred and Common Stock).
        NOTE
          6-ACQUISITIONS AND MERGERS
        On
          June 27, 2003,and
          effective as of April 1, 2003, the Registrant, through its wholly-owned
          subsidiary American HR Holdings, Inc. ("AmerHR"), acquired from BACE
          International, Inc., a non-affiliated North Carolina corporation ("BACE"),
          all of BACE's professional employer, payroll and human resource services
          operations for an aggregate purchase price of approximately $6,255,015.
          The purchase price was comprised of $350,000 cash, a 4% promissory note
          in the principal amount of $3,500,000 payable over five years, the assumption
          of approximately $2,225,814 of BACE's acquisition and capital requirement
          debt, and the balance represented by 650,000 shares of the Registrant's
          restricted common stock valued at $.89 per share. Also included is an
          option to purchase an additional 100,000 common shares for $2 per common
          share if and when the Company's common stock attains a value of at least
          $12 per common share.
        Concurrent
          with the acquisition, the Company retained the former chief executive
          of the BACE  business  unit  acquired
          as a  consultant  for the four year period through  June
          30, 2007,  at an annual rate of  $250,000,  and
          agreed to continue certain  co-marketing  activities  with
          BACE through June 30, 2004, at an annual cost of $900,000.
        Such
          payments have ceased in the fourth quarter of 2003, See Item 1 "Recent
          Developments".
        The
          operations of American HR Holdings, Inc. are included in the accompanying
          consolidated statement of operations from the date of acquisition, April
          1, 2003 through December 31, 2003. The pro forma unaudited consolidated
          statements of operations for the years ended December 31, 2003, 2002
          and 2001 for the Registrant, including BACE, prior to April 1, 2003,
          appear below:  (in
        thousands)
        For the Years Ended 
        December 31,2003
      
      2002
      
      2001Revenues
      $
      88,143,544
      
      $
      73,488,987
      
      $
      60,559,512Cost of
        service
      
      (55,007,171
      )
      
      (37,122,344
      )
      
      (42,779,222
      )Gross profit
      
      33,136,373
      
      
      36,366,643
      
      
      17,780,290Operating
        expenses
      
      (38,738,659
      )
      
      (32,6778,677
      )
      
      (18,690,365
      )Net income
        (loss)
      $
      (5,602,286
      )
      $
      3,587,966
      
      $
      (910,075
      )  -36
          -




In
          July 2002, the Registrant acquired control of the issued and outstanding
          shares of Cura., with offices in Ft. Lauderdale and Tampa, FL. Cura
          is a Professional Employer Organization currently comprised of two Florida
          corporations: The Cura Group, Inc. and The Cura Group II, 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.
        The
          operations of Cura are included in the accompanying consolidated statement
          of operations from the date of acquisition, July 1, 2002 through December
          2002 and thereafter.  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)
        For the Years Ended 
        December 31,2002
      
      2001Revenues
      $
      52,299
      
      $
      29,868Cost of
        service
      
      (31,039
      )
      
      (24,400
      )Gross profit
      
      21,260
      
      
      5,468Operating
        expenses
      
      (21,229
      )
      
      (11,450
      )Net income
        (loss)
      $
      31
      
      $
      (5,982
      )  NOTE 7-PROPERTY
          AND EQUIPMENT
        Property and equipment, at cost, consists of the following:  2003
      
      2002Furniture,
        fixtures and computer equipment
      $
      3,634,391
      
      $
      1,757,609Less: accumulated
        depreciation
      
      (2,016,554
      )
      
      (774,158
      )Total
      $
      1,617,837
      
      $
      983,451  Depreciation expense charged to operations amounted to $737,146,
          $274,538, and $57,567 for the years ended December 31, 2003, 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:  2003
      
      2002APEO
        Holdings, Inc.Cash
      $
      1,100,000
      
      $
      1,100,000Non-interest
        bearing promissory notesubjected
        to an 8% present value discount
      
      821,990
      
      
      821,990Shares
        of Common Stock
      
      406,667
      
      
      406,667Transaction
        costs
      
      88,781
      
      
      88,7812,417,438
      
      
      2,417,438Less: Net
        assets
      
      (8,250
      )
      
      (8,250
      )2,409,188
      
      
      2,409,188 -
          37-  The
        Cura Group, Inc.6% three
        year promissory note
      
      2,313,889
      
      
      2,313,8896% three
        month promissory note
      
      136,111
      
      
      136,111Shares
        of Common Stock
      
      500,000
      
      
      500,0002,950,000
      
      
      2,950,000Add: Net
        Liabilities
      
      5,248,449
      
      
      5,248,4498,198,449
      
      
      8,198,449  American
        HR Holdings Inc.Common
        Stock
      
      578,500
      
      
      Cash and
        Notes
      
      6,075,815
      
      
      6,654,315
      
      
      Add: Net
        Liabilities
      
      9,204,620
      
      
      Total
      
      15,858,934
      
      
      TOTAL
      $
      26,466,572
      
      $
      10,607,637  NOTE 9-OTHER
          ASSETS
        Other assets consist
          of the following:  2003
      
      2002Note receivable
      $
      148,920
      
      $
      208,919Investments
      
      1,005,000
      
      
      Prepaid
        expenses
      
      940,627
      
      
      343,833Noncomplete covenant
      
      72,355
      
      
      Acquisition
        costs
      
      542,277
      
      
      484,031Deposits
      
      84,124
      
      
      191,700Total
      
      2,793,303
      
      
      1,228,483Less: current
        portion
      
      1,153,627
      
      
      516,831$
      1,639,676
      
      $
      711,652  The note receivable is unsecured, bears interest at 3% and is payable
          as follows:
        a.$5,000 on March 22, 2002 with 35
          monthly payments of $2,000 with the remaining balance on November 22,
          2005b.On December 9, 2003, the note was
          amended, providing for monthly payments of principal and interest of
          $10,000 commencing February 25, 2004 with the remaining balance due
          on May 25, 2005  Investments are
          comprised of a Surplus Loan Agreement in the amount of $1,000,000 issued
          in exchange for Series E Preferred Stock, $.001 par value (See note
          17-Preferred and Common Stock) and Marketable Securities stated at cost
          which estimates fair value, in the amount of $5,000.
        The non-compete covenant
          is amortized over 31 months at a rate of $1,660 per month.
        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 lives of the customer relationships. Amortization expense
          for the years ended December 31, 2003, 2002 and 2001 was $108,000, $12,117,
          and $0, respectively.
        . -38
          -




NOTE 10-ACCRUED
  EXPENSES

Accrued expenses consist of the following:

2003
      
      2002Accrued
        payroll
      $
      14,710,418
      
      $
      9,379,191Accrued
        payroll taxes
      
      6,269,868
      
      
      4,180,119Client
        claims funds
      
      1,208,401
      
      
      2,022,977Workers
        compensation payable
      
      1,014,511
      
      
      580,589Employee
        benefits payable
      
      467,946
      
      
      685,535Accrued
        health insurance plan claims
      
      32,355
      
      
      612,592Customer
        Deposits
      
      3,655,711
      
      
      384,153Income
        Tax Payable
      
      193,773
      
      
      Other accrued
        expenses
      
      889,872
      
      
      568,654Total
      $
      28,442,855
      
      $
      18,413,810  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.
        In
          October 2002, the Registrant terminated a second 401k plan offered to
          worksite and direct employees. Plan assets were distributed according
          to Internal Revenue Code guidelines.
        Medical
          Benefit Plans
        The
          Company offers fully-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 its 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, 2003, 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 and
          as non-employee directors and advisors of the Registrant and its subsidiaries,
          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. -
          39 -




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 stock option activity and related information:  Shares
      
      Weighted 
        Average Exercise 
        PriceOutstanding,
        beginning of year
      
      
      $
      Granted
      
      
      $
      Exercised
      
      
      $
      Canceled
      
      
      $
      Outstanding,
        end of year
      
      
      $
      Exercisable,
        end of year
      
      
      $
        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 manage the Registrants risk, develop insurance
          relationships and provide access to insurance programs and collateral
          while assuming the responsibility for managing the cost of workplace
          accidents that occur during the five year term of the agreement. Payments
          made under this agreement were $43,866,830 and $16,323,144 for 2003
          and 2002 respectively.
        On November 17,
          2003, pursuant to a Subscription Agreement, the Registrant issued 350
          shares of its Series B Preferred Stock, par value $.001 (the Series
          B) to Midwest in exchange for an annual renewable letter of credit
          in the amount of $3,500,000 from the United Bank of Switzerland for
          the benefit of Curas operations. Midwest transferred this certificate
          of Series B to a third-party intermediary on December 23, 2003 (See
          Note 17-Preferred and Common Stock).
        On
          November 12, 2003, the Registrant executed a Capital Financing Agreement
          (the Capital Agreement) pursuant to the terms of which Midwest
          would provide the Registrant with long-term capital under a Marketing
          Organization Agreement between the Registrant and Central Leasing Management,
          Inc., an Illinois corporation (CLM). In that fourth quarter
          of 2003, Midwest deposited $3,000,000 CLM to meet the capital requirements
          of the Registrants operating companies. The Registrant has issued
          300 Series D Preferred Stock to Midwest under the Capital Agreement. -
          40-  On
          December 22, 2003, Midwest advanced $1,000,000 to the Registrants
          wholly owned subsidiary American Staff Resources (ASR) in
          order for ASR to provide a $1,000,000 surplus note to Providence Property
          & Casualty Company to meet the surplus requirements of ASR clients.
          In consideration of this sum, Midwest and the Registrant entered into
          a Preferred Stock Purchase Agreement whereby the Registrant issued 100
          shares of its Series E Preferred Stock in consideration of Midwests
          $1,000,000 capital contribution on behalf of ASR.
        In
          2002, Midwest provided annual renewable letters of credit (LCs)
          in favor of the Registrants workers compensation insurance
          carrier, which at December 31, 2002 amounted to $18,720,000. (See Note
          5-Insurance Deposits). 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) Subsequent to December 31, 2002 the Letters of Credit
          were alleged to be not valid and the 1,498 preferred shares were returned
          to the Company.
        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, 2003, 2002 and 2001, administrative fees paid to
          Brentwood amounted to $30,000, $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, 2003 and 2002, the Registrant had a receivable due from
          Midwest in the amounts of $268,115 and $41,414, respectively.
        On December 31, 2003 and 2002, Brentwood the Registrant had a receivable
          due to the Registrant from Brentwood in the amount of $18,270 and $23,926,
          respectively.Accounts payable at December 31, 2003 and 2002 included $2,855 and $251,050
          due to Midwest, respectively.
        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:  2003
      
      2002Furniture
        and fixtures
      $
      148,040
      
      $
      239,492Computer
        equipment
      
      1,138,905
      
      
      286,102Subtotal
      
      1,286,945
      
      
      525,594Less accumulated
        amortization
      
      (234,142
      )
      
      (140,784
      )Total
      $
      1,052,803
      
      $
      384,810  The following is a schedule of minimum lease payments due under capital
        leases as of the: Year Ending December 31,2004
      $
      187,276
      
      $
      226,1662005
      
      53,912
      
      
      110,2242006
      
      31,393
      
      
      20,2652007
      26,113
      
      Total net minimum capital lease payments
      298,694
      
      356,655Less amounts representing interest
      (74,889
      )
      (47,698
      )Present value of net minimum capital lease payments
      223,805
      
      308,957Less current maturities of capital lease obligations
      (140,299
      )
      (190,648
      )Obligations under capital leases, excluding current maturities
      $
      83,506
      
      $
      118,309  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 2003, 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.  -
          41-




NOTE
          15-NOTES PAYABLE
        Notes payable (including acquisition indebtedness) consist of the
          following: 2003
      
      2002$2,500,000
        revolving line of credit, expiring September, 2004, with interest at the
        LIBOR Market Index Rate plus 2%, collateralized by cash deposits of $2,013,318
        and  $2,658,907, respectively, and a security interest in Certificates
        of deposit of $500,000 pledged by Former CURA shareholders$
      2,500,000
      
      $
      1,217,000$1,000,000
        line of credit, expiring November, 2004, with Interest at the LIBOR
        Market Index Rate plus 2%, collateralized by cash deposits of $1,000,000
        and $0, respectively1,000,000Non-interest
        bearing acquisition promissory note of $1,000,000 payable in equal monthly
        installments over 72 months commencing January 10, 2002 after an 8% present
        value discount.588,950
      
      
      685,0276%
        interest bearing acquisition promissory note of $2,313,889 originally
        payable in equal monthly installments over 34 months commencing January
        3, 2003 and on January 27, 2004 amended whereby the obligation is payable
        over 55 months commencing February 15, 20041,847,608
      
      
      2,313,8896.5%
        interest bearing acquisition promissory note amount of $1,430,000 due
        in 5 equal annual installments commencing March 20, 20031,144,000
      
      
      Non-interest
        bearing promissory notes in the in the amount of $772,578 due in three
        annual installments commencing October 31, 2003 after an 8% present value
        discount. The Registrant has not made the initial payment of $257,526
        due October 31, 2003. The Registrant and lenders are in the process of
        renegotiating the terms of this obligation whereby it is anticipated that
        an initial payment of $72,000 will be made on March 15, 2004 followed
        by 48 equal monthly installments of $14,583 commencing March 15, 2004.682,392
      
      
      4%
        interest bearing promissory note of $3,500,000 payable in 59 equal monthly
        installments commencing August 1, 20033,403,362
      
      
        Installment
	   note payable secured by equipment
      
      188,598
      
      
      7,66511,354,910
      
      
      4,223,581Less:
	   current portion
      
      5,127,382
      
      
      2,153,571$
      6,227,528
      $
      2,070,010Unused credit available on the lines of credit
        was $0 and $1,912,000 at December 31, 2003 and 2002 respectively. -
          42 -




|On June 27, 2003,
  in furtherance of its acquisition of BACEs PEO Operations, the Registrant
  executed a promissory note in favor of BACE in the principal amount of $3,500,000
  with interest at the rate of 4%, payable over fifty-nine (59) monthly payments
  (the BACE Note). As a result of the Registrants discovery
  that the liabilities of the PEO Operations exceeded its assets by $14,300,000,
  and the Registrants contractual ability to offset any sums owed to BACE
  by the amount of such liabilities, the Registrant has suspended payments on
  the BACE Note pending a determination of its arbitration against BACE. For more
  information, see Item 1 Recent Developments.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Total maturities of
        notes payable are as follows:Year Ending December 31,2004
      $
      5,127,3822005
      
      1,715,4072006
      
      1,777,6072007
      
      1,585,7792008
      
      1,148,735Total
      $
      11,354,910 Acquisition indebtedness was incurred incidental to the reverse merger
          transaction between the Registrant and APEO and the acquisitions of
          Cura and AmerHR.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 2008 with no renewal option;Cherry Hill, NJ:
        Lease expiring December 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;Atlanta, GA:
        Lease expiring May 2005 with renewal option for an additional 3 years;Apopka, FL:
        Lease expiring May 2004 with no renewal option;Dallas, TX:
        Lease expiring June 2005 with renewal option for an additional 5 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:  2003
      
      20022004
      $
      1,145,580
      
      $
      654,0512005
      
      952,458
      
      
      518,3722006
      
      503,134
      
      
      266,2232007
      
      475,515
      
      
      266,1502008
      
      413,896
      
      
      268,384Thereafter
      
      446,080
      
      
      483,112Total
	   minimum payments required
      $
      3,936,664
      
      $
      2,456,282  Rent
          expense charged to operations were $1,297,751 and $475,978 for the years
          ended December 31, 2003 and 2002, respectively.
        NOTE 17- PREFERRED
          AND COMMON STOCK
        The
          Registrant is authorized to issue 100,000,000 shares of $.001 par value
          common stock.
        As
          of March 17, 2004 there were 9,547,811 shares of the Registrants
          common stock issued and outstanding on a fully diluted basis.
        The
          Registrant is authorized to issue 5,000,000 shares of $0.001 par value
          preferred stock in various series. Preferred Stock outstanding is as
          follows:. -
          43 - Preferred StockSharesDesignated
      
      Outstanding
      
      Par
        ValueSeries
        A, $.001 par value
      
      100
      
      
      80
      
      
      1Series
        B, $.001 par value
      
      100,000
      
      
      1450
      
      
      2Series
        D, $.001 par value
      
      10,000
      
      
      300
      
      
      1Series
        E, $.001 par value
      
      10,000
      
      
      100
      
      
      1120,010
      
      
      1,930
      
      
      5
  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 (the "Series A") to Midwest Merger Management, LLC ("Midwest")
          in exchange for $19,720,000 consisting of cash ($1,000,000) and annual
          renewable letters of credit ($18,720,000). Between April 2003 through
          June 2003, the Registrant issued an additional 1,520 shares of the Series
          A to Midwest in exchange for $19,000,000 in annual renewable letters
          of credit (See Note 5  Insurance Deposits). The Series A 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. Subsequent to the completion of
          these transactions, the letters of credit were alleged to be not valid
          resulting in Midwest's return of the 3,018 shares of Series A it received
          from the Registrant.
        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. On
          November 17, 2003, pursuant to a Subscription Agreement the Registrant
          issued 350 shares of its Series B to Midwest in exchange for an annual
          renewable letter of credit in the amount of $3,500,000 (See Note 5 -
          Insurance Deposits). 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. The Series B Preferred has no redemption priorities and
          is entitled to preference upon the liquidation or sale of substantially
          all of the Registrants assets.
        As
          a component of the reverse merger transaction between the Registrant
          and APEO, the Registrant agreed to issue 406.667 shares of Series C
          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.
        On November 12, 2003, pursuant to a Subscription Agreement the Registrant
          issued 300 shares of its Series D Preferred Stock, $.001 par value to
          a related party in exchange for $3,000,000 of cash deposits (See Note
          5-Insurance Deposits). The Series D Preferred 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.On December 22, 2003, pursuant to a Subscription Agreement the Registrant
          issued 100 shares of its Series E Preferred Stock, $.001 par value to
          a related party in exchange for a Surplus Note in the amount of $1,000,000
          (See Note 5  Insurance Deposits). The Series E Preferred 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.Series A and B preferred shares are each convertible into 10,000 common
          shares upon the Registrant's common stock reaching a value of $10 per
          share.Series D and E preferred shares are each convertible into 12,500 common
          shares commencing one year after the date of issuance.The Series B is entitled to receive an annual dividend of $400 per share
          of Series B. Midwest has renounced all rights to its Series B dividend,
          leaving an annual dividend remaining on the Series B of $140,000 at
          December 31, 2003. -
          44 -
  NOTE 18-COST
  OF SERVICES Cost of services
  is comprised of the following: 2003
      
      2002
      
      2001Employee
        benefits
      $
      11,421,889
      
      $
      5,499,070
      
      $
      4,299,099Insurance
      
      31,023,726
      
      
      16,323,144
      
      
      5,485,824Other
        
      
      
      
      93,655$
      42,445,615
      
      $
      21,822,214
      
      $
      9,878,578  NOTE 19-INCOME
          TAXES
        The income tax provision (benefit) is comprised of the following:   2003
      
      2002
      
      2001FederalCurrent
      $
      
      
      $
      
      
      $
      Deferred
      
      
      
      
      
      
      
      StateCurrent
      $
      
      
      $
      
      
      $
      Deferred
      
      
      
      
      
      
      
        Deferred
        taxes are recognized for temporary differences between the bases of assets
        and liabilities for financial statement and income tax purposes. The differences
        relate primarily to net operating losses and the reserves of workers
        compensation. The Registrants deferred tax asset is comprised of
        the following temporary differences:  2003
      
      2002
      
      2001Federal Deferred Tax AssetNet
        operating loss carry forward
      $
      (680,000)
      
      $
      (935,000)
      
      $
      (20,000)Total
        deferred assets
      
      (680,000)
      
      
      (935,000)
      
      
      (20,000)Less
        Valuation Allowance
      680,000
      
      935,000
      
      20,000Total
        Net deferred assets
      $
      
      
      $
      
      
      $
      
  2003
      
      2002
      
      2001State Deferred Tax AssetNet
        operating loss carry forward
      $
      (45,000)
      
      $
      (145,000)
      
      $
      (9,000)Total
        deferred assets
      
      (45,000)
      
      
      (145,000)
      
      
      (9,000)Less
        Valuation Allowance
      45,000
      
      145,000
      
      9,000Total
        Net deferred assets
      $
      
      
      $
      
      
      $
      
 The Company has available net operating loss carry forwards
        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
      
      StateAvailable through2018
      
      4,500,000
      
      
      4,000,000
 The differences between income tax provisions (benefits)
  in the consolidated financial statements and the tax expense (benefit) computed
  at the US Federal Statutory rate of 34% are as follows: 2003
      
      2002
      
      2001Tax provision (benefit) at the US Federal
        Statutory rate
      $
      820,000
      
      $
      1,000,000
      
      $
      Net
        operating loss carryover
      
      (725,000)
      
      
      (1,000,000)
      
      
      Workers
        compensation reserves
      
      (95,000)
      
      
      
      
      
      Provision
        for income taxes
      $
      
      
      $
      
      
      $
      
  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 - CONTINGENCIES  RISK MANAGEMENT PROGRAM
        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
          and deposits (amounting to $8,208,366 at December 31, 2003) with the
          Registrant's insurance carriers upon which the Registrant relies in
          managing its workplace risk. After reduction for the deposits noted
          above, and estimated liabilities of acquired subsidiaries amounting
          to $3,767,522, the estimated cost of claims incurred at December 31,
          2003 amounted to $7,531,061. Midwest is primarily responsible for the
          disbursement of these funds to the estimated, incurred value noted herein.NOTE 22 
          NEW ACCOUNTING PRONOUNCEMENTS
        In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of
          Statement 133 on Derivative Instruments and Hedging Activities", which
          amends and clarifies financial accounting and reporting for derivative
          instruments, including certain derivative instruments embedded in other
          contracts (collectively referred to as derivatives) and for hedging
          activities under FASB Statement No. 133, Accounting for Derivative Instruments
          and Hedging Activities. This Statement is effective for contracts entered
          into or modified after June 30, 2003, except for certain hedging relationships
          designed after June 30, 2003. Most provisions of this Statement should
          be applied prospectively. The adoption of this statement is not expected
          to have a significant impact on the Company's results of operations
          or financial position. -
          45 - In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for
          Certain Financial Instruments with Characteristics of both Liabilities
          and Equity". This Statement establishes standards for how an issuer
          classifies and measures certain financial instruments with characteristics
          of both liabilities and equity. It requires that an issuer classify
          a financial instrument that is within its scope as a liability (or an
          asset in some circumstances). This statement is effective for financial
          instruments entered into or modified after May 31, 2003, and otherwise
          is effective at the beginning of the first interim period beginning
          after June 15, 2003, except for mandatorily redeemable financial instruments
          of nonpublic entities, if applicable. It is to be implemented by reporting
          the cumulative effect of a change in an accounting principle for financial
          instruments created before the issuance date of the Statement and still
          existing at the beginning of the interim period of adoption. The adoption
          of this statement is not expected to have a significant impact on the
          Company's results of operations or financial position.In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46",
          Consolidation of Variable Interest Entities, an Interpretation of ARB
          No. 51). FIN 46 requires certain variable interest entities to be consolidated
          by the primary beneficiary of the entity if the entity investors in
          the entity do not have the characteristics of a controlling financial
          interest or do not have sufficient equity at risk for the entity to
          finance its activities without addition subordinated financial support
          from other parties. FIN 46 is effective for all new variable interest
          entities created or acquired after January 31, 2003. For variable interest
          entities created or acquired prior to February 1, 2003, the provisions
          of FIN 46 must be applied for the first interim or annual period beginning
          after June 15, 2003. The adoption of FIN 46 did not have a significant
          impact on the Company's results of operations or financial position.45



                    NOTE
          23  LITIGATION
        On October
          9, 2003, Continental Casualty Company and is related companies (CNA")
          commenced an action against The Cura Group, Inc., the Registrants
          operating subsidiary (Cura). The action, Continental Casualty
          Company et al v. The Cura Group, Inc. was filed in the United States
          District Court, Southern District of Florida. The complaint seeks the
          replacement of collateral obligations in the amount of $37,720,000.
          The parties have since stipulated to a stay of the proceedings. The
          Registrant and Cura filed their answer, affirmative defenses and counterclaims
          against the plaintiffs on October 31, 2003. The counterclaims allege
          that CNA imposed arbitrary and falsely inflated premiums and collateral
          requirements on Cura and that CNA misrepresented Curas payroll,
          status of operation and client base in order to increase premiums and
          collateral requirements. The Registrant believes that it will resolve
          the forgoing matter without a materially adverse affect upon its financial
          condition.
        On November
          10, 2003, the Registrant and its subsidiaries, American HR Holdings,
          Inc. ("AmerHR") and The Cura Group II, Inc. ("Cura II"), were served
          with a citation and petition in a suit entitled Prairie Capital Mezzanine
          Fund, L.P. et al. al. v. BACE International Corporation, et. al., in
          the Texas District Court, Tarrant County. Also named in the action,
          was William L. Baumgardner, the sole shareholder of BACE International,
          Inc. ("BACE"). The plaintiffs have alleged that the promissory notes
          are in default and seek accelerated payment of promissory notes in the
          aggregate amount of $6,905,946, with interest, made by BACE in connection
          with BACE's prior acquisition of American Staff Resources Corporation,
          and its affiliates ("ASR"), which are currently operating subsidiaries
          of the Registrant. The plaintiffs allege that the Registrant and Cura
          II assumed BACE's obligation upon the notes when they acquired ASR.
          The Registrant, AmerHR and Cura II have filed a motion to dismiss the
          action based upon a lack of personal jurisdiction. The Registrant asserts
          that the obligations set forth within the Plaintiffs' complaint were
          never assumed by the Registrant, AmerHR or Cura II and that BACE's misstatements
          of liabilities in the approximate amount of $14,300,00 exceeds the relief
          the Plaintiffs are seeking. The Registrant, AmerHR and Cura II intend
          to defend the action vigorously and have filed a motion to dismiss the
          action for lack of personal jurisdiction.
        The Injured
          Workers' Insurance Fund of the State of Maryland commenced an action
          in the Circuit Court of Baltimore for the collection of outstanding
          premiums against the Registrant's wholly-owned subsidiaries America's
          PEO, Inc. and Omni Financial Services, Inc. in the amounts of $308,463
          and $95,410 respectively. The companies have opposed the basis of the
          plaintiff's audit and the amounts sought therein. The action is currently
          in the discovery process. The Registrant believes the coverage arranged
          through Midwest shall be sufficient to meet the obligations of this
          claim.
        The Registrant's
          subsidiary Omni Financial Services, Inc. ("Omni") was served as a defendant
          in the action entitled Continental Casualty Company v. Omni Financial
          Services, Inc. CNA, on behalf of the New Jersey Assigned Risk Plan has
          alleged that Omni owes CNA $734,459 for premiums on workers compensation
          coverage. Omni has filed an answer and the action is currently in the
          discovery process. The Registrant believes the coverage arranged through
          Midwest shall be sufficient to meet the obligations of this claim. -
          46 -  The Registrant's
          subsidiaries America's PEO, Inc. ("APEO") and Omni, and the Registrant's
          affiliate shareholder Paul Hopkins were named as defendants in a case
          entitled Granite State Insurance Co., et al. v. Ujex, Inc., et. al.
          in the Superior Court of New Jersey, Morris County. The plaintiff alleges
          fraud, conspiracy and breach of contract and seeks the denial of all
          insurance obligations, treble damages for any compensatory and consequential
          damages, punitive damages, plus fees and expenses. APEO, Omni and Hopkins
          have filed a motion to dismiss the plaintiff's claims which is currently
          pending.
        Core Employer
          Services, Inc. (Core) commenced an action against the Registrants
          wholly owned subsidiary ABP Group, Inc. (ABP) in an action
          captioned Core Employer Services, Inc. et al. v. ABP Group, Inc. and
          William L. Baumgardner. Core alleges that ABP and Baumgardner owed Core
          unpaid commissions in the amount of $4,833,823. ABP denies all of Cores
          allegations and asserts that Core has failed to meet its contractual
          obligations and intends to vigorously defend the action. The action
          is currently in the discovery stage.
        The Registrant
          is a party to certain pending claims that have arisen in the normal
          course of business, none of which, in the opinion of management, is
          expected to have a material adverse effect on the consolidated financial
          position or results of operations if adversely resolved. However, the
          defense and settlement of such claims may impact the future availability,
          retention amounts and cost to the Registrant of applicable insurance
          coverage.
        ITEM
          9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
          DISCLOSURE
        During
          the two fiscal years ended December 31, 2003, there have been no changes
          in or disagreements with the Registrants independent accountants
          on any matter of accounting or financial statement disclosure.
        ITEM 9A.              
          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.
        PART
          III
        ITEM
          10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
        (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
        andDate of Expiration
      Position & Office
      Age andName
      of Present Term
      with Registrant
      Director SinceWilliam
        Keywan
      One year
      President
        and Director
      63April 27, 2002 (1)
      
      Nov. 21, 2001Judson Wagenseller
      One year
      Executive Vice President
      51April 27, 2002 (2)
      
      Nov. 21, 2001Scott Zoppoth
      One year
      Secretary, Treasurer
      43Aug. 7, 2002(3)
      and Director
      Nov. 21, 2001Anthony R. Russo
      One year
      Chief Executive and
      61May 1, 2003 (4)
      Financial Officer
      Aug. 7, 2002and DirectorDanny L. Pixler
      One year
      President, Chief Operating
      55May 1, 2003 (5)
      Officer and Director
      Nov. 20, 2002Peter Campitiello
      One year
      Secretary
      34September 1, 2003
        (6)O. Ray McCartha
      One year (7)
      Director
      54April 27, 2002Thomas Cunningham
      One year
      Director
      43November 20, 2002
        (8)
      
      April 27, 2002Ivan Dobrin
      One year (9)
      Director
      58May 1, 2003
      
      April 27, 2002 -
          47 -  _________________________
        (1)
          Mr. Keywan 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 April 27, 2002 , and was elected as the Registrants
          Chief Financial and Chief Executive Officer on August 7, 2002. Mr. Russo
          resigned as an Officer and Director in December 2003.(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. Keywan.(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
        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. -
          48 -  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, PC, 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 New York State and City 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
          11. 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. -
          49- (b) Summary
  Compensation Table. Long
        Term CompensationAnnual
        Compensation
      
      Awards
      PaymentsName and Position
      Year
      Salary
      Bonuses
      Other
      
      Stock
      Options
      LTIP
      OtherWilliam
        Keywan, President
      2001
      
      
      
      
      
      
      Director, (resigned
      2002
      
      
      
      
      
      
      
      August 7, 2002)
      2003
      - 47,000
      
      - 45,600
      
      
      
      
      Thomas Cunningham,
        ChiefFinancial Officer
        and
      2001
      
      
      
      
      
      
      
      Director (resigned
      2002
      136,250
      
      
      
      
      
      
      Nov. 20, 2002)
      2003
      133,930
      
      
      
      
      
      
      Judson Wagenseller,
        EVP
      2001
      
      
      
      
      
      
      
      and Director (resigned
      2002
      
      
      
      
      
      
      
      August 7, 2002)
      2003
      
      
      - 7,500
      
      
      
      
      Ray McCartha, Director
      2001
      
      
      
      
      
      
      
      since August 7, 2002
      2002
      
      
      - 120,000
      
      
      
      
      2003
      -
      
      - 120,000
      
      Ivan Dobrin, Director
      2001
      
      
      
      
      
      
      
      Since August 7, 2002
      2002
      180,000
      
      
      
      
      
      
      2003
      183,000
      
      
      
      
      
      
      Scott Zoppoth, Director
      2001
      
      
      
      
      
      
      
      since November 21,
        2001
      2002
      
      
      3,000
      
      
      
      
      2003
      
      
      18,000
      
      
      
      
      Anthony R. Russo,
        CEOand CFO since Aug.
        7,
      2001
      
      
      
      
      
      
      
      2002, and Director
        since
      2002
      30,000
      
      
      
      
      
      
      April 27, 2002
      2003
      38,000
      
      100,000
      
      
      
      Danny L. Pixler, PresidentAnd COO since August
        7,
      2001
      
      
      
      
      
      
      
      2002, and Director,
        since
      2002
      69,616
      
      
      
      
      
      
      November 20, 2002
      2003
      165,000
      
      
      
      
      
      
      Richard M. Steen,
        Acting CFO
      2001
      
      
      
      
      
      
      
      Since December 26,
        2003
      2002
      
      
      
      
      
      
      
      2003
      107,000
      
      
      
      
      
      
      Totals
      2001
      
      
      
      
      
      
      2002
      415,866
      
      123,000
      
      
      
      
      2003
      673,950
      
      291,100
      
      
       No
        officer or director was paid any compensation in 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, 2003, 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: -
          50-
  OPTION/SAR
        GRANTS IN LAST FISCAL YEAR NAME
      NUMBER
        OF 
        SHARES 
        GRANTED 
        OPTIONS/SARs
        GRANTED (1)
      PERCENT
        OF
        TOTAL OPTIONS
        EXERCISE 
        IN 
        FISCAL YEAR (2)
      PRICE
        
        PER SHARE
      EXPIRATION
        
        DATE
      UNDERLYINGBrentwoodCapitalCorp.
      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 dir ectors 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: -
          51 -
  AGGREGATE
        OPTION/SAR EXERCISES IN 2002 AND AT FISCAL YEAR END OPTION SAR VALUES NAME
      SHARES
        
        ACQUIRED 
        ON 
        EXERCISE
      VALUE
        
        REAL- 
        IZED
      NUMBER
        OF
        SHARES
        UNDERLYING
        UNEXERCISED
        OPTIONS AT FISCAL
        YEAR-END
        (EXERCISABLE/
        UNEXERCISABLE)
      VALUEOF
        IN-THE-MONEY
        OPTIONS AT
        FISCAL YEAR-END
        (EXERCISABLE/
        UNEXERCISABLE)BrentwoodCapitalCorp.
      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
        12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
        RELATED STOCKHOLDER MATTERS(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 Natureof Beneficial Owner
      of Beneficial Ownership
      Percentage of Class
        (1)Midwest Merger
        Management, LLC10602 Timberwood
        Circle, Suite # 9Louisville,
        KY  40223
      2,050,000
      24.2%Alan B. Willard5101 Northwest 21st
        St. - Suite 350Ft. Lauderdale, FL  33309
      1,000,000
      10.4%Danny L. Willard5101 Northwest 21st
        St. - Suite 350Ft. Lauderdale, FL  33309
      1,000,000
      10.4%Thomas Cunningham200 Lake Drive East
         Suite 110Cherry Hill, NJ 08002
      642,984
      6.7.% -
          52 -  __________________(1) Based upon an
        aggregate of 9,547,811 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. During the period between
        September 30, 2003 and December 31, 2003, and as previously disclosed
        herein in Item1, the Registrant issued 350 shares of its Series B to Midwest.
        In November 2003, Midwest transferred 350 shares of Series B to Harmon
        Burns, a previously non-affiliated third-party. The Series B Shares vote
        as 14,500,000 shares of common stock. Between September 30, 2003, and
        Decemb er 31, 2003, and as previously disclosed in Item 1, the Registrant
        issued an aggregate of 300 shares of its Series D Preferred Stock to Midwest.
        Midwests Series D Shares vote as 3,000,000 shares of common stock.
        Between September 20, 2003 and December 31, 2003, and as previously disclosed
        in Item 1, the Registrant issued an aggregate of 100 shares of its Series
        E Preferred Stock to Midwest. Midwests Series E shares vote as 1,000,000
        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 29,267,811 shares may be deemed to be outstanding. Assuming
        29,267,811 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; -
          53 -  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; andJ.   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 exchang e, 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) ren ewing 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: -
          54 -
  Name and
        Address
      Amount
        and Natureof Beneficial Owner
      of Beneficial Ownership
      Percentage of Class
        (1)Anthony R. Russo477 Madison Ave. -
        12th FloorNew York, NY 10022
      
      0.0%Danny L. Pixler5101 NW 21st Ave.
        - Suite 350Ft. Lauderdale, FL
        33309
      
      0.0%O. Raymond McCartha
      
      0.0%477 Madison Avenue,
        12th FloorNew York, NY 10022Ivan Dobrin
      
      0.0%5101 NW 21st
        Ave.  Suite 350Ft. Lauderdale, FL 
        33309Scott Zoppoth
      
      0.0%477 Madison Avenue,
        12th FloorNew York, NY 10022All officers and directors
        as a groupof 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 PlansThe
        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 INFORMATIONNumber
          of securities to be issued upon exercise outstanding options,  warrants,
          and rights (a)
      Weighted
          average 
               exercise price of 
               outstanding options,
               warrants and rights (b)
      Number
          of securities
           remaining available for future issuance under
           equity compensation plans (excluding securities reflected in column
          (a)(c)Equity compensation
        plansapproved by security
        holders
      -0-
      -0-
      -0-Equity compensation
        plans notapproved by security
        holders
      -0-
      -0-
      -0-
      Total
      -0-
      -0-
      -0- -
          55 -  ITEM 13.       CERTAIN RELATIONSHIPS
        AND RELATED TRANSACTIONSOn
        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.Risk
        Management AgreementOn
        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 payment s 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.On
        December 4, 2003, the Registrant and Midwest agreed to amend Midwests
        Service Fee under the Risk Management Agreement to be increased from three
        and one-half percent (3.5%) to four and one-third percent (4.39%) of payroll
        of the Registrants operating subsidiaries.ITEM
        14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
        Audit Fees.
          The aggregate fees billed by Rosenberg Rich Baker Berman & Company,
          our principal accountants, for professional services rendered for the
          audit of the Company's annual financial statements for the last two
          fiscal years and for the reviews of the financial statements included
          in the Company's Quarterly Reports on Form 10-QSB during the last two
          fiscal years was $155,249 and $147,932, respectively.
        Tax Fees.
          The aggregate fees billed by the Company's principal accountants for
          tax compliance, tax advice and tax planning services rendered to the
          Company during the last two fiscal years was $19,766 and $90,995, respectively.
        	  All
		    Other Fees. The aggregate fees billed by our principal
		    accountants services rendered to the Company during the
		    last two fiscal years, other than as reported above,
		    was $34,221 and $107,974, respectively.PART
        IVITEM
        15.              
        EXHIBITS AND REPORTS ON FORM 8K(a)
        Exhibits:31.1   Certification
		    pursuant to 18 U.S.C. Section 1350, as adopted pursuant
		    to Section 302 of the Sarbanes-Oxley Act of 2002	  31.2   Certification
		    pursuant to 18 U.S.C. Section 1350, as adopted pursuant
		    to Section 302 of the Sarbanes-Oxley Act of 200232 
		        Certification
		    pursuant to 18 U.S.C. Section 1350, as adopted pursuant
		    to Section 906 of the Sarbanes-Oxley Act of 2002(b) Reports
        on Form 8K:  During the last quarter of the fiscal year
        ended December 31, 2003, and to the date of the filing of this Annual
        Report the Registrant filed two Form 8-K Current Reports dated November
        19, 2003 and January 23, 2004. The November 19, 2003 Current Report disclosed
        the Registrants results of operations for the period ending September
        30, 2003 and included a copy of the Registrants November 18, 2003
        Press Release. The January 23, 2004 Report disclosed the resignation of
        O. Raymond McCartha from the Registrants Board of Directors and
        the nomination and election of Eugene M. Weiss as Mr. McCarthas
        replacement as reported in Item 1 of this Form 10-K. -
          56 -  SIGNATURESIn 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 29, 2004Certified
        Services, Inc.By:  /s/ Danny
        L. PixlerDanny L. Pixler, President,Chief Executive Officerand DirectorBy:  /s/ Richard
        M. SteenRichard M. Steen,Acting Chief Financial Officer -
          57 -
  CERTIFICATIONSI, Danny
        L. Pixler, 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; and6. 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 29, 2004/s/ 
        Danny L. PixlerChief
        Executive Officer -
          58 -  I, , 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
		  ***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.
		  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 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:
		  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; and6. 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 29, 2004/s/ 
        Richard M. SteenActing
        Chief  Financial Officer -
          59 - EXHIBIT
          INDEX
        	  31.1   Certification
		    pursuant to 18 U.S.C. Section 1350, as adopted pursuant
		    to Section 302 of the Sarbanes-Oxley Act of 2002	  31.2   Certification
		    pursuant to 18 U.S.C. Section 1350, as adopted pursuant
		    to Section 302 of the Sarbanes-Oxley Act of 200232 
		        Certification
		    pursuant to 18 U.S.C. Section 1350, as adopted pursuant
		    to Section 906 of the Sarbanes-Oxley Act of 2002